Solar Ownership and Leasing Compared

By Anna Mannello//

People interested in going solar have a number of different ways to get solar panels up and running on their home. The basic equation is simple – the panels make energy from the sun, which earns credits on the utility grid and other benefits in the form of green energy production credits and tax incentives – but there can be a lot of variation in the details of how a project is paid for, who owns it, and who receives the benefits. At the most fundamental level, consumers can choose between owning their own project through a direct purchase or a solar loan, or working with a third party owner, who would pay for the project and retain most of the economic benefits, while sharing some energy savings with the homeowner.

According to a study by the Department of Energy Resources (DOER), “direct ownership results in a substantially higher economic benefit for the homeowner” than third-party ownership. In fact, the study found that the lifetime benefits of owning solar to be ten times greater than leasing!  Direct ownership is also better for the local economy because it ensures the financial incentives associated with the project stay within the state (with you, the owner!) rather than benefiting a corporate third party.

Because the benefits of ownership are so significant, the Mass DOER has created a financing option to make solar ownership accessible to people who may not have easy access to the capital required to purchase a system. The Mass Solar Loan program is a great way for anyone to finance a solar project at a fair rate, and also offers some special support for households with qualifying incomes or marginal credit histories. The savings and income associated with the solar project should more than cover the loan payments over a 10 year term, and the income-based loan support available through this program can provide up as much as $10,500 in project support for families with qualifying income.

If moving and selling your house is a consideration, owning your solar project can avoid some real headaches. If you put a house with a leased system on the market before the lease is up (typically a 20 year term), you’ll either have to buy out the lease or ask the purchaser to assume the agreement, which some may be reluctant to do. A number of studies, including this one by Lawrence Berkeley National Laboratory, suggest that buyers are willing to pay about $15,000 more for homes with host-owned PV systems. With no third parties involved in the transaction, and all benefits and warranties transferable to the new owner, sellers should see both a smoother process and more financial benefit from a directly owned system.

At PV Squared, we know that making the decision to go solar is a significant one, and we think it’s worth taking the time to understand the available options, whether in terms of energy goals for the project, equipment choices, design approaches that fit your home and property, and ways to approach project financing. If you’re considering going solar, we’d be more than happy to talk through the best approach for you! You can reach out through our online form or give us a call at 413-772-8788.