Short & Sweet: Solar Leases Explained
A solar lease is a long-term agreement to pay a monthly payment for the solar panels that the lease company installs on your roof. This is, in its most simple form, a swap from one utility company to another. A solar lease simply replaces the local utility company that generates electricity far away and brings it to your home with one that generates the electricity right on your roof.
Solar leases or Power Purchase Agreements (PPA’s) are referred to as third-party owned solar systems. We will refer to all third-party owned solar systems as solar leases to simplify the term– however, this document is applicable to both PPA’s and solar leases.
The Best Analogy for Solar Leases Is the Cell Phone Industry
Getting into a solar lease is like switching your cell phone plan from Verizon to AT&T. Many people decide to switch from one carrier to another for reasons including price, customer service, service plans or better coverage.
Pros and Cons of a Solar Lease
Pros
Cheaper than local utility company
No debt associated with leases
No money out-of-pocket
No tax liability required
Easy for homeowner to adopt since it's similar to how homeowners are billed with local utility company
Transferable to qualified home buyer
Carbon-free energy generation
Monitoring and repairs are paid for by lease company
Cons
The most expensive way to go solar over time
Most leases have a yearly increase built into lease
Most home buyers don't want to assume long-term contracts that increase with time
Lease company claims all tax credits
Lease company does not perform maintenance to clean panels
Homeowner now has two utility companies instead of one
The reason to switch from the local utility company to a solar lease boils down to two reasons: the primary reason being to save money (it's cheaper per month than paying the local utility company) and the second is to reduce your carbon footprint (it’s a cleaner, better way to generate electricity for your home).
