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!
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.
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:
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.
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 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. |
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.
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.
At the end of the lease, you have several options to maximize the value of your renewable energy agreement:
Looking for a solar panel system in Chicago? Get your free solar quote right away and find the right system to install!