Solar Lease vs Solar Financing – Explore the distinctions between them

Solar lease and solar financing are two popular programs launched by numerous government and private institutions around the world to promote the use of solar power. By installing a solar power system, homeowners can end their reliance on the power grid and save money by generating sustainable electricity. Read more below to know which program is better suited for your needs.

Solar Lease

  • The solar lease works similarly to a traditional car or home lease system. The homeowner does not gain ownership of the solar panels or the solar power system but can install and use it at home. The lease is governed by a lease agreement signed between the homeowner and a financial institution, usually a bank.

As part of the lease agreement, the homeowner has to pay a monthly charge to the institution for a fixed number of years, after which the ownership is transferred to the homeowner. The typical lease duration is between 20-25 years.

  • In most cases, each monthly installment is usually less than the grid power bill the homeowner pays. By using solar panels and the solar power system, the homeowner can generate their electricity, thus saving money.

Solar leases often have a price escalator. A price escalator provides a framework for how much the monthly charge goes up each year. When the lease duration is completed, homeowners are presented with several options. One option is to have the ownership transferred to the homeowner. Other options include having the solar panels removed, purchasing the solar panels at a discounted price, or extending the lease.

  • If the homeowner decides to extend the lease, a professional service will be hired to assess the quality of the installed panels. If the solar power system is damaged beyond repair, a professional solar recycling company can be hired to recycle the damaged components.

Solar Financing

  • A solar financing plan is often referred to as a solar loan. A loan is obtained from a bank or a financial institution to purchase and install a solar power system. The solar financing agreement outlines several essential details such as payment mechanism, payment frequency, interest rates, and loan repayment schedule.

For the majority of the homeowners, the monthly repayments on the loan will be less than their usual electric bill before solar power system installation. One key benefit of the solar financing program is that it allows homeowners to invest in a solar power system, even if they don’t have the required start-up capital.

  • In a solar financing program, once the loan has been repaid in full, the homeowners gain complete ownership of the solar power system. To be a successful applicant for a solar financing program, most financial institutions will run a credit check on the homeowner. Only homeowners with a good credit score will be allowed to take benefit of the solar financing program.

Key Differences

Upfront Costs

  • In a solar lease, the homeowner gets money only for purchasing the solar power system. Therefore, they are responsible for installation and operations. However, in the case of a solar financing program, the loan amount covers installation as well. The solar power system installation is not a DIY project and requires skillful technicians and experts.

Long-Term Savings

  • The usual repayment term of a solar financing program is 5 – 15 years after which the homeowners can own the solar power system till its end of life. In the case of a solar lease, depending on the agreement, the lease agreement is for 20-25 years. In most cases, homeowners don’t end up owning the solar power system. In terms of long-term savings, a solar financing program will ensure long-term savings.


  • solar lease vs solar financingIn most solar leases, homeowners do not get ownership of the solar power system when the lease term ends therefore they are not liable for solar panel maintenance. The lease institution may appoint a professional service for periodic maintenance and checks on the solar power system.

However, in the case of a solar financing program, as the homeowner is making monthly payments towards complete ownership, they are fully responsible for the maintenance and monitoring of the solar power system.

If you have faulty solar panels or solar components in your solar power system, then you must recycle them and play your part in protecting the environment. Contact us at PV2 Recycle today at and we will help you recycle with ease.

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