Lease vs Ownership
Our company is founded on the principal that one size does not fit all. It all depends on your needs and interests. We customize every single system from optimizing your demand to lower your investment cost, to the technology used to meet your needs. We can and will use all the best panels and inverters available. To financing, we have something for everybody and the right fit for you is your choice, we will guide you and explain all the options available to complete your project. Solar is about clean, low cost, guilt free energy and the CGS experience keeps it that way from start to finish.
Once again, at CGS we are all about choices. Whether you decide to purchase, lease or use a PPA (Power Purchase Agreement), we are there to give you the options and guide you through the pro’s and con’s of each choice, not steer you toward one or the other because we don’t offer the others. Here is a brief overview of what each offers.
Ownership: Often considered the best option because it offers the biggest return on your investment. There is very little to no upkeep on PV systems, as long as your credit doesn’t have you paying too much in interest typically the best way to go.
Lease: best when customers are primarily interested in using electricity generated from renewable resources and less concerned about maximizing the financial benefits of installing a solar panel system.
PPA’s: offer immediate savings with no money down and are best for people who are not in a position to commit to the long term financial benefits associated with purchase or lease.
Financing Options
SOLAR LOANS
Solar Loans are a great way to finance the installation of a solar photovoltaic (PV) system. These loans may be secured (using your property as collateral) or unsecured. Terms for these types of loans are generally 7 to 20 years. Currently, interest rates on equity loans range from 3.5%–7.5%.
Some things to consider:
- Your solar panel system will generate free electricity over its entire working life—25 years or more. Your savings will be equal to the amount you would have paid your utility for electricity over that entire time period.
- Your monthly savings on your electric bills will be greater than the loan’s monthly payment, so you’ll start saving money immediately. At first, you will save the difference between what you would have paid for electricity and your loan payment. Once your loan is paid off, you will be saving the full amount of electric expenses you are avoiding by going solar.
- If you sell your house before your loan is paid, you are likely to recoup some or all of your initial investment in the solar power system because of the increase in value your solar power system contributes to your home’s selling price.
- Interest on secured solar loans may be tax deductible, which means that you also may be able to save additional money on your income taxes. Check with your tax advisor to see if you will be able to take this deduction.
Some states offer homeowners subsidized solar loans with below market interest rates to encourage solar energy system installations. Generally, these loan programs are available through your utility company and/or certain non-profit organizations. Availability of these loans is usually for a limited time period until the solar market begins to establish itself in that area.
SOLAR LEASES AND PPAS (POWER PURCHASE AGREEMENTS)
In many ways, solar leases and PPAs are similar to renting. They are a way for you to receive many of the financial benefits of installing a solar power system, without the upfront cost of purchasing it. Also similar to renting, the responsibilities of maintaining the solar PV system will belong to the leasing company that owns the system.
- The solar leasing company will install solar panels at your home or business; It will be responsible for maintaining them; and at the end of the lease (usually 20 years after the installation), they will either remove them or sell the system to you at its fair market value.
- Because the solar leasing company owns the PV system, It—not you—will be eligible for all rebates, tax credits or other incentives offered by your state or utility. Still, you will receive the benefits of any tax credits, rebates and other incentives the leasing company receives indirectly since these will reduce your lease payments.
- With a lease or PPA, you enter into a “lease agreement” or a “power purchase agreement (PPA)” with the leasing company. The leasing company will install solar panels at your property and, in exchange, you will agree to buy electricity from the leasing company at below-market rates. Depending on the agreement you sign, the below market rates are either fixed or they may increase annually at a predetermined rate–generally about 2%-3% for the duration of the lease or PPA term (generally 20 years).
- Many solar lease and PPA companies offer a $0-down option.
- A solar lease or PPA will help you to save 10%-50% over your utility’s electricity bills, without making any upfront investment.
- If you sell your property before the lease term is up, most leasing companies will allow you to assign the lease to the new owner. Alternatively, many also allow you to purchase the solar PV system by paying the remaining lease payments. That way, you will be able to include the solar PV system, and the free electricity it produces, in the sale of your home.
