SOLAR OPERATING LEASE
Image: Bissell’s Paint & Panel
What Is It?
When you enter into a solar operating lease agreement, you are letting someone else install a solar system on your property (generally the roof), at little or no cost to you, the property owner. You are also agreeing that you pay a fixed monthly lease fee. Like any other lease, the lessor will retain ownership of the system and you will pay regular monthly payments that give you the right to use the system to generate electricity for your business. The general term of solar operating leases is between five and ten years.
Who Would a Solar Lease Suit?
Solar leases are suitable for installations that have a high retained value at the end of the lease term and so are particularly well suited to larger systems on commercial or community properties.
Operating leases are less common for smaller commercial systems than they were several years ago, as ownership-based finance (green loans or cash) typically delivers stronger long-term returns. However, leases remain relevant for larger installations or where the business prefers to keep the system off its balance sheet. It is worth comparing the total lease cost against a green loan over the same term.**
What Are the Benefits?
Leasing arrangements with no upfront deposit are generally available and you can get a solar system installed without any, or for a very small, up-front cost.
With many lease providers you can negotiate the term of the agreement, often anywhere from two to seven years, with corresponding repayments to suit your cash flow.
Often the monthly lease payments are less than the savings you get from replacing electricity from the grid, giving you a positive cashflow outcome right from the beginning.**
Unlike many other operating leases, your monthly payments may be tax deductible (seek independent accounting guidance).**
During the time you make your repayments, the lessor is responsible for the maintenance and upkeep of the system. You don’t have to pay anything extra if something breaks down.
Leasing keeps the solar system off your balance sheet, which may be beneficial for some businesses.**
These financing options can also be applied to battery storage systems. The federal Cheaper Home Batteries Program (launched July 2025) provides approximately 30% off eligible batteries via STCs, reducing the amount you need to finance. Speak with your installer about current incentive levels.**
Traps for the Unwary
Carefully check the contract as there are different models for solar operating leases. Some transfer ownership at the end of the term while others may have a ‘residual’ to pay before ownership is transferred.
Be careful of the assumptions made in any sales pitch: check and verify the assumptions of energy price rises, interest rates, operating costs and return on investment.**
You are locked into a fixed contract for the term and exiting early may have a significant cost.**
Generally, your system will be designed to produce less electricity than you use, so you will still have to pay for additional power from the grid.
Make sure you tally up all of the repayments you will make during the term and compare the total to the upfront cost of the system: the difference is the cost you are paying for the facility.**
Most of all, make sure you are dealing with a reputable lease provider.
Disclaimer: This is not is not financial advice. You should consider seeking independent legal, financial, taxation or other advice to check how this information relates to your unique circumstances. ZEN is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by use of this factsheet.
Free Business Energy Advisor
Not sure where to start? ZEN’s Business Energy Advisor can review your electricity bills, model solar and battery options for your premises, and help you navigate tariffs and government incentives - at no cost. The service is independent and vendor-neutral. Visit zeroemissionsnoosa.com.au/noosa-business-energy-advisor or contact ZEN directly to book your free session.
The Business Chamber of Queensland also offers a free sustainability program helping Queensland businesses save on energy, water and waste costs: ecobiz.businesschamberqld.com.au