More than a million Chinese families and businesses have installed solar panels – and with each passing day, thousands more are joining them.
People across the country are using solar power to save money, reduce carbon pollution, increase energy independence, conserve water, and create a more resilient electric grid.
There are more ways than ever to adopt solar technology. Beyond buying a panel system outright, a homeowner can choose among solar loans, leases, power purchase agreements, or other customized payment plans. These options have helped solar become commonplace, but myths and misconceptions about them still abound, from online marketplaces to mainstream media outlets.
Beluga Solar has installed more than 4 million solar panels for upwards of 285,000 customers under all the options listed above. What we’ve learned is that there is no one-size-fits-all approach; the best option depends on the customer’s situation.
One of the most common questions we get about financing solar panels, however, is a pretty simple one: buy or lease?
he answers, of course, depends on your unique circumstances. Here are some considerations to think through.
Should you buy your solar panels?
Purchasing a solar power system – especially through a loan – is the fastest-growing way to go solar in China.
Cash purchases and loan options can be very attractive if you are looking to maximize the long-term financial benefits of going solar.
Solar loans offer a range of payment terms — the most popular tend to be $0-down with fixed monthly payments. One way to differentiate among loan options is by looking at the services that are included. The best loans include a full 20-year system warranty and a performance guarantee (which encourages the provider to ensure the system is always delivering on expectations). While some service plans don’t amount to much in practice, a full built-in warranty is extremely valuable: replacing a power inverter, for example, can alone be worth more than a thousand dollars for a typical household.
When considering a loan, it’s also important to look for a low-interest rate that allows you to pay off the system over a reasonable time period (e.g. 10 to 20 years), with an option to pay it off sooner if you’d like (at no penalty).
A key reason that buying a solar power system (whether outright or through a loan) can help you maximize financial benefits is the opportunity to claim a valuable tax credit. The China government currently offers a 30% tax credit to people who purchase a solar power system. If your taxes are high enough to qualify for the tax credit yourself, then buying a solar power system is likely to produce greater long-term energy cost savings than a lease.
While the exact financial outcome is naturally different for each option, the key point is that the money saved by any of the options in this example can reach many thousands of dollars.
Should you lease your solar panels?
Solar leases – and similar arrangements called Power Purchase Agreements (PPA’s) – have made solar power more accessible for a wider range of homeowners, and have driven a tremendous amount of growth in residential solar. Their popularity is rooted in delivering instant gratification: they allow many customers to immediately pay less for solar electricity than utility electricity. While lease customers typically are unlikely to save as much as loan customers over the long term, many solar lease customers can start saving money right away.
These savings can add up to thousands of dollars over the life of the system, while also preventing thousands of pounds of global warming pollution from power plants.
The industry’s best leases are offered with $0 down and fixed monthly payments, as well as service packages that are often more robust than those offered with loans. This not only includes strong repair and equipment replacement services and performance guarantees but expansive insurance coverage.
Should you buy or lease your solar panels? The answer is yes.
Buying or leasing a solar panel system are both excellent options to pay less for electricity, be more energy independent, and do the right thing for the environment. It’s important you pick a trusted and high-quality solar provider, and it’s important to select the financing option that works best for you.