When you see neighbors cutting their electric bills, solar systems look tempting, but the price can make you think. A solar lease offers a different route. Instead of paying for the entire system upfront, you pay a fixed monthly fee to use panels owned and maintained by someone else. At Solar Liberty in Los Angeles, California, we’ll explain how solar leasing works, where it shines, where it falls short, and how you can decide if it’s a good fit for your home energy and money usage.
This is how solar leasing works
With a solar lease, a solar company designs and installs a system on your roof, but you don’t buy the equipment. You sign a contract that gives you the right to use the system for a certain number of years, often around fifteen to twenty years. In return, you pay a fixed monthly amount that hardly changes from season to season, although your electricity consumption may change. With many leasing contracts, there are little or no upfront costs for installation, so you can start with the solar system on the first day without much testing. The company that owns the system handles routine maintenance and repairs. This means you don’t have to call for panel service if something breaks.
Solar leasing vs. solar loan vs. PPA
It’s helpful to see a solar lease alongside other common options. With a solar loan, you borrow money to purchase the system, pay the lender each month, and own the panels once the loan is paid off. You get tax credits and long-term savings, but you also cover maintenance and repair costs. A power purchase agreement works differently. The company owns and operates the system and sells the electricity it produces to you at a set price per kilowatt-hour, often less than your electricity rate, rather than a flat monthly payment. Between these ideas there is a rental agreement. You pay a regular fee to use the system, rather than paying per kilowatt hour or paying back a loan for the equipment you own.
Benefits of Choosing a Solar Lease
The biggest advantage of solar leasing is the lower barrier to entry. If you want solar energy but don’t have the money for a full system, a lease agreement lets you put solar panels on your roof at significantly lower upfront costs. The fixed monthly payment makes planning easier because you know what you owe on the system each month, even if electricity prices rise. In many cases, the leasing rate plus your smaller electricity bill is still less than your old electricity bill, meaning you can save immediately. Another plus point is the maintenance protection. Because the provider owns the system, the company has a strong interest in keeping it running and typically takes care of repairs, monitoring and panel cleaning as part of the lease terms.
Disadvantages and trade-offs to keep in mind
Solar leasing also comes with trade-offs that you should consider before signing. You do not own the system, which means you cannot claim federal tax credits or other ownership-related incentives associated with the panels. The rental period can be long, so you are making a multi-year commitment that follows you unless the contract provides for a transfer or buyout.
Some leases have a payment tier where the monthly amount increases on a schedule. This can reduce your savings if utility costs remain unchanged for a while. Selling your home while on a lease may also require additional steps, as the buyer may have to take over the contract or you may have to pay a buyout amount. If you like the idea of panels increasing the value of your home, a rental agreement may be less attractive.
Questions to ask before signing a solar lease
Before you commit, it’s worth slowing down and asking detailed questions. You’ll want to know how long the contract is, what happens if you move, and whether there is a buyback option at various points in the lease. Ask whether the payment will remain flat or increase, and how this pattern compares to historical changes in utility prices in your area. Find out what performance guarantee the company offers and what it will do if the system falls short of expected performance.
Ask how maintenance works, who monitors the system, and how quickly they respond if production goes down. Clarify what happens at the end of the leasing term, whether you can extend the system, buy it or have it removed. Clear answers to these points will help you see the bigger picture of the agreement and not just the initial payment.
Plan your next step
A solar lease can be a great path to clean energy and lower bills, but it’s still a long-term contract that impacts your home and your finances. At Solar Liberty, we help you review solar proposals, explain lease and loan terms in plain language, and design systems that fit your roof and goals. If you’re considering a solar lease and would like a second look at the details, schedule a consultation with Solar Liberty so we can go over your options together.
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