Solar Ownership Options
There are three common options for financing a solar pv array – purchasing a system, solar lease, and a power purchase agreement (PPA). The main practical distinction between these approaches is in ownership.
Purchasing a System:
Paying for your system yourself is the simplest path for owning your solar system, but the initial cost of a solar panel system can be the biggest hurdle. Through a direct purchase, or “cash option”, you purchase the solar system just as you would a car or house. Typically the installation has payments due at different steps along the way - usually a down payment once you sign an agreement, a second payment when the panels are ordered, and then a final payment once the installation is complete and operational. As with any larger purchase, you can finance the payments entirely on your own, borrow money from a bank, or finance the purchase through the installer in some instances. With a direct purchase option, you will own the solar array outright - all of the electrical production, all of the “green benefits”, and any applicable incentives will be owned by you.
Your system will be owned and maintained by the solar leasing company, typically installed for free. You pay a monthly rate for your solar panel system, but receive free electricity from the panels that offsets the monthly cost of the lease.
Power Purchasing Agreement (PPA):
Similar to a solar lease..you’ll pay nothing for the installation or maintenance of the solar system, which will be owned by the solar company. In a PPA, you pay for the electricity produced by the system directly. This electricity costs less than the electricity provided by your utility.
Purchasing a solar panel system with cash (or loan) is your best option when you…
Want to maximize long-term value.
Are eligible to reduce your federal and state tax liability through the federal investment tax credit.
Are a business, and can realize tax benefits by treating the solar panel system as a depreciable asset.
Want to increase the market value of your home by installing a solar panel system.
A solar lease/PPA is your best option when you…
Want to eliminate up-front costs.
Want to avoid the responsibility of maintenance or repairs for a solar panel system.
Are ineligible for federal or state investment tax credits from your investment in a solar panel system.
Do not want to wait until the following year to receive the financial benefits of tax credits.