Solar Panel Financing – What Are Your Options?
There are many solar advantages and disadvantages to consider when deciding whether solar energy is right for you. There are also many questions you might have. Does solar make sense for me?
Is it Better to Lease or Buy Solar Panels?
How can I pay for solar panels for my home?
How to Choose the Best Solar Installer?
Fortunately, the falling price of going solar and the variety of solar financing options available to homeowners means going solar can be attainable and affordable for everyone.
There are four main ways to finance solar panels on your home:
What solar financing option should you choose? That all depends on your personal preferences. The below comparison shows you the most important details for each option. You can click into the different solar financing options for much more extensive information. Fortunately, one of the pros of solar panels is that you’re likely to see a financial benefit no matter how you choose to finance them.
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Solar Financing Options Compared
| Solar Loan | Solar Lease | Solar PPA | Solar Cash Purchase | |
|---|---|---|---|---|
| Money down required | $0 | $0 | $0 | All cash required up-front |
| Payments | Monthly set rate | Monthly set rate, increases by escalator 1x/year |
Set rate for power produced by panels, increases by escalator 1x/year |
Up front once |
| System Ownership | Homeowner | Installer | Installer | Homeowner |
| System Maintenance | Homeowner | Installer | Installer | Homeowner |
| Length (years) | 2,5,10,15,20 | 10,15,20 | 10,15,20 | Not applicable |
Solar Loans
Just like a home loan or a car loan, loans for solar panels are loans specifically for adding solar to your home. You receive any tax credits and incentives associated with installing solar. Solar loans are now provided by many banks, credit unions, and solar companies. Homeowners with lower credit can also qualify for the PACE program. What is PACE program? In its simplest form, it’s essentially a financing option that is repaid by adding an assessment to your property tax bill.
Best for: Homeowners who want to save as much as possible while putting $0 down, and who will be able to use the corresponding tax credits.
Solar Leases
Just like leasing a car – you pay a monthly fee and a solar leasing company puts your panels on the roof. The solar leasing company services them and you receive the energy they produce while saving on your electric bill.
Best for: Homeowners who want to go solar with $0 money down and as little hassle as possible.
Solar PPAs (Power Purchase Agreements)
This is where you pay for the power your panels produce each month from a solar company, just like your regular utility contract, but at a reduced price for the length of the contract. A solar company installs and services the panels.
Best for: Homeowners who would prefer the convenience of a lease, but want to pay only for the power coming off the panels instead of leasing the panels (so your payments can be variable, while solar lease prices are at pre-determined rates). The final savings are usually almost exactly identical to a lease, but could be different if you have exceptionally sunny or cloudy days.
Solar Cash Purchases
A cash purchase. You purchase the system outright, providing you with all the solar energy benefits your system has to offer without any ongoing costs. This offers the most possible savings over time in terms of power costs. You receive any tax credits and incentives associated with installing solar.
Best for: Homeowners who are willing to pay for their system upfront in exchange for the highest savings in the long-run and are able to use the corresponding tax credits.
