Financing a Solar Panel Installation
Many business owners — and
even homeowners — are turning to solar electricity as it becomes more readily
available. Solar panels can reduce electricity costs, are better for the
environment, and last for about 20 years before having to be replaced. Using
solar power also boosts property value and makes the owner eligible for certain
tax credits and rebates.
Though they can help save on
monthly bills, installing solar panels can be expensive. It can cost between
$25,000 and $35,000 to install a solar panel system in a home. Many factors go
into this price, such as how much roof space the building has and the distance
from an electricity grid connection.
Luckily, many financing
options are available specifically for solar panel installations.
Solar loans allow for the
owner to pay for the solar installation over a fixed term. They are usually
offered by a solar energy company or traditional financial institution with a
low interest rate and fast approval time. A solar loan is a good way to avoid
the upfront expenses of using solar energy. The borrower is generally given
complete ownership of the solar panels as soon as they are built, so he or she
can start benefiting from them immediately.
PPAs versus Solar Leases
Like solar loans, PPAs (power
purchase agreements) and solar leases are a way to avoid the cost of solar
installation. But they differ in that the ownership of the panels goes to a
third party, to whom a monthly fee is paid for use of the panels.
The difference between a
lease and a PPA is that with a lease the equipment is being rented, and with a
PPA the power being generated by the panels is being purchased at low price.
Anyone who wants to someday own the solar panels should get a lease.
While leases and PPAs will
help save a lot on power bills — between 10 and 30 percent — all tax benefits
will go to the owners of the panels. On the plus side, the owners are also
responsible for all repairs and maintenance.
Purchasing Solar Panels Outright
Of course, anyone can purchase
solar panels with cash. But if someone doesn’t have the cash and doesn’t like
any of the previous options, he or she can apply for an Energy Efficient
Mortgage. They are available through the United States government and certain
financial institutions. One may qualify for one of these if he or she is
purchasing a property that is already eco-friendly in some way. However, some
may also qualify if they are simply looking to upgrade their current property.