Solar Financing Options: Paying for Solar
People who are drawn to residential solar power worry about how they will pay for solar. Fortunately, Catalyst Solar financing options are available for funding this clean way of energy.
Most people usually pay for photovoltaic (PV) solar systems through one of three ways – lease/PPA, solar loan, or upfront cash purchase. A good choice for you may not be the best choice for another homeowner. This is because houses vary in size and power usage. Although these factors vary, solar panel systems last for at least 25 years and offsets most or all your power bill per month.
According to EnergySage, solar financing options are for homeowners to bring up the funds needed to purchase a solar system by paying installments over time. We have several financing partners available. Some of these loan providers include Goodleap, Mosaic, Sunlight, and Sunova.
Electricity Monthly Bill Outlook over the next 10 to 25 years.
However, solar isn’t free! To get to these places of savings, you must pay for your solar panel system first. Fortunately, there is more than one way to pay for your solar panels, each with their own pros and cons.
Solar Financing Options
Three ways to pay for solar is with a cash purchase, with a solar loan, or with a solar lease/power purchase agreement (PPA).
Firstly, you can pay for a solar panel system that you own outright through an upfront cash purchase. A cash purchase is the best solar financing option to maximize your solar savings. For example, if your solar panel system is customized to produce 100% of your electricity needs, then you just paid 25 years’ worth of energy. Paying in full gives you the opportunity to receive all the solar incentives and rebates. Overall, this means you are likely to see a better return on investment from solar than if you were to put money down for financing.
On the other hand, the one “obvious” con of a cash purchase is that solar is not cheap. If you want to purchase your system in cash, you will need to have enough money – $25,000 give or take – on hand to pay for the system in full.
Secondly, you can own solar with a solar loan. This is a great financing option because they allow you to own your solar panel system with no money down. Often times, your monthly bill will be at a lower cost than what you pay for your electricity right now.
Solar loans may be similar to a solar lease or PPA. However, there is only one significant difference which has two major effects: with a solar loan, you own the system, whereas with a solar lease or PPA, a third party owns the system. With a solar loan, you can get any incentives and rebates for your solar panels. You are also responsible for any maintenance that your panels may need.
Solar leases and PPAs
Solar leases and PPAs are often lumped together because of how similarly they work. They are both a structure of third-party ownership where the third party installs the solar panels on your roof and then sells you the electricity generated by those panels. They give you a fixed rate that you would pay monthly.
EnergySage explains that “with a lease/PPA, you’ll typically lock in a set rate for electricity for the next 25 years, about 10 to 30 percent below the rate you currently pay for electricity…What’s more, with a lease/PPA, the third-party owner is responsible for monitoring the system and any maintenance on it.”
More on Solar Leases and PPAs
Because you are not the owner of the solar panels, you will not be eligible to claim any of the financial solar incentives and rebates. Additionally, homes with solar panel systems increase in home value of 3-4 percent. However, since you don’t own your solar panels with a lease or PPA, you will most likely not be able to sell your home for that additional value.
Note: Catalyst Solar typically does not point our customers in the direction of a lease or PPA because of its downfalls. Also, every state does not allow third-party ownership. Here’s DSIRE’s map of states that allow for solar leases and PPAs.
Solar Financing Options Comparison
A cash purchase is right for you if:
- Maximizing your savings from solar is your ultimate goal;
- You have an ample amount of tax liability to benefit from the solar investment tax credit;
- Or you have available funds to pay for the solar panel system upfront.
A solar loan is right for you if:
- You don’t want to dispense the full amount of cash needed to pay upfront;
- But you still want to save as much as possible on your electricity bills;
- And you would like to be eligible for all incentives and rebates.
A solar lease/PPA is right for you if:
- You prefer someone else to monitor and maintain your system;
- You are not eligible for tax incentives;
- Or you would like to lower and/or lock-in your fixed monthly power bill.
Get an Estimate on your Solar Panel System
The simplest way to get a solar production estimate is to enter your address into our free Catalyst Solar Calculator. You will get a recommended size system (with the kW and number of panels), potential lifetime savings over 25 years, and your environmental impact for 10 years.
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Solar financing: How do you pay for solar? EnergySage. (2022, February 21). Retrieved July 26, 2022, from https://www.energysage.com/solar/how-to-go-solar/how-to-pay-for-solar/
Detailed summary maps. DSIRE. (2021, December 8). Retrieved July 27, 2022, from https://www.dsireusa.org/resources/detailed-summary-maps/