What You Should Know About Solar Panel Lease in Chicago
According to the U.S. Solar Market Insight report for the second quarter of 2024, published by the Solar Energy Industries Association (SEIA) and Wood Mackenzie, the total solar panel production capacity in the U.S. now exceeds 26 GW per year.
Source: SEIA
Therefore, residents of Chicago, Illinois, face a choice: solar panel lease vs. purchase.
This article will explore both options, help you and choose the option that suits you best, and understand whether to buy or lease solar panels.
Looking for a solar panel system in Chicago? Get your free solar quote right away and find the right system to install!
What Is a Solar Lease?
A solar panel lease in Chicago, like any other lease, has the advantage over buying when you don’t have the full amount to pay for the product. With this option, you pay a fixed monthly amount for access to solar energy generation.
The difference from leasing ordinary items is that a solar panel lease usually does not require an initial payment, and the payment term can range from 15 to 25 years. Lease payments are planned to increase annually and are not tax-deductible. A typical annual increase is 3.9% over 15 years. You can use a solar panel lease calculator to estimate the payment amounts.
How Does a Solar Panel Lease Work?
A solar panel lease in Chicago is a financial solution that allows homeowners to use solar electricity without upfront installation costs.
The main difference between leasing solar panels and purchasing them is ownership:
- When you buy the panels, you become their full owner.
- With a lease, ownership remains with the company that installed the system, and you do not receive any tax credits.
After the solar energy system is installed, you can use all the electricity generated by the panels. Your house will be powered by solar panels instead of the utility grid.As a result, your electricity bills will decrease.
If the panels generate enough electricity to cover your consumption through net metering, you might avoid electricity bills entirely (except for some fixed charges that cannot be offset by solar energy).
However, you will still need to pay for the solar panel lease. Typically, the lease payment will be lower than your previous utility bills. For example, if your electricity bill is $150 per month and the lease payment is $100, you will save $50 each month.
Nevertheless, the solar system may not always produce enough electricity to meet all your needs. During months with fewer sunny days or increased electricity consumption, you might need to draw more electricity from the grid. In such cases, you will pay for both electricity and the solar panel lease.
Tesla Solar Panel Lease
Although Tesla solar panels are considered a high-end brand, they are quite affordable. The Tesla system costs approximately $2.50 per watt, which is lower than the average price of $3.00 per watt offered by most other solar panel installers.
In addition to the low installation costs, Tesla also offers its own financing options. You can obtain a Tesla solar panel lease without additional fees.
The cost of a Tesla solar panel lease for an average-sized system is around $15,025 before incentives. With the federal solar panel lease tax credit, the cost can be reduced to $10,518.
The price for installing Tesla solar panels can vary depending on whether the panels are installed by the company itself or one of its certified contractors. In the latter case, the cost may be higher.
Tesla offers various sizes of solar panel systems to meet your energy needs and accommodate your roof size.
What are the steps for transferring a panel lease from Tesla?
- The seller submits a request to start the transfer of the solar agreement to the buyer, specifying the details of the escrow arrangement.
- Tesla contacts the new owner to discuss the terms and answer any questions.
- Tesla sends the Transfer Agreement to the seller and the confirming party for signature via AdobeSign.
- After receiving the signed Transfer Agreement, Tesla issues the title document. If there is a UCC-1 or Solar Contract Notice on the title, and a $150 document processing fee has been paid, the UCC-1 filing is not a lien—it’s merely a notice that the solar system is owned by Tesla. Any outstanding amount, such as current arrears or prepayment, must be paid before or during closing.
- After the property purchase is completed, the seller must notify Tesla of the closing through escrow or a closing representative.
- The systems are updated to reflect the new owner according to the solar agreement.
What Are the Pros and Cons of a Solar Lease?
The main pros and cons of solar panel leasing include:
| Advantages | Disadvantages |
| No upfront costs, only a single monthly payment, which may increase due to indexing specified in the contract. Use a solar panel lease calculator for calculations. | You will not own the installed system, so you won’t receive tax benefits or other advantages of solar energy, such as an increase in home value upon resale. |
| Installation and maintenance services are typically provided by the installation company, relieving the homeowner of these responsibilities. | In some months, you will have to pay both the monthly lease payment and an electricity bill, depending on your electricity consumption and solar energy production. |
| Savings on electricity bills, as solar panels reduce the amount of the bill. | Having leased panels can complicate buying a house with a solar panel lease. If taking over the solar panel lease or transferring the lease agreement is not possible, you may need to pay additional fees to terminate the contract. |
| Control over costs, as the payment for using solar panels is fixed in the contract. | Questionable return on investment if you move to a different home, as transferring the solar panel lease is difficult if you decide to sell the house. |
Is There a Better Solar Financing Option than a Solar Lease?
The best solar financing option, whether purchasing or leasing solar panels, can be determined by several key factors. It’s important to consider how long you plan to stay in your home and how much you have available to invest in solar panels.
➤ If you have the funds to purchase, this may be the most financially advantageous solution. The average cost of installing solar panels is around $18,000, with an average payback period of 7 to 10 years through energy savings.
Additionally, you can benefit from federal tax credits and rebates by owning the system. Solar panel buyers often receive additional discounts or credits based on state rebates or manufacturer offers. However, it’s always critical to plan for the investment when buying solar panels.
On the other hand, leasing solar panels allows you to start saving on utility bills and contribute to environmental protection even if you don’t have the funds to invest in panels. Leases typically last up to 20 years, but there are shorter-term options as well. Although you won’t be eligible for tax credits or rebates, it can be an attractive option for those looking for a quick start in solar energy.
If you can handle loan payments, consider financing the purchase of the system instead of leasing from a third party. This will provide long-term benefits and increase your home’s value and curb appeal. Government incentives, utility discounts, and federal tax credits that cover a third of the cost of the solar system go to the owner, not the lessee.
How To Get Out of a Solar Panel Lease
If you plan to sell a house with leased solar panels, carefully review the solar panel lease agreement you signed. You are responsible for payments throughout the lease term, so it’s crucial to understand how the solar panel lease agreement is tied to the property ownership. In most cases, this means you are obligated to adhere to its terms for 15 to 20 years.
When moving, you may buy out the solar panel lease. In this case, you can pay off the remaining lease balance in advance and decide whether to remove the panels or leave them with the house. Most solar leasing companies include a buyout period and cost for the solar panel lease in their agreements. Usually, a buyout is possible after 5 to 7 years of leasing. We recommend reviewing your contract for detailed information.
What Happens at the End of a Solar Panel Lease?
At the end of the lease, you have several options to maximize the value of your renewable energy agreement:
- End of solar lease: Installers will remove your solar panels without damaging the roof or incurring additional costs.
- Short-term lease extension: Extend the lease for a short period, usually from one to five years, to continue using the solar panels.
- Full lease extension and panel replacement: Extend the lease for a full term of 20 or 25 years after installing a new set of solar panels.
- Solar buyout: Purchase the solar equipment to own it and the generated electricity.
Looking for a solar panel system in Chicago? Get your free solar quote right away and find the right system to install!
FAQ
How much is a solar panel lease?
The cost of a solar panel lease ranges from $50 to $250 per month, depending on various factors such as the size of the system and your location.
Is leasing solar panels worth it?
To fully assess whether leasing solar panels is worth it, consider several factors:
- Current electricity costs
- Expected monthly lease cost
Should you get a solar lease?
The choice between a solar panel lease vs. buying depends on your individual circumstances. Both options have their advantages and disadvantages and are intended for different purposes. However, experts note that both purchasing and leasing solar panels can be good options if you understand what you're getting into. Therefore, carefully review the solar panel lease agreement before signing.
How to get out of a solar panel lease?
A common question among clients is, “Can I get out of a solar panel lease?” If you decide to cancel the solar system lease, it is possible to do so before installation.
The cancellation period without penalties depends on the specific solar company's policy but is typically one month after signing the solar energy contract.
If, after signing the agreement, it turns out that your roof needs repairs, the solar company may allow you to terminate the agreement under a clause for “unexpected and unforeseen additional costs.” So, you no longer need to worry about whether you can get out of a solar panel lease.
