With household owners and businesses looking for cheaper, reliable, and cleaner energy, solar panel systems have become more appealing. The availability of sunshine in abundance in many parts of the country makes this the most viable renewable source of energy. One thing that still puts off consumers from renewables such as solar is the high initial cost. While the cost of solar has continued to fall, this is still a massive investment for any household. Installing a solar panel system on an average-size house ranges from $11,144 to $14,696. This is a lot of money and solar financing comes in handy to offset the financial burden and allow you to harness the full potential of solar.
Read on and discover available solar financing options to help you with the solar panel installation.
1. Power purchase agreements (PPAs)
Power purchase agreements or PPAs are popular solar financing options. The zero-down PPA allows you to enjoy the benefits of solar energy now without putting down any money. If you want to harness the benefits of cheap, clean electricity, a PPA is a way to go.
The agreement with the electricity provider includes a set per-kWh rate for the electricity supplied. The electricity provider owns the solar panel system and maintains it as per the service agreement. This means all financial benefits accruing from the solar system, including rebates, tax credits, tax breaks, and other incentives go to the provider. You’ll enjoy 20% to 30% savings on electricity costs compared to utility electrical rates.
If you want to install a solar panel system on your property but you don’t have the initial capital, a PPA is a smart idea. You enjoy cost savings on electricity without the high initial cost of purchase and installation.
2. Solar Lease
If you’re looking for a zero-down solar financing option, consider a solar lease. This is an arrangement where you get into an agreement with a solar energy power generating company. The electricity company provides guaranteed and warrantied performance and hardware, funds the permitting and installation of the solar system.
There’s the option of a zero-down, but you can also go for a tailored pre-paid down payment for the contract. The monthly payment terms are fixed and you’ll get the option of buying the solar equipment at the end of the lease.
Solar lease programs are ideal if you want to spread the upfront solar panel installation costs over a long period. The agreement also includes monitoring and servicing the system
3. Upfront Solar Panel Purchase
This is the direct route to solar panel installation for your home. If you’re looking for the highest returns on investment (ROI), getting ownership of the solar panels is your first choice. Once you pay the full price upfront, you can expect the cash payback from 8 to 12 years. You own the installation, which means you’ll enjoy the savings on electricity spending.
You can finance the solar panel purchase and installation through savings, 401k, HELOC, or a bank personal loan. To qualify for 100% solar loan financing, you’ll have to meet stringent requirements set by your bank. These include a good credit score, reliable income, among other factors. Paying for the system also gives you other benefits, including a full warranty, service plans, federal tax credit, and other incentives.
Solar energy loans vary greatly and it’s advisable to talk to your solar company to find out what they offer. Some installers collaborate with banks and other financial institutions to offer affordable loans. These loans can also fall under home improvement loans, which your bank will most likely offer.
If you want to enjoy the benefits of clean and affordable energy, it’s time to go solar. With these financing options, you can now install solar panels even without paying the total upfront costs.