How Solar Leasing Stacks Up to Loans

With the recent changes in the residential solar industry due to federal legislation, many installers were left scrambling to figure out the best approach for residential solar financing. The change in the Income Tax Credit (ITC) coupled with the shuttering of a few solar financing organizations, drove some installers to pivot to Third Party Ownership (TPO) solutions. After all, TPO is still eligible for the ITC and offers low initial monthly payments. But how does TPO stack up against loan financing? 

‍

One challenge facing the solar leasing market are the limitations that come with sourcing FEOC-compliant equipment which is a requirement to earn the tax credit. Because the compliant equipment  is limited, it can result in increased prices, longer timelines and less variety.  Loan financing providers, such as Sungage, are not subject to the same strict requirements, allowing them to maintain significantly broader Approved Vendor Lists (AVLs). This flexibility can translate into lower costs, faster access, and a wider selection of equipment, minimizing the risks associated with constrained supply chain 

‍

Although there may be an allure to leasing due to the promise of outsourced maintenance, the flip side of this is a lack of control for your homeowners. When leasing, homeowners lack the flexibility they can experience with ownership in the event their energy needs change. The ability to incorporate home improvement upgrades, future expansion of  batteries or additional panels, or simply control over who has access to the power in their batteries are a few examples of the flexibility homeowners may miss with going with a TPO option.  Plus, loan financing with Sungage offers no prepayment penalties and unlimited re-amortizations.   

To learn which option might be a better fit for your homeowners, click here.