What’s the Difference Between Leased and Owned Solar Panels?

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With the rising price of electricity and 30% Federal Tax Incentive on Solar PV, the JK Solar department has been getting lots of inquiries from clients who want to learn more about investing in solar, some of whom have seen ads from other companies advertising “$0 down solar” or “no cost solar.” If you are beginning your solar research process, you may be wondering about the difference between a leased array and an owned array, and what that difference means for you in the short term and in the long term. As JK President Chris Leaman (and solar owner himself) says, “With leasing, customers MUST read the fine print. If it sounds too good to be true, it usually is.” Continue reading to learn more about Solar PV, and how the difference in purchasing and ownership structures will affect your investment:

First, how does a Solar Array work?

Both leased and owned solar arrays have the same general setup that varies by system design, capacity, and brand. Glass and metal Solar Photovoltaic (PV) panels, installed on a rooftop or mounted on a ground array, collect clean and renewable solar energy. The panels send that energy to an inverter, which converts the solar electricity from direct to alternating current. Once the energy is converted, you can use it in your home or business. If you own your array and your inverter is tied into the power grid, any excess production is sent back to the utility company, and sold for a credit on your power bill.

This is a simplification, but hopefully gives you a general idea of the electrical process that goes into harnessing clean, renewable solar energy.

What is a “leased” Solar Array?

A leased solar array is an array that is installed and owned by a third party on your property. In most cases, you (the property owner) do not pay anything up front in order to have solar installed. In return, you sign a lease agreement with the third party. They claim the ownership benefits of solar, and in return you purchase power for an agreed-upon rate.

What are the advantages of a “leased” Solar Array?

  • You can save money on your electric bill, provided your lease payment is less than what you were paying for electricity prior.
  • You are helping contribute to a greener future and reducing your carbon footprint.
  • As you may have seen in the commercials, leased solar arrays can be installed for “$0 Down,” or are sometimes advertised as “no cost solar.” You pay nothing or little up front, because you are paying a monthly lease.
  • With some exceptions, the array owner is responsible for any maintenance or repairs that are needed for the array.

What is an “owned” Solar Array?

As you might guess from the name, an “owned” Solar Array is only owned by you: the owner of the property. You pay a trusted installer such as JK Mechanical at the time of install to handle the install and walk you through the interconnection and permitting paperwork with your local utility and municipality. Once the install is approved by your power company, you are the sole owner and beneficiary of the array, the power it produces, and the incentives it provides.

What are the advantages of an “owned” Solar Array?

  • You can save money on your electric bill via a direct agreement with your power company, AND you can sell excess production back to the power company in event of overproduction.
  • You are helping contribute to a greener future and reducing your carbon footprint.
  • You can claim if eligible the 30% Federal Tax Credit for Renewable Energy Investments
  • You can sell (on your own, or via an aggregator such as JK Mechanical) your Solar Renewable Energy Credits (SRECs). The value of an SREC varies because they are sold on a commodity market, but currently (February 2023) they are selling at around $40 for each SREC, with 1MWh = 1SREC.
  • An owned solar array can increase property value. (A leased array, in contrast, can be an issue for potential buyers, because they must agree to take over the lease or you’re on the hook for the buyout.)
  • Any energy or SRECs generated after your estimated payback period is net profit, making for a great return on investment.

Which one is right for me?

As with any financial or comfort solution, there is no one-size-fits-all solution for renewable energy. For homeowners whose #1 priority is having solar panels added to their home with no up-front investment or if for some reason you are ineligible for tax incentives, a leased array might be the right solution. However, for all other applications, the long-term financial incentives from both tax, energy-saving, and property ownership perspectives mean that an owned solar array is a great solution. Considering that the Inflation Reduction Act returned the Solar Tax Credit back to 30% until 2032 and expanded it as a payment to non-profit entities, the payback time for owned solar is shorter than ever, making now the perfect time to continue or begin your renewable energy journey.

At JK Mechanical, our family owned & operated team has been installing Solar in Central PA since 1979. Call today or visit us online at jkmechanical.com/solar to request your free, no-pressure site assessment and financial calculator with Jason Stark today.

 

 

 

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