Purchase vs Lease

Applied Solar Energy Solutions’ corporate goal is to assist as many households and businesses as we possibly can in obtaining energy independence. We believe that energy independence is best achieved through the purchase of a home or commercial solar power system, rather than leasing a solar power system. Owning your own solar energy equipment allows you to fix your electrical costs long-term thus providing you with energy independence! To help you in your decision making process, we have compared the differences between leasing and purchasing California solar panels and a solar power inverter:

Leasing vs Purchasing Solar Energy Equipment

Advantages of Purchasing Your Solar Power System:

• When you purchase a solar power system, the reduction in your monthly energy costs is significant and may result in a monthly improvement in your energy costs as early as day 1!
• The savings on your monthly energy costs will pay for the system in a short period of time (typically in 4–7 years). From then on, the energy produced by your system is free!
• You will permanently control and fix your cost of electricity!
• No end of term solar energy equipment purchase option and decision to buy new solar equipment or enter into another long-term lease.
• Purchased (not leased) solar power systems add value to your home. According to the Appraisal Institute, the selling price of a home increases $20.73 for every $1 decrease in annual electric bills.
• Solar power systems make your home more marketable. When you purchase your solar system, you will be able to show a buyer that your monthly electric bill is eliminated or almost eliminated. What buyer would not want that?

Advantages & Disadvantages of Leasing Your Solar Power System:

Solar panel leases do make sense in a limited number of situations and we are able to provide them when applicable. Below are the advantages and disadvantages of solar power system leasing:

Advantages:

• Beneficial for the environmentally conscious customer that is not necessarily looking to lower their electric bill, but wants to install home solar panels for the environmental benefits.
• Allows the customer that lacks the capital or ability to borrow funds to purchase their own solar power system the ability to install home solar panels with lower upfront cost. Applied Solar Energy Solutions offers low cost, unsecured financing for customers considering leasing who wish to purchase.
• Some companies may opt for a solar panel lease when looking to meet certain environmental criteria and cannot borrow to purchase their own commercial solar power system and/or is looking to preserve capital. SBA financing programs now make commercial financing easier to obtain on purchased commercial solar power systems.

Disadvantages:

• With a solar panel lease you are simply replacing your electric utility company with the company who owns your solar lease.
• Most solar leases require a 15 year commitment. During the 15 years, you rent the solar energy equipment and pay the lessor rental for the equipment. The rental typically equates to about $30-40 less per month than your current electric utility cost. All solar leases have annual rental increases similar to that of the utility companies, so your savings will never increase. If you purchase the solar energy equipment your monthly savings on the cost of electricity will pay for the equipment, typically between years 4–7. From that point on, your cost of electricity is free!
• You will assign your federal tax credit and utility rebate to the lessor upfront. At the end of the lease you must pay the fair market value of the solar energy equipment or you must return the equipment to the lessor. One of these two things must happen or the tax credit that has been assigned to the lessor becomes invalid. You must then either obtain energy from the local utility at the prevailing market rate—which will be significantly higher considering utility rates increase at the rate of 6.7% per year—or you will have to enter into another lease or purchase a system without the benefit of the solar rebates and tax incentives in place today, which will have expired. This leaves you with substantial uncertainty about your future electricity costs.
• Under a lease, when you sell your home, you are obligating the buyer to the terms of your solar lease for the duration of the lease. You are also obligating them to make the end of lease decisions described above providing them with significant uncertainty about their future cost of electricity. This may be a hard sell and make your home less marketable because the monthly lease rates for the solar energy equipment do not provide very significant savings (on average only $30-40/mo.).

As you can see, the advantages and disadvantages of solar power system leasing, direct most toward purchasing (owning) their own solar power system. With today’s solar rebates and incentives, it has never been more affordable to purchase and produce your own electricity. Imagine no longer having an electric bill. Invest in California solar electricity today and you may have just that!