Solar Lease explained
A solar lease is similar to a Power Purchase Agreement but instead of paying per kWh generated, you pay a fixed monthly "rent" for the use of the solar system installed on your roof. The solar company owns the panels and is responsible for maintenance; you benefit from reduced electricity bills.
Typical solar lease structure:
- Fixed monthly payment of £20–£60/month depending on system size
- Term of 20–25 years
- Lease payments may escalate annually (typically 1–3% per year)
- The installing company claims SEG export income
Advantages:
- No upfront cost
- System maintenance and insurance included
- Immediate bill savings if your lease payment is less than your bill reduction
Disadvantages:
- Total payments over 25 years significantly exceed the purchase price
- You don't build equity — the system has no resale value to you
- Property sale complications: buyers may be reluctant to take on a long lease; buyout costs can be substantial
- Lenders may query a long-term lease when you remortgage
Solar leases made sense when upfront solar costs were very high (pre-2015). In today's market, with solar systems costing £5,000–£9,000 and 0% VAT available, outright purchase (even with a personal loan) typically delivers better financial outcomes for homeowners who can qualify.