Solar Panels are Leased (not owned) by You, the Homeowner

So you’ve done the research, weighed the benefits and have arrived at the decision to move ahead with a solar energy generating system. Congratulations! Now, how do you pay for it? This is the point where one of the greatest misconceptions about “going solar” befalls owners. “The panels are leased, not owned, by the homeowner.” Let’s address that.

There are two primary methods to “get” solar on your property. The first, and in most cases the most consumer savvy, is the outright ownership of the system through direct purchase or $0 down lender financing.

There are a multitude of financing options available to help property owners interested in owning their panels. In the financing route the property owner owns the system outright and is exclusively entitled to any tax credits or rebates.

In a leasing model, the finance company retains ownership of the system and likewise is responsible for claiming any tax incentives. This option might make more sense for owners who either wouldn’t qualify for tax credits or perhaps only qualify for a prohibitively higher interest rate when financing a loan for outright ownership. (But more about leasing later.)

It is not only possible but very common for borrowers to have the option of $0 down solar and while maintaining ownership of the system. Finance companies are currently offering historically low interest rates for solar with flexible loan terms. In many cases and as long as you qualify, you can enjoy a low monthly payment, while maximizing your solar benefits (reducing your utility bill) through generating energy credits and owning your panels yourself. That’s a win-win-win.

Back to the other side of the coin: solar leasing. To understand the leasing of a solar energy system, we must step back in time. Years ago at the very beginning of the residential solar industry, the leasing of solar panels led to the solar boom that happened across the country. Until the technology was perfected from innovation, solar was very expensive. Factor in the higher interest rates, scarcity of technology/skilled professionals, and the relatively modest cost of fossil fuels, most people couldn’t afford the tens of thousands of dollars needed to install solar, nor was there much incentive in doing so. Solar, at that time, remained prohibitively expensive. The emergence of the solar lease allowed countless Americans to lease their solar panels for $0 down, cut in front of the utility company and go green while getting a monthly solar bill that was cheaper than their electric bill from the local utility.

We have the solar lease to thank for introducing solar to the mainstream as a major alternative energy option in America. As time has gone by, the price of the systems have decreased substantially. Now, lenders have emerged that will finance 100% of the system cost, still often with $0 down to the customer. This allows the customer to not only go solar for $0 out of pocket, but also own the system outright.

Most people who purchase their home do so because they prefer to own rather than rent. When you consume power from the utility or from a lease you are still renting your power. Only when you own the panels are you producing your own power. Historically low interest rates coupled with favorable loan terms from finance companies (like the $0 down option) have led to solar financing becoming a preferred option over the past few years.

It is important to bear in mind that not all the lending companies are equal. Some require a lien on your home while others might insist on higher credit scores. Contact us to learn more and see what makes the most sense for you.