There are three common financing options for a home solar energy system: buy it, lease it, or buy the solar power through a Power Purchase Agreement (PPA).  Leasing and PPAs offer similar financial benefit.  All options will reduce your energy costs.  However, some financial strategies may better fit your situation.

Below are the pros and cons of leasing versus buying.

• Lease: Essentially renting a solar system from a third party.
  • Pros
    • No up front costs
    • Repairs included
    • Maintenance included
    • fixed predictable monthly payments
  • Cons
    • Not as much savings compared to buying
    • 20-year contract typical
• PPA: Buying the power from a third party.
  • Pros
    • No up front costs
    • Repairs included
    • You buy only the power produced by the panels
  • Cons
    • Often have an escalating costs into the future
    • 20-year contract typical
• Purchase: Own the system by buying outright or financing.
  • Pros
    • Saves more money than leasing or PPA
    • Financing options available
      • Both home equity and non-home equity loans available
      • Certain financing options can provide positive cash flow every year
    • The more you pay up front, the more you save over the life of the system
    • More freedom on the size and how the system is installed
    • You get to keep SREC income
  • Cons
    • Must use savings or get a loan
    • You’re responsible for maintenance
    • Your responsible for repair
    • You must sell SRECS

The following list sorts financing options in order of greatest savings.

1. Purchase outright.  Greatest savings, but most out of pocket cost.
2. Finance for 5 years
3. Finance for 10 year.  This term typically offers positive cash flows every year.
4. Finance for 15 years
5. Finance for 20 years
6. Leasing or PPA. Less savings but often zero out of pocket cost.

The following graph illustrates the accumulated savings from the financing options.