As a local solar company in Colorado, we find that to always provide the best possible customer experience, we must be able to offer every kind of buying option… including solar leases.
While we are confident in saying that financing or buying solar is almost always a better choice for a long-term investment, there are circumstances in which leasing does make more sense or may be the only option.
In this article, we will outline the most important solar lease basics to help you differentiate your purchasing choices and make the best contract decision for your home’s new green energy system.
Solar Lease FAQ
What is a solar lease?
An alternative to solar energy system ownership, a solar lease is an agreement in which you can generate emission-free electricity on your property and reduce utility electricity bills without a large investment required.
Much like leasing an apartment or a vehicle, solar lease agreements involve a monthly payment for the use of the equipment, which remains owned and maintained by the organization (i.e. the solar company) leasing your panels and other system components.
Similar, but technically different, the term “solar lease” is often used synonymously with “Power Purchase Agreement (PPA).” As defined by the Solar Energy Industries Association (SEIA), the key difference between these two contract types is that in a solar lease, your monthly payment due is typically an amount preset in your contract – whereas in a PPA, monthly payments are variable and based on your solar panels’ electricity production.
How do solar leases work?
In both solar leases and PPAs, your ordinary utility energy bills will be entirely (or almost entirely) offset by solar power production. Leases are typically signed with no upfront costs required and lifetime payments designed to be less than what you would ordinarily spend on utility electricity.
Including potential savings in the first month, solar leases usually encompass 15, 20, or 25-year agreements that consist of monthly payments slightly increasing each year.
Even with a small annual adder, however, a solar lease can still provide more stable and predictable energy costs when compared to rising utility rates, such as Colorado’s near 40% increase in average residential electricity bills over the last five years.
Should I buy or lease my solar panels?
Serving homeowners in Colorado and Wyoming, our energy experts almost always advise customers to purchase solar panels, either with a cash payment or financing, rather than leasing a system. With this in mind, solar leases may still be a better alternative to utility electricity for homeowners who:
Do not qualify for the federal investment tax credit (worth up to 30% of solar energy system costs for system owners)
Cannot afford a cash purchase nor finance a system due to a variety of circumstances
Have concerns about long-term maintenance (lease agreements typically cover all repairs and system removal at no further costs)
Talk to us about your solar options today!
If you have questions about your buying or leasing options in the Front Range, please contact Apollo Energy today for a free home solar assessment.