Solar energy is an incredible, environmentally-friendly power option that has grown rapidly in recent years. However, the benefits from using solar energy have historically been an expensive investment, even if it does pay for itself over time. The Tesla Solar monthly payment plans have changed that.
There are two types of monthly payment plans for Tesla’s solar panels. You can rent the panels, or you can purchase the panels and make payments. There are benefits to both methods, depending on several factors.
You will save money either way, but just how much will depend on what method you choose. The difference in long-term savings may surprise you. Read on to see which method could save you the most and to gain a proper understanding of the Tesla solar monthly payment.
Paying for a Tesla Solar System
Whether you have a monthly payment largely depends on how you decide to get the solar system installed on your home. There are technically three ways to get a solar system installed on your home:
- You rent them
- You buy them upfront
- You buy them using financing
There are pros and cons to whichever approach you choose, and there are several things to consider when choosing which method to take. This article only focuses on comparing the two monthly options. Buying the panels upfront is the cheapest and most affordable method, but the whole process could run you $10,000 before tax credits.
Even if you have the cash on hand to purchase the whole system outright, you may not want to invest that much upfront, or you may be unsure as to whether you want the panels or not. In either situation, using one of the monthly payment plan options may better suit your needs.
The Rental Plan
Tesla calls the rental option its Solar Subscription plan. The process begins by providing Tesla with your address and copies of your monthly utility bill. Tesla will use this information to determine your eligibility for the program. This program is not available in every state and has other requirements that we will discuss later on.
Tesla will also use that information to determine what size system they recommend for your home. They will take into consideration your average monthly electricity use as well as how much sunlight your home receives based on regional indexes. There are four size systems available.
There are no upfront costs when you choose Tesla’s Solar Subscription plan. You will pay a monthly rate. This rate will be fixed, but Tesla is very clear that it can go up over time. The monthly rental rate includes the following costs associated with your solar panels:
- The cost of the solar panels and any other necessary hardware
- The cost to install the solar panels and additional hardware
- Any maintenance costs associated with your system
As with any rental plan, if you elect Tesla’s Solar Subscription option, you will not own the equipment. The positive to this is you will not have to maintain the system. The con to renting is that you do not get any of the tax credits. You can cancel your subscription at any time. There is no fee to cancel, but there is a fee to remove the panels.
The Payment Plan
Tesla has several options for financing solar panels. The obvious difference between renting and financing is that when you finance, you actually own the equipment. Otherwise, the process is relatively the same. You provide the necessary information to Tesla, and they determine the right size system for your home.
Financing the panels instead of buying them outright allows you to spend little to nothing upfront. Your monthly payment is determined by the length of the loan you select as well as your credit. Sometimes your loan payment can still be lower than your monthly energy costs. Just like with the rental plan, your payments may go up over time.
Another benefit of the payment plan is that by owning the system, you become eligible for the monthly federal tax credits. You can even apply them to your monthly loan payments. There are federal and state incentives to going solar. When purchased, in one payment or monthly payments, the equipment does come with a warranty.
The downside to purchasing the solar panels with financing as opposed to paying upfront is that you will end up paying much more for the system in the long term. Your monthly payments can sometimes be more than your energy bills were, and you also have the added responsibility of maintenance.
What Are The Differences?
As we mentioned, there are pros and cons no matter which option you choose for going solar. When deciding which option to take, it is best to consider the short-term and long-term variables. The table below breaks down the majority of these differences.
|Pay In Full||Financing Option||Solar Subscription|
|The Equipment is Owned By:||You own the panels and equipment.||You own the panels and equipment.||Tesla owns the panel and equipment.|
|The Equipment is Maintained By:||You are responsible for repairs and maintenance. There is a warranty on the equipment.||You are responsible for repairs and maintenance. There is a warranty on the equipment.||Tesla handles repair and maintenance.|
|Monthly Energy Bill Savings||Immediate.||Might be little to none at first.||You will save some money immediately.|
|Incentives Received By: (in the form of tax credits and rebates)||You receive the rebates and any state and federal tax credits.||You receive the rebates and any state and federal tax credits. They can be applied to your monthly payment.||Tesla keeps all rebates and the state and federal tax credits.|
|Long Term Value||This option will save you the most in the long and short-term.||You will save a lot, but these savings will be offset by your financing fees.||You only save on your electric bills and have to pay if you want the panels removed.|
|Initial Costs & Monthly Cost||The entire cost is paid upfront. There is no monthly cost.||There is usually no upfront costs or fees. The monthly cost is fixed and may increase gradually.||There are no upfront costs. The monthly cost is fixed and may gradually increase.|
As you can see, there are a few things to consider when choosing the best option for getting access to Tesla’s solar panels. You will save money eventually in every situation. How much money depends not only on which option you choose but also on how much energy those panels produce and how much energy you use.
There are other factors to consider when deciding which option is best for you. In some cases, you may not even be eligible for the rental option. The next sections go into more detail about the requirements for each option that introduce some other things to consider when selecting the best option for you.
Important Things to Consider
Determining which plan is best for you depends on a variety of factors. You will have to determine how much you can afford upfront (if any), as well as how much you can afford each month. You also have to consider how much risk you are willing to take that you will be able to generate enough energy to result in savings.
Another thing to consider is how long you plan on owning your home. Solar panels do increase the value of your home, but that does not mean everyone who is interested in purchasing your home will want them. You also may never see the financial benefit of the panels if you sell your home before they are paid for.
Whether you own or rent the panels, removing them is not free. Tesla will charge $2,500 to remove them. If you are renting the panels and decide you do not want to use them anymore, there is no cost to cancel your subscription. The panels will stay in place unless you choose to have them removed.
There are things to consider when deciding how to get Tesla’s solar panels installed in your home. You have to consider the cost breakdown, the eligibility requirements, and you will need to give careful consideration to how the values and incentives of each option impact you. Each of these considerations is broken down below.
Arguably the most profound consideration when selecting the best option for you is going to cost. It goes without saying that buying the equipment upfront will save you the most money, but most people cannot afford to put down several thousand dollars upfront. The amount you spend monthly will vary.
Both the financing option and Tesla’s rental program, what they call Solar Subscription, allow you to avoid most if not all of the upfront costs. With the rental option, there will never be any upfront fees. With the Solar Subscription option, you can cancel anytime. In that situation, the equipment stays on your home until you pay $2,500 for removal.
Both the finance option and rent option do not come with fixed monthly payments. These payments can and often do increase over time. The variables that contribute to your monthly payment related to what you were paying for electricity before installing the panels and how much energy your panels produce.
With the rental option, your monthly payments only go up in accordance with your energy use and production only. If you selected the financing option, your monthly payments might also fluctuate based on the loan you selected. There is an option for renters to buy the system from Tesla after five years.
In many cases, the eligibility requirements for each option may make the decision for you. For starters, you must own your home to install solar panels, even if you are just planning to rent them. Your ability to finance the panels will also depend on your credit score and other factors that may contribute to loan availability.
Most importantly, Tesla’s solar rental program is only available in six states, and within those states, you must be serviced by a qualifying utility company. Tesla has a list of these companies on its website. Most of the major utility companies in each state are on the list. The six states where Tesla’s rental program is available are:
- New Jersey
- New Mexico
Unfortunately, if you do not live in one of those six states, your only option to get Tesla’s solar panels would be to purchase them outright or purchase them with a loan. Remember that even if you live in one of those six states, your utility company must also be participating in the program.
Measuring the Value
The next factor to consider when selecting which plan is best for you involves determining the value of installing the system. The value is determined by how much money you will save a month and in the long run by going solar.
In the majority of situations, you will see an immediate value whether you rent or finance the panels. Installing solar panels automatically results in savings on your monthly utility bills. The amount you save right away when financing may be less than renting, depending on your finance agreement. Your energy use can also play a big role.
With both options, if you are using less electricity than you are producing, you could potentially profit from the amount of electricity you are producing. This profit would be deducted from your energy bill. There is nothing you can do to control how much energy you create.
The best way to increase the value of your solar panels is to control your energy use. If you can manage to use less energy than you are producing, you can maximize the value of your solar panels.
Considering the Incentives
There is also the issue of considering the incentives that coincide with going solar. There are a few state and federal solar incentives available to homeowners who install solar systems. These incentives come in the form of:
- Tax credits
- Solar Renewable Energy Credits (SRECs)
The amount of type of state incentives varies from state to state. All states are eligible to receive the federal tax credits, the SRECs. You only have access to these incentives if you own the equipment. This means you must either buy the equipment upfront or finance them. Owning the system is the only way to benefit from these incentives.
If you elect to rent the system by enrolling in Tesla’s Solar Subscription plan, you will not be able to receive any of these incentives. If you own the equipment but are making monthly payments, you can apply these incentives to your monthly payment. Once the equipment is paid for, you will be able to collect these incentives yourself.
It is recommended that you check your local and state legislation related to solar energy to determine just how much you could benefit from these incentives. These incentives can help reduce your monthly payments. Some states may even have programs or grants available to help you purchase the panels.
Thinking About the Long-Term
When deciding which plan is best for you, it is also crucial to think about the long-term. For some homeowners, the necessity to repair and maintain your equipment may not be realistic or desirable. In this situation, you may find you would rather just rent the equipment. However, most of the repair and maintenance for owners is under warranty.
Another long-term consideration relates to commitment. The only way out of a solar panel contract is to rent them. If you have signed a finance agreement, you are responsible for completing the contract. Some loan agreements can span up to twenty-five years. Thus, it is important to consider how long you will stay in that home.
If you do not plan on staying in your home long, you may also want to consider renting the panels. Just do not forget to account for the cost of removing them. In most cases, solar panels increase the value of your home. You will just want to make sure you have paid them off and that they have been maintained properly.
The biggest of the long-term variables to consider has to do with just how much you can save. The estimated savings for a rented unit versus owning the unit are vastly different. In some cases, you may save over $15,000 more over the course of twenty-five years when you purchase the panels, even if you are making monthly payments.
There are benefits and concerns associated with either option you select. Renting the solar panels through Tesla’s Solar Subscription program provides the most flexibility, but with lost risk comes low reward. When you rent, you only stand to save money on your monthly energy bill. It is through ownership that you also benefit from the tax credits.
Owning the system will undeniably save you the most money. Solar panels add value to your home, give you access to state and federal tax credits, and result in monthly savings on your utility bill. You can increase the value of your solar panels by reducing the amount of energy you use each month.
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