If you’re ready to install solar panels and power your home with renewable energy, you might be wondering which payment option will offer you the most benefits. There are multiple ways to pay for or purchase solar panels, and the right option for you depends on your circumstances and what you are looking to achieve. 

How should you pay for solar panels? Should you lease the equipment or buy the system? The right answer for you will depend on your unique circumstances, but the standard ways to add a solar system to your home include: 

• Cash

• Financing through a solar loan

• Solar lease

• Power Purchase Agreement (PPA)

Purchasing your solar panel system outright or through financing options provides the most benefits to homeowners, although leasing a solar panel system also comes with its advantages.

Solar Panel Ownership

Choosing to pay for your solar panels in full upfront or through a financing plan ultimately leads to you becoming the owner of the solar panel system. This ownership approach allows you to fully capitalize on the associated benefits, such as increased home value and potential energy savings.

Cash

This is what it sounds like—paying for the entire rooftop solar panel system out of pocket at the time of purchase and installation. This is a great option if you have the cash on hand as you can own the solar panels outright. 

Advantages of Buying with Cash

• Own your solar panels and personally pocket the savings
• Receive help for covered maintenance and repairs during the 25-year warranty 
• Production guarantee offers assurance your solar panel system will perform as expected
• Benefit from tax incentives like the 30% federal investment tax credit for solar panels and any state incentives
• Fixed payments which are easy to budget for each month
• Instant increased home value as homes with solar sell for 6.8% more
• Sell your house and solar panels without worrying about transferring a lease
• Get paid for extra energy produced and sent back to the utility grid through net metering

Disadvantages of Buying with Cash

• Must have sufficient funds to pay for the rooftop solar system (typically $20,000–$30,500 after tax credits)
• Tax benefit may be limited based on the amount owed
• If the solar panels are not under warranty, you would need to cover maintenance costs and repairs yourself

Financing Your Solar Panels

If you can not pay for your solar panels in full at the time of installation but want to own your system, you can finance them. Blue Raven Solar offers BluePower Plus+ to customers who want a plan to pay for their solar panels over time. This exclusive financing option offers all the benefits of ownership with the flexibility of a payment plan. 

Advantages of Buying with a Solar Loan

• Receive monthly checks from Blue Raven Solar, as we will cover the first 18 months of your solar loan payments when financed through BluePower Plus+
• Easily budget with fixed monthly payments
• Obtain assistance for covered maintenance and repairs throughout the 25-year warranty 
• Be confident in your solar panel production with a production guarantee
• Benefit from tax incentives, including the 30% federal investment tax credit for solar panels and any applicable state incentives
• Homes with solar generally sell for 6.8% more
• Get paid for extra energy produced and sent back to the utility grid through net metering

Disadvantages of Buying with a Solar Loan

• May need to pay some initial, upfront costs at the time of the installation 
• Tax credits are limited by the taxes owed  
• If solar panels aren’t under warranty, you would need to cover maintenance costs and repairs

How Do the Different Payment Options Work?

Each payment method, whether buying or leasing, has advantages and disadvantages. Let’s explore the options of each:

Solar Panel Lease Options

Leasing offers an alternative to buying a solar system. Solar lease options include a direct lease from a solar installation company or a power purchase agreement (PPA).

Solar Lease

When you choose to pay for your solar panels through a solar lease, you pay a fee to lease the solar panels each month and can use the energy they generate. The payments don’t vary based on how much energy you use in a given month; however, the standard price for the energy generated may increase over time, according to the lease agreement. 

Advantages of a Solar Lease

• No upfront cost—the solar panel company pays for the solar panels and installation
• No maintenance or repair costs as the solar installation company maintains the system and equipment
• Solar equipment is often monitored and maintained by the installation company
• Enjoy any warranty offered with your solar system
• Payments are relatively consistent from month-to-month, making for easier budgeting

Disadvantages of a Solar Lease

• You receive a limited amount of savings each month
• You cannot take advantage of solar incentives like the federal investment tax credit and most state benefits
• You don’t build equity in your solar panel system and see only a minor increase in home value
• Prices tend to escalate over time, meaning your bill could double over 25 years
• No production guarantee
• If you sell your home, you must find a new homeowner who is willing to take over your lease payments

Power Purchase Agreement (PPA)

A PPA is similar to a solar lease, except the price you pay for energy will vary depending on your use—for example, homeowners might pay more in the summer when they are using their air conditioner than in the winter when their energy consumption is typically lower.

Advantages of a PPA

• Requires no initial investment, as the solar panel installation company covers the costs of the solar panels and installation
• Maintenance and repair expenses are not the responsibility of the homeowner
• Energy costs are reduced during periods of lower consumption

Disadvantages of a PPA

• Energy costs increase during periods of higher consumption
• You cannot take advantage of solar incentives like the 30% federal investment tax credit and most state or city benefits
• You receive a limited amount of savings each month
• Homeowners do not accrue equity in the solar panel system, and home value increases are minimal
• Prices often escalate over the course of the 25-year agreement, potentially resulting in a doubling of the utility bill
• No production guarantee
• If the home is sold, you must locate a buyer willing to assume the lease agreement

Which Payment Option is Right for You?

When choosing between buying or leasing a residential solar system, it is crucial to consider factors such as upfront costs, long-term savings, tax incentives, home value, maintenance responsibilities, and contract terms. The best choice for you will depend on how well each option aligns with your specific energy goals, property characteristics, lifestyle preferences, and financial situation.

Purchasing a rooftop photovoltaic (PV) system, either through cash or a solar loan , often provides the most long-term benefits, including maximized energy savings, access to tax incentives and rebates, increased home value, and greater control over financing terms. 

Leasing, while requiring little to no upfront costs, may limit your monthly savings, disqualify you from tax benefits, and potentially complicate the selling process of your home. However, it may be a better fit for your budget or lifestyle.

Ultimately, to determine the best way to go solar and purchase a system, it’s crucial to evaluate your specific financial situation and energy requirements.

Making Solar Accessible and Affordable

At Blue Raven Solar, we’re committed to making the switch to solar easy for homeowners. Our solar specialists will help you evaluate your energy needs, budget, and circumstances, explaining the purchasing, financing, and leasing options available so you can make an informed decision.

If you are ready to power your home with clean solar energy, talk to Blue Raven Solar today by estimating your solar savings through getting a free quote here.

After submitting your request, a solar specialist will promptly contact you to arrange a complimentary solar assessment. This personalized proposal will provide insights into the potential solar benefits you can expect. We’ll also explain the implications of installing solar panels on your property, empowering you to decide whether solar energy is the optimal choice for you and your household and to make an informed decision between leasing and buying solar.

Sources:

• https://www.seia.org/initiatives/solar-investment-tax-credit-itc
• https://www.seia.org/research-resources/solar-power-purchase-agreements
• https://www.solarreviews.com/blog/what-is-a-ppa