Making the switch to solar energy is an exciting way to live more sustainably and save money on your electricity bills. But it can be hard to choose between a solar PPA vs lease.
Both choices give you access to renewable energy without the high costs up front, but they are not the same when it comes to ownership, possible savings, and long-term benefits. These are the main changes between them.
This guide will help you choose the one that might work best for your home. Read on!
Understanding Solar Power Purchase Agreements (PPAs)
A Power Purchase Agreement (PPA) lets people put solar panels on their roofs without having to buy the whole setup. A third-party company owns, maintains, and runs the panels in this setup, and you pay a set monthly rate for the energy they create. This is why PPAs are so popular now:
Cost Savings
There are usually very little or no up-front costs with a PPA. You pay a set amount per kilowatt-hour (kWh) of energy instead, which is usually less than what you would pay at a power company.
Access to Renewable Energy
A solar PPA is a useful way to use renewable energy, which lowers your carbon output and helps make the world greener. With this choice, homes can become more environmentally friendly without having to own or maintain a system.
Flexibility
You can select a set or rising rate plan with a PPA that best suits your energy consumption habits. Some PPAs include a rate increase of 1% to 3% per year, which may still be less than the average rate of inflation for energy bills.
What You Get with a Solar Lease
A solar loan is another way to use solar power without buying the setup. In this plan, you don’t pay per kWh of energy, but instead make a set monthly lease payment for the solar cells.
Like a PPA, the rental business owns the panels and takes care of them. This is how hiring is different from a PPA:
Predictable Monthly Payments
Leasing gives you security with a flat monthly rate. This can make planning easier because your payment stays the same every month, no matter how much energy you use. This stability can be especially appealing for families who don’t want their energy costs to change often.
Tax Incentives
The possibility of receiving tax incentives is one reason why leasing is attractive. You might not be able to get these perks directly, but leasing companies often use them to lower the cost of your lease payments.
Maintenance-Free
When you hire a solar system, the company that owns it takes care of all fixes and maintenance, so you don’t have to worry about hidden costs that come up with system upkeep. With this easy-to-use plan, you can get the benefits of solar energy without having to worry about running the system.
Key Differences: Solar PPA vs Lease
There are many things to think about when choosing between a solar PPA and a lease, such as your budget, your long-term goals, and how you’d like to make payments. Knowing about these things will help you make a choice that fits your energy needs better.
Ownership
You won’t own the solar system if you have a PPA or a lease. But a PPA is more like a utility service because you only pay for the energy you use and not the equipment itself. A lease is more like a long-term loan.
Monthly Rate and Energy Consumption
How you pay is a big difference. With a PPA, your payment changes each month based on your energy consumption and how much power your system generates.
A solar loan, on the other hand, gives you a set monthly rate. This might be appealing to people who like to stick to their budgets.
Savings and Incentives
You might save money with either choice, but it depends on a lot of things, like how much energy you use and how much the utilities cost where you live. Because the leasing or PPA provider typically claims them, many PPA and lease deals restrict direct access to tax incentives. But some businesses pass the savings on in a roundabout way by lowering monthly rates.
Contract Terms and Flexibility
Solar PPAs and leases usually have terms of 20 to 25 years. Some deals let you buy the system at a lower price after a certain amount of time, and others let you give the contract to a new homeowner if you decide to sell your home.
Assessing Your Energy Needs
Why you should choose a solar PPA over a lease may depend on how much energy your home uses and how often you use it. For instance, if you live in an area where energy rates change often, the lower cost per kWh of a PPA may save you more money in the long run. If you’d rather have a stable budget, a fixed-rate lease might be a better option.
Pros and Cons of Solar PPA vs Lease
Depending on your living and financial goals, both PPAs and rentals have their own pros and cons. When it comes to cost per kilowatt-hour, a PPA is often more flexible than a lease.
However, the billing may not be as predictable as with a lease. Leases, on the other hand, have fixed monthly payments that make planning easier. However, they might not be able to save you as much money as a PPA.
Final Considerations Before You Decide
Before choosing between a solar PPA vs lease, consider how long you plan to stay in your current home, your energy needs, and whether flexibility or predictability is more important to you. If you’re still unsure about which option fits your situation best, consider to click for more insights and comparisons. Both options support your journey towards renewable energy and reduce your carbon footprint while making solar more affordable.
Solar PPA vs Lease: Which is Right for Your Home?
Whether you choose a solar PPA vs lease relies on your budget and how you like to live. Both of these choices make renewable energy available without having to pay a lot of money up front for a solar system.
Based on your energy consumption, a PPA might be the best option for you if you’re looking to save money. A lease, on the other hand, might be the best option for you if you want security and a steady monthly payment.
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