Solar leases are a lot like a lease on a car:
Solar leases differ from auto leases in three important ways:
With a lease, the contract lays out how much your panels will cost for the duration of the lease, including any escalators. Many people prefer this versus having to constantly wonder how much the next rate increase will be from your utility, and prefer the convenience of not having to deal with any maintenance or be liable for any work that needs to be done to their solar system.
Solar leases are one of the most popular ways to go solar, along with solar loans. Who is a solar lease most appropriate for?
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Since the leasing companies are so large, they are able to take advantage of many special tax benefits that regular homeowners can’t take advantage of, and these companies are then able to offer leases at a discount to residential buyers.
Homes with solar leases are purchased and sold every day. There are two possible scenarios during a home sale. The first, and most common, is that the new homeowner takes over the lease. The second is that you can buy out the cost of the lease in advance and include the cost of the lease in your homes’ purchase price. This option is less common, since it requires you to put up cash for the purchase. Both methods work very well during the process of selling a home with a solar lease.
There is nothing required from the homeowner during the duration of a lease – the solar leasing company handles any equipment issues that arise.
An escalator is a very important part of the lease – this is the percent that the lease increases per year, to cover inflation and the costs of installation and maintenance for the lease. Lease escalators are typically 2.5-6% annually, depending on provider, homeowner credit score, panels used, anticipated energy provided, and a number of other factors.
A common point of confusion among homeowners investigating their solar options. Solar leases are a lease on the solar panels themselves, while the power that comes off of them is yours. A solar PPA (power purchase agreement) is an agreement to purchase solar power from the panels that a company installs on the home. The difference is not usually important to most homeowners, but it is the difference between paying to use equipment (so leasing the panels and using the electricity that comes from them) versus paying for what the equipment produces (the electricity from solar energy generated by the panels). Both utilize escalators to account for inflation and the costs of running the providers company.
Solar leases are provided by a number of different providers and installers working with different financing companies. While solar leases are provided by far fewer companies than solar loans, they are still quite common, and many of the larger leasing companies also offer leases while working with smaller installers.
All of our providers offer the full spectrum of solar finance products, from loans to leases, PPAs and cash purchases. However, solar leases, unlike solar loans and cash purchases, are not available in all areas due to state and local regulations. By entering your zip code in the submission box on the top of the page we can show you which pre-screened lease providers we work with in your area, and if leases are indeed offered in your area.