Benefits of Owning (vs. Leasing) Solar Panels

What are the benefits of purchasing a solar system vs. leasing one? In this article we will take an unbiased look at both options and help you, the homeowner, to get a better sense of what`s the better choice in your particular situation.

It`s more than six years since SunRun introduced “zero-down” payment schemes for solar. Third-party ownership has turned out to be a complete game changer for the solar industry. The company recently announced a growth of 80% in California in only one year.[1] Another study revealed that more than 70% of Californians who go solar prefer third-party ownership.[2] Similar numbers can be found in other sunny states across the country as well.


You save more money by buying

There is more money to save (in the long run) if you purchase a solar system in cash. As the owner of the solar system, you receive all the rebates (in some areas up to $6,000 per kilowatt), the 30% tax credit and the additional SREC income that your new solar panels produce.

Loaning is usually wiser than leasing. Most homeowners finance their solar panels through a home equity loan or a second mortgage. Many solar installers offer long-term financing at very affordable rates. If you were financing through a loan that is equivalent to a typical solar lease, you would be paying somewhere between 8-20% in interests (usually tax deductible).

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Solar panels will increase your home value

How much is the big question. Here`s a rough estimation to give you an idea of what quantities we`re talking about: A solar system that is producing $1,500 in annual savings with a prevailing fixed mortgage rate of 5% would increase your home value somewhere around $30,000 ($1,500/0.05).

A study conducted by National Renewable Energy Laboratory (NREL) concluded that homes with solar panels sell 20% faster and for 17% more money.[3]


A lease is not an investment

I often advice people to look at purchasing a solar system as a long-term investment. I want to emphasize that a solar lease is not an investment – you do not have ownership of the solar system itself (you have no assets). A solar lease is a long-term year commitment to 10-20 years of lease payments. When would you financially commit yourself to rent a home for 10-20 years?


Solar leases may reduce your home value

You will find leasing companies that advertise increased home value with their solar leases. In some cases this is true (homes with lower electricity bills tend to be worth more). However, a solar lease can also be a hindrance when you`re trying to sell your home. Finding a buyer that qualifies with excellent credit and agrees to assume your solar lease can be tough. Alternatively, paying yourself out of the lease can be very costly.


No one knows where the prices are headed

A lease can come with a fixed, escalating or de-escalating payment plan. You`re only saving money if the utility bill savings actually exceeds the lease payments. No one really knows where the electricity price is at ten years down the line. Likewise, no one knows what solar systems will cost in the future either.

Understand that the feasibility of a solar lease is based on predictions about the future.

Also worth mentioning is that the predicted future costs of electricity is dependent on where you live. SolarCity says, “utility rates increase 5% per year”, meanwhile, U.S. Energy Information Administration (EIA) predicts that electricity prices will slightly fall over the next decade due to a decline in natural gas prices.[4]


Solar leases make sense in some situations

Going solar with a $0 down approach can be very tempting, and in some situations they make perfect sense.

Here are some of the benefits of solar leases:

  • With a solar panel lease you can start saving money from day one.
  • Performance is guaranteed.
  • Maintenance, repairs and replacements are generally taken care of by the leasing company.
  • Inverters typically only come with a 10-year warranty and will eventually need replacement.
  • Solar leasing companies might be eligible for subsidies that homeowners do not have access to.


In what situations do these benefits outweigh a cut in long-term savings?

  • You want a solar system, but lack in cash or do not have access to a well-structured loan; solar leasing could be the way to go.
  • You do not have a high enough income, or you are a non-profit organization, and cannot take advantage of solar tax credits and deductions.


Regardless of whether it’s the best possible deal, for many people wanting to let the sunshine in, it’s the only deal.

For more information on solar leases, you don`t want to miss Best Solar Lease – SolarCity, SunRun, Sungevity, SunPower.

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Comments - 19


I recently had a SolarCity rep come to my house and it sounds like a great deal having a flat rate for electric power that is cheaper than my cheapest bill so far. I’m still doing some research though. I am not planning on living in my house (but still owning) for more than 5 years. Is it worth owning panels with whatever rebates and financial incentives I would get in California? Maybe leasing is still a better option for myself, but if I could get most money back on an install to own, maybe owning is the way to go regardless? Thanks for these articles touching on this movement!

July 7, 2013 9:01 pm Reply


You will get more money back through ownership, so if you have the money (or a access to a well-structured loan), I would go for buying the system.

July 15, 2013 4:35 pm Reply


Nowhere do I see you take the degradation of the panels into account. These panels don’t last forever. They produce a little less energy each year. There’s a reason these lease and PPA agreements tend to run out after 20 years. By then the panels have degraded to a point where they no longer make economical sense to these companies. Also, the inverters don’t last forever. When we talked to Sun City they told us that the inverter will likely need to be replaced in around 15 years. Another thing to consider is that, if you buy the system yourself, it may have some impact on your homeowner’s insurance. That is some expensive equipment on the roof that is exposed to all sorts of threats. I’m not saying that this tips the scales the other way toward leasing but it is part of the equation.

February 14, 2014 11:39 pm Reply


I keep seeing these days that you can get a prepaid solar lease, for 20 years, that is 5% less than purchasing a system. I wonder how they are able to do this? And isn’t this a better deal than buying because in 20 years who knows what value the system will have.

October 31, 2013 8:01 pm Reply



Sungevity promotes the pre-paid lease as an alternative to purchase. They claim it be more cost effective, and notionally it does appear to be, because the price is about 40-50% less than what they would charge for purchasing the same system, plus they provide full warranty and free maintenance for the term of the lease (20-year initial term), and a production guarantee that you woudn’t get if you purchased. The catch is that they get all the tax benefits, but even still, that only amounts to 30% on the federal tax credit, so I was similarly confused about how they make money on that. The answer is, in a lease situation, the leasing company can depreciate the value of the asset as a tax write-off since they technically own it, which you cannot do on your personal inome taxes if you buy it yourself. So, they end up writing off the entire cost of the system over some number of years, saving themselves a bunch of cash on their tax bill, and they ALSO get to claim the solar credits and incentives that you would have otherwise gotten if you bought it, which I guess explains how they can “sell” the pre-paid lease at just a little more than half of what that same system to cost to buy.

Smart way to leverage governement incentives, I suppose. From what I can tell, the pre-paid lease is a good way to get a worry-free solar system at a significant discount below a straight-up purchase, and still retain most of the benefits. They only thing you really lose is the flexibilty to add panels or upgrade components in the future to increase capacity, since you don’t really own it until the lease term is up and the company gives ownership of the system to you (it would cost them more to remove it and repair your roof than what the components would be worth at that point).

February 10, 2014 5:37 am Reply

Michael S

Joe said it right. There is a pre-paid option. I’m going to say though that some sales reps will jack the pre-paid price up because they can and most home owners’ don’t know the difference. In CA, I can get you a pre-paid lease for the same cost as the purchase price minus the 30% tax credit because our company claims the tax credit, AND gets to write off the system as a depreciating asset. You get solar energy without having to worry about the insurance, warranty, inverter replacement, etc.

For the most part the other incentives in CA have nearly dried up and you can’t count on those being available. That will happen in other states as well.

July 29, 2014 11:18 pm Reply

Ric DeVan

I’ve tentatively signed up for a PPA system with solar company not on your list, but have second thoughts. Since I can pay in full maybe I should own the system. In fact, I would prefer to have a system that is independent of (not connected to) the local power company, since they are no longer buying back energy.

“The company” will charge for the power produced versus power used. Is this typical? What is the typical difference between the amount of power produced and the power used?

“The company” has designed a (approximate) 400 K watt system. This was done before the summer months and in spite of the fact that my average usage for the 12 months preceeding the contract date was over 500 KW. What will happen if the system is under powered?

October 10, 2014 11:45 pm Reply


SunRun is now fully integrated like Solar City is, designing, financing, installing, all under one name and company. They also have much better pricing for purchases. Leasing and PPA’s are the most beneficial way for the majority of homeowners to go Solar. If you were not planning on spending $30k on a home improvement project already, then there is no reason to spend it on a system just because you are opposed to leasing other things like cars etc. if you were to get satellite tv, would you insist that you own the dish they put on the roof? and then spend $1000 to own it? Solar is no different, the upfront cost does not justify the return you get from a system. If you have $30k to invest, and want to see a return on your money, put it into a low risk investment account. The fact is that you will not see a return on your Solar purchase for 12 – 15 years in most cases.
In addition. most companies, like SunRun, give you the ability to purchase the system during the PPA term. So many people will get the system on the roof, have it installed, have it completely covered, and then buy it for much less a few years later. The systems will last for 30 -35 years.
The fact is, Solar is not perfect. It is not going to make you rich. if you are investing, or going Solar for that reason, don’t do it. You will have a bad experience, and blame the solar companies for not giving you what you thought you were getting. Here is what you should think about:
– Will you be using electricity for the next 20 -30 years?
– If so, do you think you will have to pay for that electricity? Regardless of who you pay?
– So if it is something that you will be paying for always no matter what, what is the best available option to do so?
– It is fact, utility companies can not lower their prices, only raise them to simply maintain. Solar is fixed, it is in writing, it is environmentally friendly, and is significantly cheaper than any other solution available. So at this point, Solar is simply the best available option. All the negative things that are mentioned in this discussion about a lease and PPA, are all irrelevant. SunRun and other companies guarantee everything. So it doesn’t matter about degradation, it doesn’t matter about rebates. All the Solar companies want to do, is provide homeowners with a system for free, and lower their bills by 30%. They are not claiming to do any more than that. If this were your car insurance, and you could lower your payments by 30%? would you even hesitate to do that? So why do so with your electricity? Get a system for free, and stop paying more than you have to. The cynicism and scrutiny this industry is under is ridiculous. The fact that these power companies have become so institutionalized is scary. PG&E literally kills people and the environment, spills, leaks, disasters etc..then they charge their customers more when they have to clean it up, or improve their systems. After going solar, and seeing how easy it is, my only advice, is don’t make this complicated. It isn’t rocket science. it is simply cheaper electricity. And the best option you have right now.

February 21, 2015 7:57 pm Reply

Ric DeVan

The problem with leases, as I understand them, is the company will install extra panels (nearly twice as many) to up the production. You may or may not need that extra production, but you will pay for it.

March 16, 2015 8:17 pm Reply

Ric DeVan

You will get more money back, initially. But if you compare the cost numbers to what you are saving in energy each month, it may take longer than the life of the system to recoup your cash output.

I bought a system anyway, with the hope of eventually going “self contained” with battery backup for night time use and getting off the local electric utility (SDG&E) permanently. Tesla is working on batteries for that very purpose. In addition, I figured it would take only about 10-15 truck batteries to product the six kilo Watts I need at night.

March 16, 2015 8:25 pm Reply

Ric DeVan

Update: I eventually cancelled the PPA deal with Vivent and went with a local company, Sun Coast. They have been in business for over 20 years and used the best panels (Solar World) and inverters (Enphase) for the install. My electric bill went from $80/month to $5.10/month, which is the SDG&E’s minimum monthly charge. Had I stayed with Vivent I would have payed about $50/month. Vivent would have installed more panels and charged me for every kilo Watt produced whether I used it or not. Plus they get payed for selling it back to SDG&E.

March 16, 2015 8:35 pm Reply


I have a contract with Solar City to install solar panels via a PPA, but am wondering whether it is a wise decision. I may move in a couple of years. Just installed a new roof with a 50 yr warranty. The salesman is very good and convincing, but I still wonder if it would be more difficult to sell my home with solar in place. Looking at my gas and electric bill from last month, I used 746 kWh and paid $106. including taxes. Solar city says I’ll pay them $99/month, and my rep says they do not sell the energy back to the electric company. I’m confused. Can anyone steer me straight?

March 17, 2015 7:27 pm Reply


PPAs are good for most folks.. You save from day one and no costs to maintain. The idea that the solar company makes you put extra panels so they may charge you more is simply not true. You have final say and get the production numbers up front. Choosing to wait for 10 years to see a return doesn’t make sense for most people. Additionally, saying bill now $5 a month doesn’t make sense.. You’ve left out something as you must be comparing apples to oranges in the dollars saved..

March 27, 2015 5:11 pm Reply


With Vivint, the homeowner gets credit for ALL the energy the system produces. They do not get credit for unused energy generated by your system, YOU do. The utility company credits the unused energy on YOUR account and YOU and only YOU can use that credit.

April 7, 2015 7:04 pm Reply


wow…. you laid it out so simple and I truly appreciate that. My family and I have a upcoming appointment (Solar City) After reading all these reviews I started confusing my self. I originally compared it to buying a car or satellite too but so much information gets confusing. It should change the fact of the end result…. cheaper bill. thanks again.

April 19, 2015 5:24 pm Reply


We’re still doing research as to which way we would like to go with leasing/owning. Being that we live on Guam, I wanted to know if it still works when there’s a typhoon?
Just curious, but it also helps to know.

May 14, 2015 12:39 am Reply


With the PPA, dont you end up owning an obsolete system over years, if loses, efficiency, invertor, monitors may require repair, so who will be responsible if one choses to buy vs lease. How much would a system cost to install without using these solar power companies? Isnt Solarcity, solarpower charging you too miuch to install?
the margin they receive from ConEd must make them enormous cash flow. How does we capture that margin ourselves, or is it just safer to go with a name brand company?

June 20, 2015 9:46 pm Reply


1) all solar companies want to do is make money so don’t confuse the process.
2) environmentally sound—with the exception of the carbon footprint of producing and disposing of the panels. Significantly greater.
3) 30% savings—I haven’t seen anyone hit those numbers with a lease program.

I want solar—and am looking at SUNRUN but I really question all the facts stated and am worried that in the end I will get it in the end

July 13, 2015 4:42 am Reply


When I was trying to figure out purchase vs lease a friend gave a simple explanation.
He had made a $30k investment by purchasing solar and his savings was about $3k each year from reduced electricity bills. He said that amounts to a 10% return on your investment. Where else can you get a guaranteed 10% return. That made the decision to purchase very clear. They solar companies did push pretty hard for the lease options, but I held firm. This all assumes you have the funds available for a purchase or access to financing that is lower than 10%.

October 29, 2015 4:09 pm Reply

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