Should You Own or Use a 3rd Party Option for Solar Panels

Switching to solar energy represents massive savings for any home or business owner. Not only do energy bills come down but you also help make the earth a better place by using a renewable source of energy. Most people who decide to go solar often have to decide on whether to use a third party ownership (lease or PPA) or to outright buy or use a loan for their solar panels. Each option comes with its own unique characteristics, making either option suitable to different people under different circumstances. In this article, we are going to explore the two options so that you can make a more informed choice.

Ownership of Solar Panels

Under this option, you make an outright purchase and the panels become your property for good. The upside of this is that there are no other costs save for repair and maintenance of the system. You will not need to pay any energy costs at the end of the month if exclusively using solar energy nor will you pay any other fees on the panels. Purchasing solar panels outright also opens you up to various government subsidies meaning that you might end up paying up to just 50% of the initial stated price.
​The down side to purchasing your solar panels is that you will pay a significant amount upfront. Even though discounted and subject to subsidies, some homeowners may not have the capital to pay outright and thus this option is not for them. You will also be responsible for any repair and maintenance costs that are done to the solar panels. There are two ways to own the system.

Cash Purchase

• Overview: Paying upfront for the entire cost of the solar system.

• Benefits:

  • Maximum long-term savings on energy bills.

  • Ownership of the system and eligibility for incentives like tax credits.

  • No interest or financing fees.

• Best For: Those with the capital to invest upfront.

Solar Loans

• Overview: Borrowing money to cover the cost of installation, then repaying it over time.

• Types:

  • Secured loans (home equity loans or HELOCs).

  • Unsecured loans (offered by solar companies or banks).

• Benefits:

  • Spread the cost over time.

  • Ownership of the system, making you eligible for tax incentives.

  • Monthly payments often lower than your energy bill savings.

• Best For: Those who want ownership but prefer to spread payments over time.

Government Incentives and Grants

• Overview: Federal, state, and local governments often provide incentives to reduce installation costs.

• Examples:

  • Federal Solar Investment Tax Credit (ITC): A 30% tax credit on the cost of your system.

  • State Incentives: Rebates or tax credits based on location.

  • Net Metering Programs: Sell excess energy back to the grid for credit.

• Best For: Homeowners and businesses looking to maximize financial benefits.

Third Party Ownership

Under this option, you enter into a contract with a solar energy company for the solar panels. Under this option, the panels still belong to the company and are availed to you are an agreed periodic fee. The advantages of this option include very low upfront costs, typically just the agreed monthly fee. The company meets all costs associated with installation and maintenance. Secondly, in the event that the solar panels don’t generate enough energy to meet the agreed threshold, the company may foot the cost of the difference. On the other hand, if the panels generate more than that, the extra energy is yours for free. The two most common types of third party ownership options are;

Power Purchase Agreements (PPA)

• Overview: A third party installs and owns the solar system on your property. You buy the electricity it generates at a lower rate than utility prices.

• Benefits:

  • No upfront cost.

  • Immediate savings on energy bills.

  • Maintenance and repair are typically handled by the provider.

• Drawbacks:

  • You don’t own the system, so no tax credits or incentives.

  • Long-term contracts (15-25 years) with annual price escalations.

• Best For: Those looking for immediate savings without upfront costs.

Solar Leases

• Overview: Similar to PPAs, but you pay a fixed monthly fee to lease the system, regardless of the energy produced.

• Benefits:

  • No upfront cost.

  • Maintenance is the provider’s responsibility.

• Drawbacks:

  • No ownership, so no tax credits or rebates.

  • Fixed payments may not adjust with energy savings.

• Best For: Renters or homeowners who want the benefits of solar without owning the system.

Which Option Works For You?
When it comes to figuring out how to get a solar energy system installed in your house, any one of the options that we have discussed could work for you. It all depends on your circumstances. For homeowners with capital to invest, owning the panels outright might be a better option. For homeowners who might not have that kind of capital, using the 3rd party for the panels might be the best way to go.

If you are wondering which option would work best for your home or business, GenRenew can help you make that decision. Once you schedule an appointment, our energy experts will evaluate your home or business and give you expert advice on what option works best for you.  We are a reputable solar energy solutions company with a long history of providing effective solar solutions to homes and businesses. Call us today at 732-835-4272 and let us work with you to deliver a solar energy solution that is just right for you.