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Various Types of Solar Purchases

Types of Solar Purchases - Solar Panels
Eric Donti
Eric Donti
April 21, 2023

Sun energy is steadily converted to electricity at lower costs with zero emissions. The three main types of solar purchases are buying a system outright, leasing a system, and entering a Power Purchase Agreement. Each method has pros and cons, as your choice depends on your financial situation. It's now incredibly easy for property owners to get lower-cost solar energy from a third-party energy provider.

Buying Solar Panels with Cash or Credit

House with solar panels

If you've got plenty of savings, your easiest entry into solar might be to buy your own solar panels and install them on your roof. Whether you use savings or cash from a loan, the panels are yours once you pay for them. Remember that federal tax credits are available to help pay for the equipment. You will be responsible for maintaining your own solar panels, which you can do by scheduling annual solar expert inspections.

The main advantage of owning your solar system is that it provides instant energy savings. On top of that, solar panels will increase the value of your home or building by as much as 5 percent and reduce greenhouse gases. Ensure the installer of your PV system sizes is based on maximizing the existing structure. Additionally, a good deal comes with a warranty that lasts many years.

You'll save hundreds of dollars each year, up to thousands per decade. Ideally, it will be a low-maintenance solution that lasts 25 to 50 years. About half of the solar purchases are directly by property owners with or without financing, while the rest is leased.

Leasing Solar Power

There are a few different ways to lease solar energy and enjoy the financial benefits of solar power, such as lower energy costs. Many homeowners lease solar power from a third-party vendor, which maintains ownership of the solar equipment and handles all the maintenance issues. Both pre-paid, and monthly solar leases involve paying the vendor upfront for use of solar power it supplies. The Investment Tax Credit (ITC) factors your price that beats conventional energy rates.

While the solar vendor assumes all the risks and repairs, you cut energy costs. Eventually, you'll have the option to purchase the system at the end of your lease term. In that case, you and the vendor will determine the system's "fair market value." However, you can keep leasing solar power, upgrading the system, or returning it to the vendor.

If you choose to extend a monthly lease, the vendor may raise the cost each year, so you might be paying more than you thought. One of the tax advantages of a pre-paid lease is you can deduct the interest from your income taxes.

Power Purchase Agreements

3 Men installing solar panels on the roof

One of the most innovative types of solar purchases is the Power Purchase Agreement (PPA). PPAs have been attractive over the years because they allow you to jump into going green immediately without saving up for a big payment. The vendor owns the solar equipment installed on your roof and charges you for the electricity you use based on kilowatt (kWh) hours. These agreements are typically for 10 to 25 years.

For many people who cannot afford the other ways to get into solar, PPAs are the way to go. Some homeowners need help to qualify for a new loan to consider other options. With a PPA, you realize savings when the vendor installs its system on your roof. In many cases, your energy cost will drop immediately because the price you pay per kilowatt hour (kWh) is fixed and not the typical tiered rates your current utility provider charges. 

Similar to other leasing agreements, you won't be responsible for maintenance. The vendor will handle all your technical issues. The main difference between PPAs and conventional lease agreements is how monthly payments are structured. If you decide to sell your home, the new homeowner assumes the remaining term on the PPA.

Other Ways to Get Solar

community-shared solar system

Other ways to access solar power exist, such as through community-shared solar programs. These roofless solar solutions involve tapping into solar energy from an offsite power source. Only some communities, however, have this option readily available to them. Some utilities may supply solar power to renters of certain apartment complexes. Determining which solution works best depends on your budget and how much you want to contribute to a cleaner environment.


Understanding the different types of solar purchases helps you plan to seamlessly transition to going green. If you've got plenty of savings, an easy entry into solar might be to buy your own solar panels and install them on your roof. An even easier way to reap the benefits of solar power is through a solar Power Purchase Agreement (PPA), which can be installed for a little as zero $0 dollars out-of-pocket.