Comparing the Costs of Putting Solar Panels on a House vs Electricity Payments

Project: Comparing the Costs of Putting Solar Panels on a House vs Electricity Payments
Name
Institutional Affiliation
Course Title
Instructor
Date
Project: Comparing the Costs of Putting Solar Panels on a House vs Electricity Payments
Introduction
The decision on how individuals finance their solar power systems largely depends on their own financial objectives. There are two major financing options that one can access to install solar panels. One can decide to either buy the equipment, just like buying a car or a house, or choose to lease the solar equipment from third parties like in the case of renting a house or an apartment. Both of these options do have their unique benefits. However, one major difference between buying outright and leasing a solar photovoltaic (PV) system lies on ownership. If one buys a solar PV system, they own the system for the rest of their lives after purchasing the system by cash or upon full repayment of the solar loan (energysage, 2018). Leasing the system or signing a power purchase agreement (PPA) means that a third-party will own the system. This single distinction will impact on other factors, including the financial offsets, terms, maintenance, costs, and the savings or the return on investment (ROI) of the system. At the same time, not every company will be willing to provide solar leases or PPAs and before one decides to follow this route, they should first confirm with their chosen provider if the preferred financing option is available. It should also be noted that PPAs have no legal backing in many states.
Buying Outright
Buying the system is regarded as the best way to fully maximize one’s financial saving and returns. All these savings will usually come straight to the purchaser, which are in the tune of 40-70% over the lifetime of the solar equipment (energysage, 2018). Buying the panels will cost in between $10,000 and $20,000 after considering the tax breaks and incentives (Garskof, 2016). If one does not have such kind of financial capital, there are several lending institutions in the United States or any other country that can offer loans. These institutions are specifically suited for solar financing. With the kinds of loans they offer, one can own a solar PV system without any financial capital. As the owner of the solar panels, one can take advantage of the Investment Tax Credit (ITC). ITC refers to a state tax credit, which helps people to fund their solar projects. The ITC allows owners to reduce up to 30% of the cost of solar panels directly from tax bills. In cases where the tax bills are lower than the ITC value for the system, then leasing can become the only remaining great option.
Solar Leasing
Leasing can also be perfect in case one is not willing to pay the upfront costs or secure a loan or in case the credit score of an individual is way below 650 (energysage, 2018). When a system is leased, one signs an agreement with the company that owns the solar panels. This is done in exchange for a set monthly payment after which the company installs the panels on one’s property ready for use. One will enj...