Looking to get the most bang from your solar buck? In the past many homeowners who made the decision to “go solar” choose to lease solar panels rather than purchase them. Not too long ago, owning solar panels was prohibitively expensive and it was considered much cheaper to lease them.

But times have changed and these days, owning is becoming the more popular, and in the long run, more affordable route to reducing your carbon footprint AND your electric bill.

Time to Own It

Increasingly, solar consumers are cutting out the middleman. Currently 72% of solar systems are owned by a third party under a power-purchase plan (PPA). According to GTM Research, by 2020, over half of consumers will be choosing direct ownership over leasing.

Additional data bears out those findings. “Consumers are trending away from the leasing options in favor of owning their solar systems, either with a loan or with cash,” said Vikram Aggarwal, CEO of solar system marketplace EnergySage.

ROI is the Reason

The key reason for this shift in purchasing preference is simple: The cost of panels has fallen dramatically. A decade ago a solar panel array could set you back roughly $30,000. Today that same panel system is more likely to cost between $15,000 to $18,000. As prices for panels continue to fall, ROI on your investment in solar can be achieved in as few as five years, depending on where you live and the incentives and tax credits available there.

Prices are also decreasing for soft costs — taxes, permit fees, inspections and labor costs. According to Deutsche Bank soft costs are predicted to drop by 50% over the next four years.

Solar Systems that Revolve Around You

With prices falling for panels the terms of PPA are becoming less attractive. Although signing a 20-year PPA may eliminate upfront installation costs in the end, the solar system provider gets 80% of the financial return.  

Adding to the downside of the leasing arrangement is that many PPAs include an “annual escalator” which increases a monthly payment or price per kWh by a set percent each year of the contract. If the annual escalator is set at a rate that increases faster than the price of electricity from the power company, the power from solar panels could become MORE expensive than traditional electricity during the contract period. Ouch.

On the other hand, if you own your panels the story is quite different. Owners only pay for the difference of the energy they use compared to the energy they produce, and can even bank energy credits by selling power back to the grid.  

Loan to Own

Upfront costs are often the biggest hurdle to overcome when deciding to own or lease — and new loans specifically designed for solar system purchase are becoming increasing popular.

“The solar loan market has exploded,” said GTM Research solar analyst Nicole Litvak. “Every…financier has introduced or is planning to introduce a loan, and an entirely separate group of pure-play loan providers has emerged.”

The Bottom Line

While leasing solar panels is still a viable option for many, with the price of solar panels continuing to fall, out and out ownership is becoming a more attainable, and arguably better option for homeowners everywhere.

Would you like to know more about how owning solar panels can help you drive your electric bill down to zero? Contact us today for a free quote.