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Solar Financing 101: What Are Your Options?

Upgrading to a solar system is good for the environment, but it can be hard on your pocketbook. Most homeowners don’t have the money upfront to pay for a solar panel installation. Fortunately, there are many great financing options that can make going solar affordable.

With so many different solar financing options, it can be confusing to tell them apart! Let’s sort through the available options so that you can make an informed decision for your home.

Solar Lease

A solar lease is probably the most popular option for homeowners that want to go solar. Whoever owns the solar system is responsible for the maintenance, monitoring and repairs. They receive the financial incentives, which includes the 30% federal tax credit and SRECs, or solar renewable energy credits.

The benefit to leasing is that you don’t have to put much money down, if at all. You pay the solar provider a certain amount each month, and they handle the maintenance for you. It doesn’t matter how much electric you use, either. The price stays the same. The downside is that you don’t receive any of the financial incentives.

Power Purchase Agreement (PPA)

A PPA is very similar to a solar lease except that you pay a predetermined amount for every kWh that your solar system produces. Therefore, your bills will be different each month. Before choosing between a lease and a PPA, find out how much you will pay for each kWh. This price is based on where you live and your utility company.

Home Equity Loan

If you have equity in your home, you may want to consider taking out a loan. This way, you own the solar system and receive the financial incentives, including the tax credit and SRECs. Each month, you will pay your lender a predetermined amount that will also include interest. Interest rates range from 3.5% to 7% with terms of 7 to 20 years.

Energy Efficient Mortgage (EEM)

It’s possible that you may qualify for an EEM, which is a government program designed for energy efficient homes. Before you can qualify, your home must be evaluated through a professional energy audit. If financing is approved, your monthly mortgage with be credited.

Property Assessed Clean Energy Program (PACE)

Another program worth checking into is PACE, which is only available in some states. With PACE, you borrow money from local municipalities and pay back the loan through your property taxes. Terms generally last for 15-20 years, and the tax liability would be transferred to the new owner if you did decide to sell your property.

Peer-to-Peer Lending

Peer-to-peer lending is a newer type of financing that you could be comfortable with. In this arrangement, borrowers and lenders are matched on a crowdsourcing platform. In most cases, you don’t have to use your home as collateral, but the interest rates can be steep.

At AllSeason Solar, we tell homeowners who can afford to buy their panels to do so. This way, they earn the financial incentives. However, the majority of homeowners do not have the money upfront, so we recommend leasing more often. With no money down and the ability to save immediately, there’s nothing standing in your way of a solar panel installation.