Investing in solar energy is one of the smartest decisions homeowners can make today. But understanding how to finance your solar system is just as important as the panels themselves. If you’re considering going solar, you’ll likely encounter three common financing options: solar leases, solar purchases, and power purchase agreements (PPAs). Each comes with its own benefits and drawbacks, depending on your budget, goals, and preferences.
Let’s break down each option so you can decide which is right for your home.
1. Solar Purchase: Own Your System Outright or with a Loan
What it is:
When you buy a solar system, either by paying upfront or financing through a loan, you own the panels outright.
Pros:
- You get the full financial benefits, including federal tax credits and local incentives.
- You can increase your home value.
- Your energy savings grow over time as you generate your own power.
- No monthly payments once the system is paid off.
Cons:
- Higher upfront cost (unless using a loan).
- Responsible for maintenance and repairs.
Who it’s for:
Homeowners who want long-term savings and are comfortable with an initial investment or financing options.
2. Solar Lease: Pay a Fixed Monthly Fee to Use the System
What it is:
You don’t own the solar panels. Instead, you lease them from a solar company, paying a fixed monthly rate for use.
Pros:
- Little to no upfront cost.
- Maintenance and repairs are usually covered by the leasing company.
- Predictable monthly payments.
Cons:
- You don’t own the system, so you miss out on tax credits and some incentives.
- Savings may be less than owning the system outright.
- Lease agreements typically last 15-20 years, with limited flexibility.
Who it’s for:
Homeowners who want solar with minimal upfront costs and prefer not to handle maintenance.
3. Power Purchase Agreement (PPA): Buy the Power, Not the Panels
What it is:
You agree to buy the electricity generated by the solar system at a set rate, often lower than your utility’s rate, without owning the panels.
Pros:
- No upfront cost.
- Pay only for the solar power you use.
- Maintenance is usually covered by the provider.
- Potential for savings right away.
Cons:
- You don’t own the system or get tax credits.
- Your savings depend on how much electricity the system generates.
- Contracts can be complex and lengthy.
Who it’s for:
Homeowners looking for low upfront cost solar and are fine with buying power instead of owning the system.
Which Option is Right for You?
Choosing between lease, purchase, and PPA depends on your financial goals, how long you plan to stay in your home, and your preference for ownership and maintenance.
- Want to maximize savings and incentives? Purchase is usually best.
- Prefer low upfront costs and maintenance-free solar? Leasing or PPA might be ideal.
- Planning to sell your home soon? Leasing or PPA contracts may complicate things.
Aicon Solar Can Help You Find the Best Fit
Navigating solar financing can be confusing, but you don’t have to do it alone. At Aicon Solar, we help you understand your options and select the financing method that fits your lifestyle and goals.
Ready to start saving with solar? Contact us today for a free consultation.