Solar leasing does have some drawbacks potential renters should keep in mind.
For one, lessees won’t qualify for tax incentives. The federal government provides a 22 percent tax cut on solar installation costs (though that program could expire in upcoming years). That’s in addition to local incentives buyers could use. With a lease, those benefits stay with the solar company, since it owns the system.
And the included maintenance? It doesn’t always involve top-notch service, which could affect how well the system generates power.
“Maintained is a loose word,” McDonnell said, “because there are lots of systems that aren’t getting the maintenance they deserve, but the homeowner still is responsible for the lease payment every month regardless of production.”
Meanwhile, because the homeowner doesn’t own the system, it doesn’t add value to the house. Owning an installed residential solar system can increase a home’s resale value by up to $15,000.
“One thing of note: Buying adds value to a home – leases and PPAs don’t,” Bouchy said. “If you purchase your solar panel system, it adds value to your home and helps it sell faster.”
Leases can even have a negative effect when it comes time to sell, since the buyers are required to take over the lease unless the previous owners pay it off in full. And that’s assuming the buyers qualify to take it over in the first place.
“There are big issues when it comes to selling a lease/PPA solar program, as the seller expects the new buyer to take over the solar contract,” said Guinn, who has spent much of his career working with residential solar systems. “A realtor or buyer could walk into a horrible contract that could force them to pay 15-30 percent more for electricity due to the solar rates. Third-party-owned systems are very difficult to buy or sell.”
There are also fewer make-or-break issues such as appearance and system size. Leasing companies will design the system to fit their specifications, regardless of how many panels homeowners want or where they want them placed.