Which is Advisable, Buying or Renting Your Solar Panels?

By : Next Level Energy | June 7, 2019

Your specific financial objectives determine your choice on how to finance your sun-based power system.

The primary difference between purchasing and renting a sun-based PV system is in possession. Purchasing a sun-based power system (either by paying directly with cash or paying off a solar system loan) gives you full ownership of the system. The sun based power system is owned by a third party if you rent the system or consent to a PPA (Power Purchase Agreement).

This difference affects your sun-based power system’s investment, maintenance cost, terms, savings and degree of profitability. Moreover, not all organizations offer solar renting as well as PPA so do well to ensure that your selected supplier offers the financial option which you desire. Note that PPAs are not lawfully allowed in many zones.

It is best for you to acquire a sun-based power system with money or financing a solar loan purchase if you….
  • Need to maximize the budgetary advantage of introducing a sun-based power system, instead of taking advantage of the ecological  benefits of the system alone;
  • Are qualified through bureaucratic venture charge credit to decrease your government and state charge risk;
  • Are business and you can take advantage of tax cuts by regarding the sun-based power system as a depreciable resource;
  • Need to expand your home’s market estimation by introducing a sun-based power system.
Your best solar alternative is to rent or PPA when you…
  • Are basically interested in taking advantage of the ecological benefits of the system as opposed to maximizing the budgetary advantage of introducing a sun-based power system;
  • Need to stay away from the obligations of upkeep or fixes for sun based power system;
  • Are not qualified by investing in a sun-based power system to decrease your government and state charge risk;
  • Cannot wait till the next year for the budgetary advantage of tax credit.
Carefully analyze: Purchasing VS renting solar

There are a lot of distinctions in the cost, upkeep, terms, financial offset opportunities, and investment savings/returns which all depends on your choice of financing.

Cost of solar installation

Solar rent/PPA
  • A sun-based power system can be gotten for little money or even nothing.
  • Only the third party owner of the system can receive incentives, refunds, and tax credits so you won’t eligible for all those.
solar installation cost
Solar loan/purchase with money
  • Before refunds and incentives, the sun-based power system can cost between $15,000 and $30,000.
  • You can get up to a 50% reduction in the total cost of cash purchase. Majority of the solar installers will deal with the administrative work and modify the price tag to reflect the total cost.

Solar Maintenance

Solar loan/purchase with money
  • You are responsible for the upkeep of the system because the system belongs to you. Solar equipment lasts for a long time and often comes with warranties so there is less upkeep for you to do.
  • Your purchase might not include an application to track your system’s framework execution.
Solar rent/PPA
  • The obligations of upkeep are solely by the solar company because they own the system.
  • Most of the time, you get an application that tracks your system’s framework execution.

Terms

Solar loan
  • Loans are commonly accessible for terms of 10 to 20 years at an interest rate of 3% to 8% provided you have a 640 or higher FICO rating.
Solar rent/PPA
  • Solar rent/PPA is commonly for a period of 20 to 25 years after which you can decide to renew the agreement or buy the system directly.

Investment savings/returns

Solar loan/purchase with money
  • Based on your property as well as the incentives in your zone, you can spare up to 40% to 70% on power cost throughout the lifetime of your sun-based power system.
  • You get free electricity throughout the lifetime of your sun-based power system (which usually ranges from 25 to 30 years).
Solar rent/PPA
  • Based on your property as well as the incentives in your zone, you can spare up to 10% to 30% on power cost.

Before making your decisions on whether to purchase or rent your sun based power system, thoroughly analyze your financing options. Make sure you explore all the available financing options before making your decisions. All scenarios are not the same so there a quite a number of factors to consider to determine what is best for you.

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