Solar system dilemma: to rent or buy your own?

When Joburg and surrounding areas where hit by a hailstorm earlier this month, some of the property insurance claims submitted had to do with damage to solar panels. 

The hailstorm caused massive damage to cars and solar panels in areas like Midrand, Centurion and the inner city. 

In a country plagued by persistent power outages, consumers are faced with a crucial decision: should they rent or buy their solar system?

Dylan Schnetler, commercial head for Synapse Ultra at Rubicon, says buying solar panels often requires big capital and this often drives people to either get their panels financed by a bank or they simply rent them from suppliers.

Suppliers usually maintain them and do the necessary repairs.  

“When you choose to lease a solar system, it is important to remember that since you do not own the equipment, the solar service provider retains the right to remove the system if the agreement ends. Conversely, owning a solar system entails purchasing and installing the solar panels and associated components on your property, granting you full control. You also assume responsibility for all maintenance, cleaning and repairs.

“In the long run, buying is the more sensible option because it allows you to harness long-term financial benefits, whereas renting merely provides temporary access without the benefits of ownership.

"Over time, the renting model will cost you more and never be fully paid off, making it a perpetual fiscal drain. On the other hand, purchasing offers the advantage of once the payment is complete, all the benefits continue to accrue with no further costs,” says Schnetler.

He says the rental option has low upfront costs, making them easily accessible to many households.

“If you are in a rental property or have plans to sell your house, choosing to rent a solar system instead of purchasing one could be more advantageous. Ending a solar rental agreement is generally straightforward, but you will most likely incur penalties for cancelling your contract early.

"Also, rental agreements often come with performance guarantees, ensuring that the system meets certain energy production levels. If the system underperforms, the service provider is usually responsible for addressing such issues and ensuring optimal performance,” says Schnetler. 

Some of the drawbacks of renting the panels is that a rented system does not increase the value of the property. Also, unlike owning a solar system, renting now does not provide access to government incentives or tax benefits.

National Treasury allows individuals to receive a 25% tax rebate, up to a maximum of R15,000, for eligible solar panels that are put into operation from March 1 2023 to February 29 2024. 

Sumarie Greybe, co-founder of digital insurance platform Naked, says rented solar systems will usually need to be covered under your home building policy.

“This policy will pay for the repair or replacement of the panels and other components if they’re destroyed, stolen or damaged in an insurable event. Insurable events include theft, fires and weather (storms or wind, for example). 

“Insurance will also protect you from personal liability if an accident related to the solar panels hurts someone else or damages their property... It will, however, not cover wear-and-tear or service and maintenance-related issues – these should be covered under your supplier’s warranty and service agreements,” says Greybe.

Schnetler says the upside of buying is that it gives you the freedom to customise it according to your specific energy needs. You can determine the size, number of panels and system configuration, allowing you to maximise energy production and optimise your savings.