Buying vs Leasing Solar Panels in California: How to Make the Best Choice
If you’re thinking about installing solar panels for your home in California, you have two financing options to choose from: buying your solar panels with cash or a loan, or leasing them.
When you buy your panels, you own them outright. When you lease, you don’t own your system, but your upfront investment is much lower.
There are pros and cons to both options. In this guide, we compare them to help you decide whether you should lease or buy solar panels for your home in California.
What’s the Difference Between Buying & Leasing Solar Panels?
There are two key differences between buying and leasing rooftop solar panels: who owns them and how you pay for them.
Buying Solar Panels
When you buy your solar panels in cash or finance them with a loan, you own the system outright.
There are a few benefits of solar ownership. The main one being that, in most cases, the financials work out better. Since there’s no interest or fees, you’ll break even faster and save more money over the lifespan of your system.
The downside is that you have to pay for the installation. It’s a considerable investment, and usually what stops homeowners who want solar panels from installing them.
Leasing Solar Panels
If you aren’t prepared to buy solar panels, leasing is a good alternative.
When you lease your solar panels, a leasing company pays to install them on your roof. You then pay the leasing company a monthly fee to use the energy they produce. It’s just like leasing a car or an apartment.
The main benefit of a lease is that you don’t have to make an upfront investment. Instead, you pay a monthly fee. The ideal result here is:
The solar panels bring your electricity costs down significantly
Your lease payment is lower than your current electric bill
You end up cash flow positive from day one
Solar leasing is often called third-party ownership, or TPO. You’re the first party, the installer is the second party, and the company paying for the installation is the third party. The leasing company, the third-party, owns the panels, hence the term “third-party ownership.”
Pros & Cons of Leasing vs Buying Solar Panels
Whether you buy your solar panels or sign a solar lease, you will see financial benefits. But there are pros and cons to each option, and it’s important to weigh them carefully before you make your decision.
Buying Solar Panels
Pros:
Higher long-term savings - You’ll save more money over time when you own your system.
Total control - You own your system and have complete control over it.
Increase home value - Owning solar panels can boost your home’s value.
Eligible for incentives - As the owner, you’ll receive any rebates or incentives the system qualifies for. However, since the 30% solar tax credit is ending, this is no longer a major benefit.
Cons:
Higher upfront cost - The initial investment will be higher if you buy your solar panels.
Maintenance responsibility - Since you own the system, you’re responsible for any maintenance or repairs it needs.
Leasing Solar Panels
Pros:
No upfront cost - Most leases do not require an upfront payment.
Predictable energy costs - Lease payments are typically fixed, so you know what you’ll owe every month.
Immediate & long-term savings - You’ll start saving money right away and continue to for the entire lease term. At the end of your lease term, you’ll have the chance to buy the system.
No maintenance responsibility - The leasing company will take care of any maintenance your system needs.
Cons:
Lower overall savings - The lifetime savings are generally lower with a lease than they are if you own your system.
No incentive eligibility - Since you don’t own your system, you can’t claim rebates or tax incentives. Since there aren’t any big incentives available in California right now, this isn’t a serious disadvantage.
Should You Lease or Purchase Your Solar Panels?
So, which option is better for you? It all comes down to budget and preference. Solar leases and cash/loan purchases both have their benefits and drawbacks. It’s up to you to weigh them and decide which benefits matter most to you.
If you want to maximize your return on investment and you have the funds to pay for solar upfront, a cash purchase is the best option.
If you don’t love the idea of a big upfront investment but still want to lower your bills and reduce your impact on the environment, you should consider a solar lease.
Solar panels aren’t a one-size-fits-all investment. That’s why, at Taylor Energy, we offer a range of financing options. We can help you compare cash vs lease vs loan to find the solution that makes the most sense for you.
Find a solar financing option that fits your budget. Call (707) 518-9625 today for a free consultation.
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