Three Ways to Finance Rooftop Solar — Are loans all the rage?

Solar is beautiful

So you are thinking about installing solar, but don’t know where to start. Don’t worry, I have a few options that you can explore to make sure you are making the right decision, financially.

Depending on your current position in life, it may seem difficult for you to adopt solar; you probably want to save up for your family and raising kids, or maybe you are planning on moving in the next few years. Believe me, you can still go solar, and there are affordable and easy options for short-term and long-term needs.

Here are three options for purchasing a solar panel system for your home:

1. Outright buy the solar panel system. You can do this either through up-front cash purchase or financed with a simple loan. Simple loans are becoming all the rage in solar, and they generally are pretty easy to come by through your local installer or through a home equity loan. The great part about a loan is that it is no money down, and you own the system and are in control.
2. Lease the solar panel system or sign a Power Purchase Agreement. For a lease, you pay little or no money up-front and instead pay a fixed monthly fee to a third-party solar company for the solar panel system. A PPA is where you would pay a fixed fee per kilowatt-hour of energy generated by the solar system. (A quick note: a kilowatt-hour, or kWh, is the unit of energy you purchase from the utility or energy your solar panels produces.)
3. Finance through a Property Assessed Clean Energy (PACE) program. This option is like a lease, but the solar panel system is financed through your local government and paid back through your property taxes. This is a pretty new but exciting option for solar financing to keep track of. Head over to Pace Nation to find out more and see if this financing is available in your area!

You might be wondering: “OK, so if I purchase a solar system, how do I actually save money and pay this off?” Well, good question, but it is really an easy one. You are saving money on your electricity bill with the energy produced by the solar panel system. The savings you see on your monthly electricity bill dictate how long the system takes to pay off — or when you get your return on the investment. Now there is a funny little thing called “net metering” that basically allows you to sell power that you aren’t using back to the grid at a reasonable rate. But let’s save this topic for another post — stay tuned!

So I mentioned that solar loans are all the rage these days, but what option do you really prefer for your situation? We would love to hear from you!

You can find a short video summary of your financing options on our YouTube channel. But until next time, join the conversation on solar financing using #solarhood on Twitter.