Three Ways to Go Solar

There are three ways to get solar power, pay everything up front, lease the solar panels, or finance them.

Solar Lease

A solar lease is when someone else owns the solar energy equipment (usually the leasing company) installed at your home to produce your electricity. You pay a monthly payment to lease the equipment for a period. Those terms usually last 10 to 15 years and often the lease payment increases over time.

These are similar to leases, except that in leases you pay for the equipment leased and you get to pocket the power savings. If you have a PPA, then you don’t have to pay for the equipment, you have to pay for the power you use, just like you do with the utility. The difference is that lease payments are about the same every month, and PPAs vary each month based on the amount of energy produced by the system. Under a PPA, a customer pays only for what is produced during a given month, and will, therefore, pay more in summer than in winter.

Purchasing Panels

It is better to own your solar panels. It just is. We know that many people do not have the savings, the assets, or the credit score to get favorable rates when financing, but if you do have the means, it is much better to own the system and finance it over a few years When you own something like solar, it is an asset. Cars are also assets, but they are depreciating assets, meaning they are worth less over time a solar investment is an appreciating asset, that adds to the value of a home. A lease or a PPA contract are just other ways to say that you pay to use someone else’s asset.

Every bank and credit union has a version of the home equity loan. It is a great way to use the home itself as collateral to procure a loan to install solar. Installing solar increases the value of the home, and every bank knows this. If you have good to great credit, and you don’t have a lot of credit card debt, most banks will give very favorable rates and terms for these loans and explore what your bank can do for you is a great option.

There are also many solar power finance companies. All they do is work with homeowners to get solar loans for their homes. Companies like GreenSky Finance or Ygreen are more than willing to look at your situation and see if a solar loan is right for you. The great thing about the solar loan is many times the payments are less than what you would have paid for power from the utility anyway.

Pacific Gas and Electric, located in California, offers a zero percent loan on solar panel installations on the home, and many others are following suit. With any of these financing options, you get to retain the 30 percent federal tax credit and any other financial incentives. The interest on the loan is tax deductible, and you own your solar system instead of renting it. The end result is your return on investment with a loan is far greater than a lease.

Solar is a viable solution for energy, it can significantly increase your property’s value, and reduce your carbon footprint. When considering installing solar power for your home there are financial options for the homeowner to study. 

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