Lease solar panels

It seems like a great idea to lease solar panels and save yourself the cost of having to outlay the full amount to buy them, but is it such a great bargain? Leasing solar panels ties you into a long term contract, typically for twenty to twenty five years. This can impact the sale of your home if you move within that period. 

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How much does it cost to lease solar panels?

It costs between $50 and $250 to lease solar panels, according to Forbes magazine. That tallies with an account by Esme Deprez in Bloomberg where she wanted to buy a house that had Sunrun leased solar panels in place, and the lease was for $75 a month. 

Sunrun is America’s largest solar company and the majority of their business is solar leases (CNET). They benefit from the tax credit on the leased solar panels and receive lease payments every month with a payment escalation each year. 

In the UK, ‘rent a roof’ schemes proved very popular, effectively giving the homeowner ‘free’ solar panels (Which). The solar companies made their money back from feed in tariffs; selling the excess electricity back to the grid. But those prices have dropped, removing the incentive for solar companies to offer these schemes. 

Buying a house with leased solar panels

If you are buying or selling a house with leased solar panels, you will need to pass on the lease with the title deeds during the house sale. This can complicate conveyancing and be a potential issue for buyers. 

Esme Deprez discovered that the lease for the Sunrun solar panels was tied into the property title of the house she wanted to buy. The only two options available to her were to take over the twenty year lease or buy the lease out (either herself and her husband or the sellers of the property). Sunrun was not prepared to remove the solar panels.

In the same way, the solar panels that were installed under a ‘rent a roof’ scheme in the UK are not owned by the homeowner and any buyer will have to be willing to take on the lease.

How much does it cost to buy out a solar panel lease?

It costs a significant amount of money to buy out a solar panel lease. It basically means paying the cost of the installation of the solar panels and potentially compensate the solar company for any profits made from tax credit or feed in tariffs. 

Esme Deprez and her husband were quoted $27,300 to buy out their lease. A homeowner named ‘Julie Griffiths’ by the Guardian battled with her ‘rent a roof’ leaseholder until they eventually agreed to a buy out cost of £20,500. 

The cost to install solar panels in the US is on average $15,000-$25,000 so Esme paid over the average (Forbes). ‘Julie Griffiths’ was quoted £12,000 to install her solar panels before she took the lease option. She paid close to double what the solar panels would have cost and she lost any benefit from feed in tariffs. 

Leasing vs buying solar panels

Given the potential issues with selling your home with a lease in place, it might make more sense to buy solar panels rather than lease them. 

Save On Energy quotes an example cost for installing solar panels in Texas at $28,120 for a 7.4 kW system. The Residential Clean Energy Credit, a federal tax credit available until 2032, could bring that cost down by 30%. Google’s Project Sunroof estimates that solar panels in Texas could save a homeowner $5,000 over and above the cost of the solar panels. Pay back on the panels could be achieved within six to nine years. 

We found a deal with EON Energy in the UK, where you can spread the cost of solar panels with interest free payments. A 6-panel 2.34 kWp solar system would cost just £166.52 per month over 36 months. This is a total cost of £5994.72. It has the potential to save a household up to £431 a year and £45 Smart Export Guarantee on electricity sent back to the grid. Savings are likely to be higher this winter with rising energy prices.

Beside the financial benefit of buying solar panels there is the kudos of being kind to the planet and investing in clean energy for your home.

Is leasing solar panels a good idea? 

The answer to that question really lies in whether you are living in your forever home or not. If you are likely to stay in your home for the duration of the lease contract, leasing solar panels might make sense. If you intend to sell your home, you need to take extra care on the terms of the contract. 

If you have the money available to buy solar panels either outright or on an interest free plan with the right guarantees and insurance in place, buying solar panels might make more sense in the long run. It will also mean that you can contribute to increasing clean energy take up.

The information in this article is not intended to be legal advice. If you are planning to buy or lease solar panels, always seek expert legal advice.