Solar energy technology has made leaps and bounds in progress in the last few decades, paving the way to sustainability and as a viable and affordable source of renewable energy. With the dramatic boon in the solar industry today, prices have dropped to an all-time low; in fact, 75% in the past 10 years. This means breaking free from fossil fuels and its rising costs is more feasible than you think.
Like with any major investment comes big decisions. Homeowners and businesses hovering on the opportunity to invest in solar energy sometimes arrive at a crossroads when it comes to deciding on which is better: buying or leasing solar panels.
The main difference between owning and leasing a solar PV system is in ownership, which is distinctly more beneficial to your bottom line. Whereas leasing solar panels or signing a power purchase agreement (PPA) gives a third party ownership of the system, not you. Here’s the rundown on each to help you in your decision-making.
Purchasing solar panels
- Owning panels means you can legally sell them when you sell your home. The value of your home increases by approximately $20 for every $1 decrease on your power costs, according to a study sponsored by the Department to Energy; and they higher the premium on you sale or on an appraised value. Homebuyers are recognizing the value when making property purchase decisions. Not only can you recoup the initial cost of your solar power system when you sell your home, but rooftop solar panels allow you to increase your asking price, thus, boosting your ROI.
- Business owners can claim their solar panel system as a depreciable asset and as an added incentive, can accelerate the depreciation period and gain from tax benefits.
- Monetize your SRECs (solar renewable energy certificates).
- Reduce federal tax liability through the federal investment tax credit.
Leasing solar panels
- You do not own the power that you use, the solar leasing companies do. This means they become your utility provider to which you will continue to make utility payments.
- You do not get the 30% federal tax credit.
- You cannot claim any credit on your home value appraisal with leased solar panels.
- Leases usually last up to 20 years. So when your house is put on the market before the lease is up, you will have to either buy out the lease or transfer it (and its terms) over to a potential homebuyer, which can be a drawback to the new owner.
If you want to keep your solar panel systems and savings away from third-party suppliers’ hands, your best option is to become a proud owner and maximize on the financial benefits. For building owners, this makes good economic sense when it comes to calculating economic returns.
The benefits of owning your system are hard to beat. But don’t let the question of affordability deter you from making a green upgrade; luckily, there are many solar financing options available so that you can tap into a cheaper way to getting electricity.