The cost of installing solar panels has fallen by 75% since 2010, and banks now recognize the investment potential of a home solar system. That’s why they’re willing to offer financing to help you install solar on your home and start saving money today. And with the 30% tax credit for solar installations available only until the end of 2019, now is the time to get solar quotes for your home.
With a solar loan, you get the full tax credit benefit and you own the system from day 1. In the green states on the map above, solar loans are an excellent option and can save you thousands over the 25-year life of the system.
If you prefer not to own the panels on your roof or you can’t take the federal solar tax credit, a Solar PPA (Power Purchase Agreement) may be right for you. PPAs are contracts with the solar installation company, who puts the solar panels on your roof at their expense and sells you the solar electricity for a lower price per kilowatt-hour than you currently pay the utility company.
Also known as “third-party ownership,” PPAs can be a great way to start generating your own clean energy without spending thousands of dollars up front! If you live in a green state, congratulations! $0-down solar is likely available in your neighborhood.
Connect to a solar expert in your area to learn more!
The reason these states are so good for solar loans and third-party ownership is the great renewable energy policy and incentives they’ve put in place to make sure solar is a good investment. In these states, you can get financing for solar panels or sign a PPA and buy electricity from a solar company for cheaper than power from your electric company and still make a small profit on their investment.
Taking a loan to buy a home solar installation is like getting a small business loan for a business that’s sure to succeed! That’s because you get a 25-year production warranty when you install solar panels on your roof. Many premium solar panel manufacturers add in a 25-year workmanship warranty as well, and great solar installers generally offer 10-year warranties on the work they do.
With all these warranties, and the knowledge that your solar panels will likely outlast them, all you have to look forward to is saving money on electric bills!
Solar loan providers like Mosaic and EnerBank off simple 10- to 20-year payback loans, with a slight catch. You have to use the 30% federal solar tax credit to pay down the loan and keep your monthly payments low. But these loans are unsecured, low-paperwork, and very low-interest compared to many other loans out there.
Another option is a home equity line of credit, or HELOC. These tend to be low-interest and by obtaining financing yourself, you can pay the cash price to install the solar system, meaning you can save a few points in finance charges you might pay with a solar loan provider. But HELOCs are harder to get and more paperwork-intensive.
Either way, your loan payments should start out around the same as you would have paid for electricity before going solar. Over time, as the utility company raises rates, you’ll begin to see savings every month. Then, after the loan’s paid off you get the full benefit of free solar electricity for the last 10-15 years of owning the system, saving you thousands of dollars in the long run.
First, you sign a 20-year agreement with a solar installation company. Don’t worry if that seems long: your installation will be warrantied to keep producing energy for the entire term.
Then you get panels on your home with no money down, and you pay the company a monthly payment that is less than your monthly electric bill savings. That’s huge! People around the country save an average of about $36 per month on their energy bills with a solar PPA. The average home needs about 900 kilowatt-hours (kWh) of electricity per month, at a cost of $.15/kWh. Getting a PPA for $.11/kWh will save you $36.
Here’s how the numbers break down:
PPA Prices tend to start out significantly lower than the retail cost of electricity. Your installer will work with you to design a system that can meet your needs. If you can replace all the electricity you use with solar, you’re looking at a savings of about $35-$40 per month.
After the first year, the cost of a PPA usually rises by about 2% per year, to keep pace with inflation. The cost should stay under the retail cost for the long-term, because utility companies traditionally raise rates by an average of 3.5% per year. Still, this is where you’ve got to be careful. Before you sign a PPA agreement, make sure to get an independent assessment of your utility price increases and read the fine print on the agreeement.
Like we said above, the best states have laws like Renewable Portfolio Standards and Net Metering to encourage rooftop solar and make sure you get full credit for the energy your panels produce. Many of the grey states above are missing one or both of these laws, which makes the economics of solar a little more difficult for third-party owners.
Even in these states, you might still find some good financial incentives to help you take thousands off the cost. And you can still pay cash for a solar panel system, or in many cases get a low-interest loan that pays itself back over time with the electricity savings. Click your state to find out more, or connect with a solar expert in your area to see what options are available to you.
Is your state red? Ouch. Some states have laws that prohibit third-party ownership of solar systems. These states also tend to have poor incentives and policy to keep solar owners safe in case the utility companies decide to alter the deal.
This usually means homeowners have to finance the cost of solar themselves, which can work. But without a good base of strong solar policy, it can feel like flying by the seat of your pants. Solar loans are offered by many of the biggest installers and banks all over the country, so click your state, read about the options you have, and get excited about saving money with solar!
Now that you’re so knowledgeable about solar PPAs, why not connect with one of our solar experts to see if you can get $0-down solar and start saving today!