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Solar Lease/PPA vs Purchase

September 1, 2017

The cost of living is continually rising and is punctuated by out of control utility rates taking a larger chunk of most people’s monthly spending funds. NM Solar Group strongly believes solar energy is a viable solution to save money on electricity while also reducing environmental pollution. Many of our competitors push a lease or PPA to customers, but what are the differences of solar lease vs purchase.

Solar Lease and PPA

A solar lease and a solar PPA are very similar programs that some companies offer their customers. They were the most popular way to go solar in the past due to previous limitations in solar loan offerings. In essence, homeowners sign 20-25 year contracts to rent power from the solar companies in exchange for installing the panels on their roof.

The solar company continues to own the solar system and the contracts are generally structured so the payments rise 2.9% per year. Homeowners pay predetermined monthly charges with leases. With PPAs, they are charged for the power produced each month (whether used or not).

Solar Lease and PPA Downsides

There are a number of downsides to solar leases and PPAs. The biggest disadvantage is the fact that homeowners cannot claim the 30% IRS solar tax credit for their solar system.

The contractual yearly rate increases guarantee utility costs will continue to rise. The solar companies argue the payments will stay below the utility company’s charges, which is likely accurate, but both the monthly payments and total amount paid over the duration of the agreement will be drastically higher than a 15-year solar loan.

Further, with a solar PPA, homeowner’s payments will vary each month and they could potentially pay more than they need to over time if energy efficiency improves or usage decreases.

Some companies offer a 25-year solar lease-to-own arrangement which allows the homeowner to take ownership after the lease ends after 25 years. The homeowner inherits a solar system that is now out of warranty, which they paid orders of magnitude more for than a solar loan, both monthly and in total. They also cannot claim to IRS solar tax credit. Solar lease-to-own arrangements are the least economical way to go solar.

Solar Loans Offer a Better Alternative

NM Solar Group has partnered with local lenders to offer a $0 down 15-year fixed rate solar loan for our customers.

With our solar loan, there are no yearly rate increases like solar leases or PPAs.

Most importantly, homeowners can now purchase a solar system to significantly lower their electric costs and utilize the 30% IRS solar tax credit to save even more.

If you would like to learn more about the advantages of NM Solar Group’s solar loan, please give us a call at 505-415-6172 or Click Here to schedule a free consultation. NM Solar Group is excited to help!

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