There is a huge movement in this country for people to go solar. Usually, when one house in the neighborhood puts solar panels on their roof, a slew of others follow suit. I love that solar panels are basically contagious. But before you put them on your roof, know that not all solar panels—or solar panel contracts—are created equal. Be sure you know what you’re getting into before you sign on the dotted line.
The main decision you will be faced with is whether you will be buying or leasing the panels. Buying is much more expensive up front, but leasing panels saves you less money over time. You have to decide which one is going to be better for you in the long term.
Obviously, buying solar panels can be a costly endeavor. Solar power companies may offer loans if you don’t have the cash on hand to pay for them. However, these loans often are not tax deductible, and you will likely qualify for better rates if you find your own lender. Another reason to take out the loan yourself is that if you use a home equity loan, the interest is tax-deductible, which will make the loan cheaper in the long run. The trade-off there, though, is that you’re offering your house as collateral—which can be a problem if you cannot pay the money back.
But once the panels are on your roof, you own them. If you want to take them down, you can. If you want to remove some panels, you can do that. If there are federal incentives or local tax breaks, you can receive them. You directly benefit from the power you generate from the panels. You also own any and all RECs (renewable energy credits—the financial value, that can be sold or bought, based on the amount of renewable energy created by a renewable source) that come from your solar panels. That’s more money in your pocket. Over the lifetime of the panels, you will save more money by owning than if you lease them.
If you lease the panels, you lose control of your roof. That may sound silly, but once you sign that contract, if the company decides they need more panels up there, guess what? You’re going to get them wherever they see fit. Most leases are fairly long-term, so if you plan to sell the house, you’ll either have to hope that you can pay the buyout costs, that the new homeowners won’t mind the existing contract, or that the panels can travel with you to the new place (which means the new house will have to support a likely outdated system, and that you have comparable sun exposure/similar zoning laws at your new place). The solar company also own the RECs, which they can do anything they want with—including selling them to a power company, who then gets federal credit for having solar panels on your roof even though they have nothing to do with them; power companies have to show that a certain amount of their power comes from renewable sources, so they can do that at your expense. The selling of RECs is one of the reasons solar panel companies can afford to put panels on your roof for next to nothing. As for the energy created by your solar panels, you buy them from the solar company at a discounted rate. That rate may increase dramatically over the life of the lease—check your lease to see if the rates are included. Leasing solar panels will still likely decrease your energy bill and put money in your pockets, and you won’t go into debt over it.
Either way, though, you are creating alternative energy and saving money on your energy bills, which is pretty great. It just depends on which method works best for you.