Pros and Cons of a Solar Lease

What Is a Solar Lease?  

A solar lease is a long-term agreement to pay a monthly payment for the solar panels that the lease company installs on your roof. This is, in its most simple form, a swap from one utility company to another. A solar lease simply replaces the local utility company that generates electricity far away and brings it to your home with one that generates the electricity right on your roof.

Solar leases or Power Purchase Agreements (PPA’s) are referred to as third-party owned solar systems. We will refer to all third-party owned solar systems as solar leases to simplify the term– however, this document is applicable to both PPA’s and solar leases. 

The Best Analogy for Solar Leases Is the Cell Phone Industry

Getting into a solar lease is like switching your cell phone plan from Verizon to AT&T. Many people decide to switch from one carrier to another for reasons including price, customer service, service plans or better coverage. The reason to switch from the local utility company to a solar lease boils down to two reasons: the primary reason being to save money (it's cheaper per month than paying the local utility company) and the second is to reduce your carbon footprint  (it’s a cleaner, better way to generate electricity for your home). 

Pros and Cons of a Solar Lease

Pros

• Cheaper than local utility company

• No debt associated with leases

• No money out-of-pocket

• No tax liability required

• Easy for homeowners to adopt since it's similar to how homeowners are billed with local utility company

• Transferable to qualified home buyer

• Carbon-free energy generation

• Monitoring and repairs are paid for by lease company

Cons

• The most expensive way to go solar over time

• Most leases have a yearly increase built into lease

• Most home buyers don't want to assume long-term contracts that increase with time

• Lease company claims all tax credits

• Lease company does not perform maintenance to clean panels

• Homeowner now has two utility companies instead of one

Is a Solar Lease right for you? That's an individual decision and one that should take all the above into consideration. For more in depth knowledge we recommend checking out the books that this content came from: Buying Solar Homes and Escape Solar Leases by Cory Vanderpool, the founder of Spark.