How to Finance

Converting your home or business to solar energy is great for your budget as well as the environment.   Total system prices vary widely and can be a significant upfront investment, however, you can expect to save 40% to 70% over its 30 year lifetime.

But what’s the best way to pay for your solar system?  Often the decision comes down to cash flow.  Do you have the cash necessary to purchase the solar installation?  Do you need any up-front money?  Do you need to borrow?  Below is an overview of the common approaches:

Purchasing provides the most savings and greatest overall value.  The rate of return is significantly higher than what you'd earn in the stock market and most other investments.  To help defray the cost you’ll receive a 30% Federal Tax Credit, earn Solar Renewable Energy Credits (SRECs) that you can sell as you produce solar power (or sell them up front to help finance the system), and get any state renewable energy grants available in your area.  Have your solar installer put together a cash flow statement covering 25 or 30 years to see the extraordinary amount of extra cash you'll have over the expected life of the solar panels.  The significant decrease in your electric utility bill along with the incentives mean the system will pay for itself in 6 to 10 years and then your electricity is free going forward.

Home Equity Loans are a great option to finance your solar PV system.  You’ll receive the same great benefits as above however, you'll pay interest to the bank.  Fortunately, the interest is tax deductible, and there is no penalty for early payoff.  Additionally, you’ll be selling your SRECs for cash which can be used to pay down the principal.

Home Equity Lines of Credit function the same as a home equity loan except that they are not term loans.

Solar Loans are another good option.  They are offered thru third party financial companies and are secured by the solar equipment.  KW Solar Solutions partners with Sungage, a trusted lender with flexible terms.  Be aware that the interest for these loans is not tax deductible.

Leasing and Power Purchase Agreements provide the lowest financial benefits to homeowners.  The overall savings is a small fraction of those earned by owning your solar PV system.  You won't receive the Federal Tax Credit; you can't sell the SRECs and you will not get any state renewable energy grants.  Plus, if you'll be selling your home in the future you'll have to find a buyer who is willing to assume the lease.  Sellers are often required to buy out the lease.  Great for the leasing company, not so great for you!

If you are considering leasing solar equipment from one of the national leasing companies such as Solar City, request that they provide you a quote for the full purchase price of their proposal.  In order to do a true price comparison, ensure the system size quoted is the same as that quoted by KW Solar.   Then, divide the total purchase price by the system size.   This gives you the price per watt of the system, which is the dollar amount educated consumers use to help them make their buying decision.  Then comparison shop for price, quality, warranty, made in the USA equipment, customer service, references, etc.  Please give locally owned solar companies special consideration.


It's a bright day for solar :)

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