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.
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.