Buying vs Renting: Solar Panels
The decision to buy your solar panels or rent them is an important one. If you're in the market for a short-term solution, it may be more economical and feasible by renting.
However, if you are looking at this as a long-term investment with future savings on electricity bills, then buying will most likely prove beneficial over time.
It depends largely upon how much of a commitment you want to make upfront versus what kind of timeline works best for your needs going forward. This guide outlines some key factors in deciding between renting vs buying solar panels.
Buying is not for everyone
The cost of solar panels may be a huge deterrent for many people, and the price tag can often lead to an unwillingness to purchase.
But, as long as you live in an area with enough sun exposure on the rooftop of your home or building where they are installed, solar power is still worth it.
The decision to install solar panels on your home requires a cost-benefit analysis.
The payback period for the installation is based on what kind of system you install, how many square feet are covered by its roof, and if you're willing to lease or buy it outright.
Many argue that leasing provides immediate access and no need for maintenance while others claim it is more cost-effective if you plan on living at your residence for five years or more.
When to buy vs rent or lease?
Leasing solar panels have many advantages. You have no upfront cost commitment with reduced monthly payments because leasing companies own all maintenance expenses such as replacement parts management that can be costly.
Buying a system is favorable when you have capital and want to save up over time on electricity bills by purchasing renewable energy at less than retail prices.
This also protects against inflation rates through savings in interest, financing costs, and tax deductions while generating equity for future use.
Here's what you need to know when making your decision about leasing versus buying or creating one yourself on a roof with no help from the government.
If you plan on staying in your house for at least 10 years, then, either way is viable and both will produce some form of return.
However, if after 10 years living there it seems like moving is imminent either by choice or because something happened that altered plans then choosing between lease agreement vs buyback offers might be difficult as each option has its own pros and cons for this scenario.
If you decide to buy, you don't have to buy upfront because most suppliers will offer monthly payments over a time that is much less than what you spend annually on electricity bills.
You can also rent equipment if you don't want to buy it. The benefits of renting or leasing solar power equipment include no upfront investment costs, flexible terms that match with business needs, and tax credits up to federal incentives.
Consider used equipment
You can also consider cutting costs by buying used or second-hand equipment.
However, you will need to get the panels properly tested by a qualified professional to make sure if they work as they are meant to be.
You can get financing through an energy service company where they charge less than typical banks, and pay off their investment over years rather than waiting decades.
Your location matters
An analysis of the cost and benefits is not complete without considering sun exposure.
Solar panels are more efficient in areas with higher levels of solar radiation, so a thorough investigation should be done before making any decisions on location or type.
In sunny areas of California, it may take 10 years for solar investment to payoff while in a northern state like Idaho a few years more.
The payoff from investing in solar panels depends not only on proximity to the equator but also geographical factors including cloud cover, precipitation levels, etc. which vary across different parts of America depending upon geological formations or climate patterns specific areas.
Cost of equipment
By buying solar panels you pay for equipment, installation, and maintenance costs- which might not even work in your geographical region. And there's no guarantee that they'll last as long as you need them to.
Also, you need some technical knowledge to choose a complete system that meets your needs.
Because solar panels have components or extra features like battery backup, monitoring device compatibility, ease-of-installation kits (or not), warranties offered by the manufacturer, etc.
Leases are an excellent option if this is something you're looking into: it won't cost anything upfront, plus leasing companies will charge monthly payments on top of what would've been your energy bill anyway so it feels like just another utility each month.
When you lease solar panels, be sure to ask your provider about cancellation terms.
How much will they charge for the service?
What happens if I want my system removed from my property before the expiration date?
Who pays for dismantling and removal of equipment at end-of-life or earlier termination without cause by either party in a no-cost option agreement?
Type of The System
With so many solar options on the market, it can be hard to know which one is best for you.
- What's your budget?
- Do I need a grid-tie system or an off-grid power inverter?
- How much space do I have and where will my panels go?
Off-grid and grid-tie systems have both pros and cons depending on your needs. For example, off-grid systems are more expensive to install upfront but offer independence from the electrical system.
While grid-tie requires an initial investment of money in hardware for installation that can be recouped over time as you use less power during peak hours.
Additional features or upgrades will affect the cost of buying and leasing.
For instance, if your solar energy system doesn't have a battery backup when the power goes out, you'll not be able to keep all of the lights on and appliances running without interruption.
The answers to those three simple questions should help guide your decision when choosing between different products in this field.
The size and number of panels
Your energy consumption is a key factor in determining how many panels are needed and the size of each panel.
The larger your solar power system, the more expensive it will be for you to acquire and install.
Cost of installation
There are a number of factors that come into play when considering how much it costs to install solar panels.
For example, the cost will depend on what kind of system you decide to go, roof shape & pitch, and more importantly who will install it. You can either hire an installer or do it yourself.
One of the most important considerations when renting solar panels is if installation costs are included in your monthly payment plan. This ensures that you don't get stuck with a costly surprise along the way!
Cost of disassembly
If you're thinking of installing solar panels on your home, make sure to check the contract beforehand.
Solar panel companies usually won't charge for taking them off after installation. However, if there is a fee associated with uninstallation, it will probably be charged when they are removed from your property.
Roof's orientation & slope
The solar panel installation price is going to vary widely depending on the type of roof and how complicated it will be for installers.
For instance, a flat or low-angled rooftop could make installing panels much easier than an angled one with lots of shingles.
Expect to pay more for installation if the angle is steep and there are lots of layers that need removal before you can get at your roof itself.
One major factor that affects your return on solar panels investment is the shading pattern. Plants and trees will shade some of your panels, which reduces their sunlight exposure in order to maximize theirs.
This means that some areas of the solar panels will not produce as much power on their own with varying degrees depending upon how dense they are shaded.
In addition, there can also be an issue if birds build nests near enough to cause concern; this could affect production rates too.
Your home's readiness for installation
It's important to be sure that your home is solar-ready before investing in a system. It can take up to two months for installation, and you'll want the right panels on the roof of an eligible house with enough direct sunlight at all times during the day.
For those who are renting or have shade from trees nearby their homes, it might not make financial sense.
But if you're looking into buying this property long-term as well, then there may be some incentives available through local energy utilities or government sites where we live.
Benefits of renting
By leasing solar panels, you pay the monthly installments when renting them. This is a good option if your upfront costs are high and it allows for maintenance to be done by the company that leases these panels as well.
Solar energy systems provide savings on electricity bills. However, they depend heavily on how much power your home uses per month and what rate of electric supply they charge in their area.
Things To Consider Before Renting
When you lease solar panels, the company that owns them will take care of maintenance and tax benefits.
You do not have to worry about upfront costs or transporting your panels and other equipment since the company does that for you!
However, when deciding on a contract length it is important to find out if there are any penalties in place should you want/need to break the agreement before its completion date.
Benefits of buying
If you install solar panels in your home, not only will the installation be tax-deductible but also renewable energy certificates.
Electric companies have to source some of their power from renewables like wind and solar.
This means that if you produce more than they need, then it is possible for you to make money off them by selling any leftover credits on a market called Renewable Energy Certificates (RECs).
Over time these RECs can help reduce how long it takes before installing your system pays itself back.
Renewable Energy Certificates are an additional benefit when deciding whether or not to invest in a Solar Panel System because electric companies must source some of their power from sustainable sources such as wind and sun.