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Renting vs. Buying Electricity: Is There a Difference?

Dax, VP of Advertising for EnergyONE Solar, is a young voice in the solar energy field offering an alternate view on all topics solar.

We've all heard the popular belief that buying is usually better than renting, whether it be a home, a car, or otherwise. Could this apply to electricity as well?

We've all heard the popular belief that buying is usually better than renting, whether it be a home, a car, or otherwise. Could this apply to electricity as well?

Buying vs. Renting

When you purchased your house, your car, or even a boat, I'm sure the subject of buying versus renting was brought up. Whichever you've ended up deciding on, the general consensus for a long time has been to buy rather than rent if you're going to be using it for more than three years. In most cases, after three years, you'll have spent less money buying it than you would've by renting, and are likely to turn a bigger net profit should you ever decide to sell.

That's not to say the popular opinion hasn't been disputed. It's a bit of an age-old argument which is better, both have their pros and their cons for various different situations. Most of the time, the "better" option is down to personal preference. For example, purchasing a home ties you to that one location, and someone who is prone to move often would likely benefit more from the freedom and mobility that comes from renting over buying. On the flip side, someone that doesn't have any plans to move in the near future may be more open to considering buying in order to save money in the long run.

Of course, buying or renting has different pros and cons depending on what it is you're spending the money on. What if I told you that it was possible to "rent" and "buy" electricity? Not only is it possible, but odds are, you're renting it right now. Are you sure that's what you want to be doing? Most people aren't even aware they have the option, let alone know how each option can affect them.

Buying Electricity

Let's use a common example to explain the idea. I'm sure you're already well aware that buying fast food isn't a very efficient use of your money. It's fast, but it's expensive, and your wallet will definitely thank you if you spend your money on ingredients to cook yourself a meal instead.

In order to get started with this, you'll need to make an initial investment in the form of an oven, a refrigerator, a microwave, a Crock-Pot, and/or other cooking essentials. Naturally, all of your appliances will cost quite a bit more than just a trip to your local McDonald's, but as time passes, you'll save much more money in the long run. In this sense, you're essentially "buying" food rather than "renting" it. You're purchasing the means to create your own food for very little cost instead of buying meals every day that add up to be very expensive over time, just like buying a home rather than renting one. It follows the same line of logic. This is all pretty obvious, but this same common sense logic can also be applied to electricity. Your oven in this situation? Solar units.

In the scenario of renting a home, many people are brought discomfort by the fact that a landlord can increase rent at any time, and there's not a lot you can do about it. People are compelled to purchase the home in order to keep their spending from increasing at an inopportune time. This also means you're safe in situations where, say, your neighbor's rent increases. You already purchased your home, meaning nothing changes for your cost.

This can easily be translated to solar panels, replacing the landlord for your power company. It's a well-documented fact that the price of electricity is rapidly rising, and will only continue to do so. Despite this, many people are continuing to "rent" electricity from their power companies, when the option to "buy" electricity is readily available with solar energy. Using solar will keep you safe from the power companies' rising costs, ensuring you'll always have electricity, indefinitely, for the price you bought it for.

Renting From Your Power Company

Think of continuing to rely on your power company as the "renting" option for your electricity, and consider how long you plan to use energy. A fairly long time, I assume, probably even your whole life. In that case, ask yourself, would you rent a home for the rest of your life? Some may say yes, they could be perfectly fine with paying increasing, smaller fees, and might never want to pay an upfront larger investment. Others see that as a red flag, answered with, "of course I wouldn't," in which case, solar may be a smart option to look into.

A common problem people tend to have with the concept of buying as opposed to renting is, as noted above, that they plan to move in the near future. The great thing about buying solar as opposed to an entire home is that the solar panels can be uninstalled and taken with you, removing this issue entirely from the equation. What's even better is that, due to the lack of moving or delicate parts in a solar unit, your chances of damaging them during transport are actually very low.

Alongside purchasing an indefinite amount of electricity, by investing in solar you're also giving yourself a safety net for any potential power outages. In a situation that leaves a large area without power, having access to electricity, even during the day, is a huge benefit that shouldn't be ignored.

Like most things, it's not for everyone. If your home suffers from a lot of shading produced by trees or otherwise that can't be cut back, solar is likely not a great option for you, unless you have clear space on the ground for the units. Some may be tempted to say that those with a weak or damaged roof may also be bad candidates for solar, though more and more roofing/installing tools are being used that can help combat this. If you don't think your roof can handle solar, it's always best to get a professional opinion.

Ultimately, the choice comes down to personal preference, and which option would benefit you the most. As always, anyone would recommend that you do your own dedicated research before making a decision. The choice between buying and renting for most things is a very important one, and there's no reason to believe that the same choice isn't just as important when it comes to electricity.

Pros of "Buying" Electricity: Using Solar

  • You're investing one larger initial payment for indefinite electricity.
  • You gain the ability to produce energy even during power outages.
  • You're able to avoid the increasing fees and prices of power companies.
  • You will save money in the long run.

Pros of "Renting" Electricity: Buying From a Power Company

  • You're able to pay smaller amounts spread out over time.
  • You don't have to pay a large amount you may not have.