Understanding Solar Panel Lease vs. Purchase: A Guide

  • By: kwameb
  • Date: September 13, 2023
  • Time to read: 12 min.

As renewable energy options become more accessible, many homeowners are considering investing in solar panels as a cost-effective way to power their homes. However, with options like leasing and purchasing available, it can be challenging to navigate the decision-making process.

It’s important to understand the differences between solar panel lease vs. purchase to make an informed decision for your home’s energy future. In this guide, we’ll explore the pros and cons of each option, factors to consider, and tips for finding the best solar installer for your needs.

Key Takeaways:

  • Leasing solar panels can have lower upfront costs and may provide access to the federal solar tax credit.
  • Purchasing solar panels can lead to long-term cost savings and increased home value, but requires an upfront investment and responsibility for maintenance and repairs.
  • Solar loans and power purchase agreements (PPAs) are alternative financing options to consider.
  • Environmental impact should also be a consideration, as solar power reduces reliance on fossil fuels and decreases carbon emissions.
  • Choosing the best solar installer requires researching factors such as reputation, experience, and customer reviews.

Benefits of Leasing Solar Panels

If you’re considering solar panel lease vs. purchase, leasing can offer several benefits worth considering.

  • Lower upfront costs: When you lease solar panels, you typically don’t have to pay any upfront costs. This can make solar energy much more accessible to homeowners who might not have the funds to purchase a system outright.
  • Potential access to the federal solar tax credit: Many leasing companies offer the option to transfer the federal solar tax credit to the homeowner, which can be a significant financial benefit. This credit allows homeowners to deduct a percentage of their solar panel installation costs from their federal income taxes.
  • Convenience: With a solar lease, the leasing company typically handles all maintenance and repairs. This means you don’t have to worry about finding a reputable solar company or dealing with any unexpected costs.

Of course, there are also some potential downsides to leasing solar panels. For example, you won’t own the system outright, which means you won’t be able to take advantage of any long-term cost savings or potential increases in home value. Additionally, you’ll typically have to sign a lease agreement that outlines specific terms and conditions.

Ultimately, whether leasing or buying solar panels is the right choice for you will depend on your unique financial situation and personal preferences. However, it’s good to know that leasing can be a viable option if you’re looking to access the benefits of solar energy without a significant upfront investment.

Lease vs Purchase solar panels

Pros and Cons of Purchasing Solar Panels

When it comes to purchasing solar panels, there are both advantages and disadvantages to consider.


  • Long-term cost savings: While purchasing a solar panel system requires a larger upfront investment, it can result in significant cost savings on your electricity bill over time.
  • Increased home value: A solar panel system can increase the value of your home and make it more attractive to potential buyers.
  • Ownership: When you purchase solar panels, you own the system outright, providing a sense of pride of ownership and control over your energy future.
  • Tax credits and rebates: Purchasing a solar panel system may qualify you for federal and/or state tax credits and rebates, potentially offsetting the initial cost.


  • Upfront costs: While a solar panel system can save you money in the long term, the initial cost can be a barrier for many homeowners.
  • Maintenance and repairs: As the owner of the system, you are responsible for maintenance and repairs, which can be costly if something goes wrong.
  • Changing technology: As solar technology continues to advance, your purchased system may become outdated sooner than you would like, requiring additional investment in upgrades.

When deciding whether to purchase solar panels, consider your financial situation, long-term goals, and willingness to take on the responsibilities of ownership.

Purchase Solar Panels

Understanding Solar Loans

If you’re interested in purchasing solar panels but can’t afford to pay for them outright, a solar loan may be a good option for you. Solar loans are specifically designed to help homeowners finance the upfront cost of a solar panel system while still allowing them to enjoy the long-term savings on electricity bills.

With a solar loan, you’ll borrow the money you need to purchase and install the solar panels. You’ll then pay back the loan over time, typically with interest. The terms of the loans can vary depending on the lender, but some loans can be repaid over up to 20 years.

One of the most significant benefits of a solar loan is that you’ll still own the solar panel system, which means you’ll be eligible for any federal or state incentives that come with ownership. These incentives can reduce the cost of the solar panel system and make it more affordable.

Solar Financing

Interest rates on solar loans can vary, but they tend to be lower than interest rates on traditional home improvement loans. Some lenders may also offer incentives or discounts for homeowners who choose to finance their solar panel system with them.

Before you apply for a solar loan, it’s essential to do your research and compare rates and terms from different lenders. Some solar installation companies may also offer financing options, so be sure to consider all of your options before making a decision.

Exploring Power Purchase Agreements (PPAs)

Another option to consider when deciding on solar panel lease vs. purchase is a power purchase agreement (PPA). With a PPA, you purchase solar energy from a solar company, rather than owning or leasing the panels themselves.

One major benefit of a PPA is that there are no upfront costs to install solar panels on your home. Instead, you simply pay for the solar energy that your panels generate. This can be a great option for homeowners who are unable or unwilling to make the initial investment required for purchasing or leasing solar panels.

Another advantage of a PPA is the potential for significant cost savings on your electricity bills. In many cases, the cost per kilowatt-hour of solar energy purchased through a PPA can be lower than traditional utility rates.

However, it’s important to note that with a PPA, the solar company remains the owner of the panels and is responsible for maintenance and repairs. Additionally, PPAs typically involve long-term contracts, which can limit your flexibility if you sell your home or want to switch to a different energy provider.

Overall, a PPA can be a great option for homeowners who want to go solar without the upfront costs and responsibilities of owning or leasing solar panels. However, it’s important to carefully review the contract terms and compare the financial implications of a PPA to other options before making a decision.

power purchase agreement

The Financial Considerations: Upfront Cost, ROI, and Savings

When deciding between solar panel lease vs. purchase, finances are a crucial consideration. One of the primary factors is the upfront cost. Purchasing a solar energy system outright typically requires a significant investment, while leasing options tend to have lower upfront costs. However, it’s worth noting that purchasing a solar panel system can provide long-term cost savings, as you won’t have to pay monthly lease payments.

The cost of solar itself has decreased significantly over the years, making it a more feasible option for many homeowners. Additionally, there are numerous federal, state, and local incentives available for purchasing a solar energy system, such as tax credits and rebates. These incentives can help offset the upfront cost and make owning a solar panel system more affordable.

Calculating the return on investment (ROI) is another crucial aspect of the decision-making process. When considering the ROI, it’s important to factor in the cost savings on electricity bills. With a purchased solar energy system, these savings can help pay off the initial investment over time and offer long-term financial benefits.

Of course, there are also costs associated with installing solar panels, such as mounting equipment, wiring, and labor. However, the overall cost will depend on numerous factors, including the size of the solar system and your geographic location.

If you decide to purchase a solar panel system, it’s important to find a reputable solar installer to handle the installation. A professional installation can help ensure optimal performance and longevity of your solar energy system.

solar panel installation

Overall, the decision between solar panel lease vs. purchase will depend on your individual financial situation and personal preferences. It’s essential to weigh the upfront costs, long-term savings, and available incentives to make an informed decision. By taking the time to research and evaluate your options, you can make the best choice for your home’s energy future.

The Environmental Impact: Going Green with Solar Power

If you’re looking for a way to reduce your carbon footprint and help the environment, switching to solar energy is an excellent option. Solar power is a renewable and sustainable source of energy that generates electricity without releasing harmful emissions into the atmosphere. By using solar panels to power your home, you’re making a positive contribution to the fight against climate change.

Residential solar systems come in a variety of sizes and configurations, from small rooftop installations to large ground-mounted arrays. No matter what type of system you choose, switching to solar power can have a significant impact on reducing your household’s carbon emissions.

solar panels

Solar energy is a clean and renewable source of power that produces no greenhouse gas emissions, making it a crucial tool for fighting climate change. Unlike traditional power sources that rely on fossil fuels such as coal and natural gas, solar power uses the energy from the sun to generate electricity. This means that solar energy systems can help reduce our dependence on non-renewable resources, decrease harmful emissions, and create a more sustainable energy future.

Switching to a solar energy system is not only good for the environment but can also provide significant financial benefits. Solar power systems can reduce your monthly electricity bills and potentially even generate income through net metering programs. Plus, many states and utility companies offer incentives and rebates for residential solar installations, which can help offset the initial cost of switching to solar power.

Overall, making the switch to solar power is a win-win for both the environment and your wallet. By generating clean, renewable energy from the sun, you’re doing your part to create a more sustainable energy future and reduce your household’s carbon footprint.

Selling Your Home with Solar Panels

If you’re considering selling your home with solar panels, it’s important to understand the implications of owning vs. leasing.

Owning your solar panels can potentially increase your home’s value, as buyers may appreciate the long-term cost savings and environmental benefits. However, it’s crucial to properly communicate the details of the solar system’s ownership and any associated maintenance costs to potential buyers.

On the other hand, if you lease your solar panels, you may need to transfer the lease agreement to the new homeowner. Some buyers may be hesitant to take on a lease agreement, while others may appreciate the potential for lower electricity bills.

Ultimately, the decision to buy or lease solar panels should be based on your individual circumstances and preferences. Whether you install solar panels before or after listing your home, make sure to work with a reputable solar installer and properly disclose any relevant details to potential buyers.

residential solar

Finding the Best Solar Installer

When it comes to installing solar panels, finding the right solar company is crucial to ensure a smooth and efficient process. Look for a solar installer with:

  • Experience: Look for companies that have been in business for several years and have a proven track record of successful installations.
  • Certifications: Choose a solar installer with the necessary certifications, such as the North American Board of Certified Energy Practitioners (NABCEP).
  • Reputation: Read customer reviews and check the company’s rating with the Better Business Bureau to ensure they have a positive reputation.

Additionally, consider the financing options offered by the solar installer. Some companies offer solar financing options, which can help make the upfront cost of solar panels more affordable.

Remember to get quotes from multiple solar installers before making a final decision. This can help you compare pricing and ensure you are getting the best deal.

Solar Panel Installer

“Finding the best solar installer is crucial to ensuring a successful installation process. Look for a company with experience, certifications, and a positive reputation.”

Making the Decision: Lease vs. Purchase

Now that you’ve weighed the benefits and drawbacks of leasing and purchasing solar panels, it’s time to make a decision. Ultimately, the choice between the two comes down to your personal circumstances and energy goals.

If you’re looking for a lower upfront cost and convenience, leasing may be the right choice for you. With a solar lease, you won’t have to worry about maintenance and repair costs, and you may have access to the federal solar tax credit. However, keep in mind that you won’t own the solar panels and may have to pay a lease payment.

If you have the financial resources and want to own your solar panels outright, purchasing may be the better option. You’ll benefit from long-term cost savings, increased home value, and the satisfaction of owning your energy source. However, purchasing requires a larger upfront investment and responsibility for maintenance and repairs.

If you’re not sure which option is best for you, consider consulting with a solar installer. They can help you assess your energy needs, budget, and goals to determine whether leasing or purchasing is the better choice.

No matter which option you choose, remember that switching to solar power can benefit both your wallet and the environment. By reducing your reliance on fossil fuels, you can help create a more sustainable future for our planet.

Lease or purchase solar panels

When making your final decision, keep in mind that both leasing and purchasing have their own unique benefits and drawbacks. Consider your personal circumstances and energy goals to determine which option is the best fit for you. Whether you choose to lease or purchase solar panels, you can take pride in knowing that you’re making a positive impact on the environment while saving money on your energy bills.


Now that you’ve explored the differences between solar panel lease vs. purchase, it’s time to make a decision for your home’s energy future. Remember to consider the financial implications, the environmental benefits, and your personal preferences when deciding between leasing and purchasing solar panels.

If you’re looking for lower upfront costs and the convenience of having a solar company handle maintenance and repairs, leasing solar panels may be the best option for you. On the other hand, if you’re willing to make a bigger upfront investment and interested in long-term cost savings and increased home value, purchasing solar panels may be the way to go.

When making your decision, don’t forget to explore the option of a solar loan or power purchase agreement (PPA) as well. And, make sure to select the best solar installer for your needs by considering their reputation, experience, certifications, and customer reviews.

Take Action Today

The future is bright with solar power, and now is the time to make the switch. Whether you choose to lease or purchase solar panels, you’ll be making a positive environmental impact, saving money on electricity bills, and increasing your home’s value. Contact a reputable solar installer today to start your journey towards a more sustainable energy future for you and your family.

Solar Panel Lease vs. Purchase FAQ

1. What is the difference between leasing and buying solar panels?

Leasing solar panels involves paying a monthly fee to a leasing company to use their solar panel system, while buying solar panels requires making a one-time upfront payment to purchase the system outright.

2. Is it better to lease or buy solar panels?

The decision to lease or buy solar panels depends on your specific circumstances. Leasing is a good option if you want to avoid the upfront cost and maintenance responsibilities, but buying provides long-term cost savings and ownership benefits.

3. What are the pros and cons of leasing solar panels?

The pros of leasing solar panels include lower upfront costs, maintenance and repair services provided by the leasing company, and the ability to go solar without having to take out a loan. However, the cons include higher overall costs over time and the lack of ownership and associated benefits.

4. What are the pros and cons of purchasing solar panels?

The pros of purchasing solar panels include long-term cost savings, ownership benefits, potential increase in home value, and eligibility for federal solar tax credit. The cons include the upfront cost and responsibility for maintenance and repairs.

5. How does the federal solar tax credit apply to leasing or purchasing solar panels?

The federal solar tax credit applies to both leasing and purchasing solar panels. If you choose to lease, the leasing company may take advantage of the tax credit and factor it into their pricing. If you purchase, you can claim the tax credit yourself on your tax return.

6. What is a power purchase agreement (PPA) and how does it relate to solar leasing?

A power purchase agreement (PPA) is a contract between a homeowner and a third-party company where the homeowner agrees to purchase the solar power generated by the system at a predetermined rate. The PPA is a financing option commonly used in solar leasing arrangements.

7. How does solar financing work?

Solar financing options, such as solar loans, allow homeowners to borrow money to purchase a solar panel system. The homeowner then repays the loan over time, typically through monthly payments. This option combines elements of ownership and financing.

8. What happens if I want to sell my home with leased or purchased solar panels?

If you have leased solar panels and want to sell your home, you will need to transfer the lease agreement to the new homeowner. If

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