There
are many different financing options available for PV systems. You may
purchase a PV system or enter into a lease or power purchase agreement
(PPA). Below you will find information about owning vs. leasing/PPA and
the advantages and disadvantages of both options.
You may purchase a PV system or enter into a lease or power purchase agreement (PPA). Each has its own benefits and disadvantages.
Owning | Leasing | |
What are you buying? | ||
Buying an asset | Buying a service, usually with a purchase option | |
What is included in the purchase? | ||
Generally will not include inverter replacement, O&M, insurance, may include monitoring | Generally includes O&M, inverter replacement, insurance, monitoring | |
What are the tax implications? | ||
Need to have the tax appetite to make use of the 30% ITC. If financed through home equity loan, then get tax deduction | Solar services provider has the tax appetite for the 30% ITC AND can make use of commercial depreciation tax benefit | |
What are the risks? | ||
Responsible for O&M | Longevity of the solar services provider | |
What happens if I move? | ||
New homeowner buys the asset | Can transfer payments to new homeowner or must buy out the remainder of the contract at 'fair market value' | |
What are the financial benefits? | ||
Return on investment in the form of lower electricity bills and increased home value | No or little up-front cost, benefits from commercial depreciation tax credit, usually cash positive or neutral in year 1 |
You may purchase a PV system or enter into a lease or power purchase agreement (PPA). Each has its own benefits and disadvantages.
Advantages | Disadvantages | ||
Purchasing | 30% federal investment tax credit (through 12/31/16) You own the asset/investment Home value increases without property taxes increasing | Responsible for operation and maintenance (O&M) Responsible for replacing inverter after 10-year warranty | |
Leases | Little to no money down Fixed monthly payment O&M covered for 20 years Inverter & module replacement for 20 years Electrical production guarantee | 20-year lease term Do not own system Possible restrictions when selling your home | |
PPA | Fixed $ per kWh produced by system Little to no money down O&M covered for 20 years Inverter & module replacement for 20 years Electrical production guarantee | 20-year PPA term Do not own system Possible restrictions when selling your home Pay for all kWh produced, even if you do not use it |