Normally, the question “invest or lease solar panels?” comes when you own the big size roofs which suits well for rooftop solar installation and some idle cash flow. You wonder if you should invest by yourself or just lease the roof to get monthly renting fee to the 3rd party investor who owns the system. So you can see very clearly the main distinction is the ownership which in turn impact the initial capital, responsibilities in installation, operation, and the most important is financial profit. Let’s have a look at the table below to illustrate the difference during 25-30 years after installing rooftop solar.
Main difference is the investment capital. If you lease you roof, you do not pay any upfront money but the solar system still exist above your building and you still can enjoy the benefit of reducing the carbon footprint. As an investor, you either can use your own cash or take leverage of financial loan.
I said year 1 but normally it takes a few months to complete all the arrangement and construction phase.
After Year 1
At the moment the solar system starts to generate electricity, leaser and buyer both earn monthly cash flow. Buyer will pay leaser the fixed amount money or a discount electricity bill at the agreed rate in the lease contract. Here you will consider you would better own the system to maximize the financial benefit including tax credit. All the periodic maintenance or repaired (if any) will be taken by buyer.
After Year 5
Absolutely the payback period will depend on the size of project and other factors, but normally with an experience and professional Rooftop Solar Developer, Buyer should get back the initial investment and start to generate the cash flow. For this time, everything is still same with Leaser, nothing changes.
After Year 21
The leaser could inherit the rooftop solar system and enjoy the free electricity from at least 5 to 10 years if the system gets the good maintenance plan. The Buyer at this moment often exits the project but it is not necessary.
The lease period term normally is from 20 or 25 years. However, if you want to make it shorter, you still can negotiate with Buyer. The rent fee or the discount rate could be smaller since the investor has less time to get the benefit from their investment.
Leasing initially seems promising, upon further review, you will find that leasing does not offer tax advantages as solar system ownership and less profit return compared to investing. This article objective mainly shows that in case you both have capital and roofs, it would be better if you invest yourself to maximize all the benefits.
In case you only have roofs, do not worry, read the article “All benefits of leasing roofs” to understand how much benefits you can earn via leasing.
EXAMINE ALL OF YOUR OPTIONS BEFORE MAKING SOLAR INVESTMENT?
Are you ready to make up your mind which option is best fit for you? Well if you still have some concerns, please remember that we are here to help not to sell. We will look through your current situation and assist you to have a perfect plan that clearly defines financial figures such as the price, the return investment, paypack time, cash flow monthly, Net Present Value, IRR; procurement plan all the environmental benefit. Contact us today to “Start the sustainable profit business with green energy”!