Texas is known for its sunny skies, so it’s no surprise that many folks in the Lone Star State are turning to solar power to light up their homes and businesses. Our rickety power grid provides a powerful incentive too! But with so many options available, it can be tough to decide whether to buy a solar power system or use a Power Purchase Agreement (PPA).
In this article, we’ll break down the pros and cons of each option, so you can make an informed decision and start reaping the benefits of solar energy.
Buying a Solar Power System
If you’re the type of person who likes to own things outright, buying a solar power system might be the way to go. When you buy a system, you’ll be responsible for all maintenance, repairs, and upgrades. But in return, you’ll get to enjoy the full benefits of solar power, including lower electricity bills, a smaller carbon footprint and the right to customize your system at will.
Pros:
You own the system. But like owning a house or car, it will really be the bank that holds ownership until the loan is paid off.
You’ll have complete control over the maintenance and repair of the system, which can save you money in the long run.
You will reap 100% of the Income Tax Credit (ITC) available to solar customers.
You will reap 100% of the system depreciation available on capital improvements.
You’ll get to enjoy the full benefits of solar power, including lower electricity bills and a smaller carbon footprint.
Cons:
Buying a solar power system can be expensive, especially if you don’t have the cash on hand to pay for it upfront.
Obtaining financing for your system requires elements typical to a loan process; qualification, proof of income, credit score, and an approved Debt to Income ratio.
You’ll be responsible for all maintenance, repairs, and upgrades, which can add up over time.
While 100% of the ITC belongs to you, you will be responsible for the accounting work. While this is not difficult, the ITC and system depreciation will add complexity to your tax return. A CPA can help you through this consideration.
If you move, you’ll have to sell it along with your home and property. This can complicate closing, and some buyers may insist on eliminating debt on the system in order to close.
Using a PPA
If you’re not interested in buying a solar power system outright, a PPA might be a better option for you. With a PPA, you’ll enjoy and purchase the electricity that your solar panels generate, without the hassles of system ownership.
Pros:
You won’t have to pay for the system upfront, which makes it a great option if you don’t have the cash on hand.
You’ll have zero concerns about financing and qualification. EVERY landholder in Texas qualifies for a PPA with no money down.
You won’t have to worry about maintenance, repairs, or upgrades, as the company that owns the system will be responsible for those.
You’ll still get to enjoy the benefits of solar power, including lower electricity bills, power continuity in a blackout and a smaller carbon footprint.
Cons:
You won’t own the system, which means you won’t be able to sell it if you move. The agreement to purchase power from the system is simple to transfer to the new owners, however.
Even though you won’t own the system outright, it will still be ‘screwed and glued’ to your property. As such, it will be covered by your Homeowners Insurance, and you may see a rise in your premiums to match. This rise is typically less than 10$ per month.
You’ll have to pay for the electricity that the system generates, similar to the agreement to purchase power you currently have with your utility.
The company that owns the system might not be responsible for maintenance, repairs, or upgrades, which could mean higher electricity bills for you.
So, which option is best for you?
The choice between buying a solar power system and using a PPA ultimately comes down to your personal preferences and financial situation. If you have the cash on hand to buy a system, it might be a better option, as you’ll get to enjoy the full benefits of solar power. But if you don’t have the cash on hand, a PPA might be a better option for you, as you won’t have to pay for the system upfront.
Regardless of which option you choose, one thing is for sure: solar power is a smart investment for anyone looking to live independently and minimize your energy costs.
Interested in going solar? Drop me a line and we‘ll discuss what solar can do for you. Because there’s nothing more Texan than energy independence!
