Financing Solar Energy Systems

Financing solar energy systems is a topic prone to causing great confusion among consumers. Perhaps you’ve done all the research and you’re ready to invest in solar energy. You know it’s a sound investment. You know it increases the value of your home, saves you thousands of dollars in energy costs every year and protects you from power outages. It’s a step you are ready to take, but you may not be sure how. Like most consumers, you may not be in a position to purchase outright, but should you lease? Get a loan? To find the right answer, you must first determine what the best option is for your financial situation, your energy needs and the best value for your money. Each situation is unique, as the cost of your system will depend on several factors. Fortunately, most solar companies already have the answers you need.

Determining the Best Solar Financing Option

When you work with your solar installation company, they will help you determine your energy needs, which in turn will help determine the size and placement of the panels. You must also factor in the cost of battery backup, if necessary. Once you have determined your total system cost, you can choose the best way to finance your solar array. In the states of the Intermountain West region, you have the several options, which include traditional financing, private loans and leasing. Commercial customers also can use a program known as Property Assessed Clean Energy (PACE), while public entities have Power Purchase Agreements (PPAs) and Financing and Qualified Energy Conservation Bonds (QECBs) programs available.

Traditional Financing

This is accomplished much like financing any other home improvement. Traditional financing is not the most common method for purchasing alternative energy systems today, but it works well for many customers. Check with your financial institution or credit union for information on energy-efficient mortgages, personal lines of credit, home equity loans and Title I home improvement loans. Because this option can be a bit onerous with regard to documentation and qualification, many customers take advantage of programs offered by their solar installation contractor instead.

Private Loan Programs

Most alternative energy installation companies offers financing for solar projects, either through private financing companies or cooperating financial institutions. The benefit of these programs is the quick and simple process and the flexibility to wrap most of your options into the financing agreement, including installation costs.

Leasing Solar Panels

For years, this was the only way to obtain a solar energy system. Leasing means that someone else owns the equipment and you pay a monthly fee to lease it. Leases can have either fixed, escalating or de-escalating monthly payments over the lifetime of the agreement, which can be 15 years or more. Leases may offer little to no money down, but they don’t qualify for tax credits or available rebates. Based on the structure of these agreements, it is sometimes difficult to achieve a desirable return on investment.

Qualified Energy Conservation Bonds

These are tax credit-qualified bonds that can be issued by local, state and tribal governments. They are for use in funding energy-efficienct and renewable energy community projects.

Property Assessed Clean Energy Financing*

This is an option for some commercial customers involving 100 percent financing paid back over 15 to 20 years through your county property tax payment.

Power Purchase Agreements

In this program, available to most government, nonprofit, and public entities, a coordinating entity owns and maintains the system on your property. The customer pays for the energy it produces, much like you pay your existing utility company. The primary benefit of a PPA is that your rate is pre-negotiated for the lifetime of the agreement, so you can easily budget and avoid escalating costs.

Don’t let confusion over financing stop you from making the move to energy independence and financial benefit. Intermountain Wind and Solar has all the answers on this topic, and offers its customers a highly advantageous program for financing solar energy systems.