Did you know?
You will typically save more than double over the life of a system by buying your solar panels vs entering into a third party owned lease or PPA agreement.
Solar lease vs buy
| System Size 5kW | Purchased System (fund with HELOC loan) | PPA |
|---|---|---|
| Upfront Cost | $16,000 | $0.00 |
| Total Output per annum | 7,851 kWh | 7,851 kWh |
| Escalation percentage | N/A | Assume 0% |
| Interest Rate | 5% | N/A |
| Annual Payment to solar company | $0 | $1,216 |
| Total output over 25 year life | 196,280 kWh | 196,280 kWh |
| Cost of a replacement inverter after 12 years (may not be required | $1,300 | N/A as solar company responsible |
| 26% tax credit | $4,160 | Solar company keeps your incentives |
| Total Payments to generate this amount of power | $18,753 | $30,185 plus any residual payment at end of PPA |
| Savings on power over 25 years (assume 2.5% utility power price inflation) | $56,316 | $56,316 |
| Source of funding | HELOC loan at 5% originally for $16,000 but then paid down to $11,840 | Funded by solar company |
| Profit (savings less total payments) | $37,563 | $25,931 |
So as you can see you save a lot more on solar if you organize the loan yourself rather than leaving it to the solar company. However, in both circumstances you are significantly better off by going solar than by doing nothing. The other advantage of the purchase with loan is that you don't have to worry about transferring the PPA contract if you sell your home. The only circumstances in which I would choose a PPA over a purchase would be if I did not pay federal income tax and so could not use the 26% federal solar tax credit.