How To Pay
Despite the diverse reasons for purchasing a solar system, a common thread exists when it comes to deciding - what's this going to cost me?
There are now options that allow you to take advantage of affordable financing on top of the available incentives that make choosing solar power easier than ever.
Basic Financing Methods
Cash up Front:
Good option for homeowners who have
accumulated comfortable reserves and live in an energy market where
PV
investment returns exceed yields by conventional investments.
First Mortgage and Refinancing:
Typical home mortgages
are often the very best financing arrangement in which the interest is tax
deductible. The additional dollars added to your mortgage payment is typically
less than your current electric bill, saving you money every month.
Home Equity Line of Credit:
For those homeowners who have
built enough equity a home equity line of credit (HELOC) allows you to borrow as
needed against the equity in your home. Although the interest rate may vary,
they are often tax deductible.
Credit Cards:
The high interest rates and non tax-deducitible
payments of credit cards make them a secondary choice for financing a solar
power system.
Power Purchase Agreement (PPA):
In a PPA the provider
finances, installs, owns and operates a renewable energy system on your property
with no capital investment from you. You are only billed for the actual
electrical output, usually at a discounted price per kWh with locked in rates. At certain milestones, you can purchase the
PV system at a discount or elect to
continue the agreement.
Bank secured and unsecured loans:
Most secured loans are
home equity based and may be tax deductible. Interest incurred from unsecured
loans is not tax deductible.
Vendor Financing:
Some PV module manufacturers offer
financing directly to their customers at low monthly payments.
Utility and State Loan Programs:
A number of states and
utilities have established loan programs to help homeowners purchase PV systems.
Associations Financing:
Electric and Gas Industries
Association (EGIA) www.egia.com provides financing to its contractor members.
This is through its partnership with GE Money and GEOSmart Sustainable Financing
Solutions program.
Local Government Loans:
An exciting new development in
residential PV financing that is becoming more widespread. It allows
municipalities to create special tax assessment districts in which homeowners
can borrow money from the local jurisdiction and pay it back over time through
their property taxes.
Energy Efficient Mortgages:
For homeowners who want to
finance energy efficiency measures e.g. Solar in new or existing homes. Offered
through FHA or VA Programs.
Operating Lease:
Like leasing a vehicle, you pay a
monthly payment to rent the solar panels. Lease payments are usually at or below
utility costs. The leasing company uses tax incentives, Renewable Energy
Certificates (RECs), and depreciation expenses to fund the program. Although leases do not
exist in all states, programs are being developed as states improve their rebate
programs.
