Commercial Solar Systems: Own or Lease?

Jan. 22, 2015

New reports show ownership could have fast benefits.

While choosing renewable energy for your facility is a great option, many owners balk at the idea of buying their own solar PV system and will lease a system instead. New research, however, shows that the levelized cost of energy for buying a PV system could be up to 30% lower than the option of leasing solar equipment. To Own or Lease Solar: Understanding Commercial Retailers Decisions to Use Alternative Financing Models from NREL compares the strategies used by IKEA and Staples, two companies that have a large photovoltaic presence in the U.S., with IKEA owning its solar equipment while Staples uses the lease or PPA model.

The study’s authors are quick to point out, however, that the calculation is dependent on an assumption that the commercial customer’s pre-tax discount rate is 10%, if the discount rate is higher, leasing may be more cost effective.

“A company must work across its different business groups to decide what is more appropriate for its situation. With that said, if a company has less expensive sources of financing and is comfortable with the risks, it can often save on its energy bills by owning a PV system” says David Feldman, lead author of the report. 

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