Expert guide to solar financing: How to find the best solar financing.
Updated: Jun 10
What Solar Financing Is Right for Me?
With so many options now available for financing a solar system it's easy to get information overload. Don't worry, we’re here to help! Let's take a look at the most common solar financing options so that you can decide which one is best for you.
Right at the top of the perks list for financing rooftop solar is having your system designed and installed with no upfront cost. Yes - those “zero-down solar” advertisements you’ve seen are the real deal!
We've partnered with the most trusted names in solar financing to ensure that our customers always get the best deal for their families. These providers offer a number of great options. You can save on your monthly electricity without having to pay anything out of pocket beforehand.
Let’s talk about how Solar Leases, Power Purchase Agreements (PPA), and Solar Loans work and how to determine which one is right for you.
Leasing is the easiest way to enjoy the benefits of a residential solar system. You essentially “rent” the panels and equipment that we install. Similar to leasing a car or apartment you pay a fixed monthly payment. With solar leases, you don't own the panels, the leasing company does. This means you get all the benefits of solar without having to maintain the system yourself. The leasing company cleans and repairs the system as needed. This also means that as the owner the leasing company keeps any rebates, tax breaks, or other incentives that come with installing the system.
Solar lease agreements typically have an annual rate increase built in. Most lease agreements feature a 3% annual price increase but remain 20-30% cheaper than the cost of traditional electricity which continues to rise yearly.
Power Purchase Agreement (PPA)
PPAs are another easy way to finance your solar installation. Instead of leasing panels you pay for the power they produce monthly. Like leases this means you get the benefits of solar without having to maintain the system yourself. It also means the finance provider keeps any rebates, tax breaks, or other incentives that come with owning a residential solar system.
Just like traditional electricity, PPAs are an agreement to purchase the power generated by your system at a set per-kWh rate. Your solar rate is 20%-30% lower than your utility bill and may increase by up to 3 % per year depending on your agreement.
A key difference between PPAs and Leases are ownership. PPAs generally allow you to purchase the system after the 5-year mark. Leases have stricter rules around ownership and often require you to complete the term of your agreement before you can own your solar panels.
Another common option is the zero-down solar loan. Similar to other loans, you can borrow the amount needed to install your system and make monthly payments at a fixed interest rate. With solar loans you are the system owner. That means you're entitled to all the financial benefits of solar ownership. These include state and local rebates in addition to the federal solar investment tax credit (ITC).
There are a number of options when shopping for a solar loan. Terms include 10, 15, 20, and 25-year options, and various interest rates are available - usually in the 2.99% to 5.99%* range. Your monthly payment depends on how much your system costs to install, your interest rate, loan term, and the type of loan you choose. Most solar loans don’t penalize early payment.
What incentives do I qualify for?
Owning your rooftop solar system can be very beneficial if you qualify for the available credits and rebates. The Federal solar investment tax credit is based on how much you pay in taxes, while other rebates depend largely on where you live. There are also a growing number of incentives for backup batteries as energy storage becomes more important around the country. For a free estimate on the cost of your solar system with state, federal and local incentives enter your zip code below.
Other benefits of Solar Financing
In addition to zero upfront cost, there are a number of "hidden" perks to financing rooftop solar. Warranties and production guarantees protect you from system failures or damage that may arise. Finance companies also provide customers with access to monitoring software to know exactly what your system is producing. Another little-known benefit of solar financing is the ability to borrow money without a major impact to your credit.
We hope we’ve given you the information you need to make an informed decision on what best fits your lifestyle. If you have more questions about financing or the solar installation process be sure to give us a call at (855) 4-KUUBIX (458-8249). Our qualified Energy Consultants are always available and happy to help.
*Interest rates based on pre-approval credit score