So you’ve decided to go solar, now it’s time for you to figure out how you will pay for it. If you don’t have the money to pay for the installation and equipment upfront, there are a variety of solar panel financing options for you out there. We’ve picked a few popular ones here and elaborated on them for you.

  1. Solar Leases and PPAs
  2. Property Assessed Clean Energy Program (PACE)
  3. Shared Solar

Solar Panel Financing options

Solar Panel Financing Loans

We’re sure you’ve heard of home improvement loans. Well, solar loans are no different, except one fundamental difference: solar panel loans allow you ownership  of an asset that generates financial value. This includes the electricity generated by the panels and the 30% federal investment tax credit and other cash rebates. Now the next question in line: Who provides these loans? Here's a breakdown of entities that are capable of helping you with solar loans:

  • Solar manufacturers
  • Credit Unions
  • National lending institutions
  • Private-public partnerships
  • Utility companies

Finally, like any other product, solar loans come with different terms, structures, and conditions. If you want to determine what kind of loan suits you best, you will need to ask yourself the following questions:

  1. Do you want a secured or unsecured loan?
  2. What is your capacity when it comes to paying a monthly installment?

Solar Leases and PPA

Solar leases and PPAs (power purchase agreements) you get out of paying upfront for the solar panels and their installation. Instead, you just need to pay a certain amount of money to the installation company monthly. Another plus is that since you don't own the panels, you don't have to worry about maintaining them either- the company that owns them will take care of that.

It is important to remember that despite the similarity, leases and PPAs are different. Here is a breakdown of both:

  • Solar Leases: This is a monthly amount you will pay to the company for renting the equipment.
  • PPAs- This entails you paying for the energy generated at a lower price as compared to the market rates.

Although both options are a great alternative to purchasing the panels upfront, solar leases are a better option for the consumers that want to purchase their panels at the end of their term. Solar leases and PPAs help you save about 10%-30% of your energy costs. The only off-putting point is that the federal investment tax credits and cash rebates will go to the company that owns the panels and not you.

Property Assessed Clean Energy (PACE) Program

Some states allow you to finance your solar through a PACE program. The homeowner loans money from an entity such as the state, city, county or town, and pays that back through higher property taxes over a period of 15-20 years. It is important to understand that PACE programs do not reduce equity in your home. If you sell your property, the tax liability gets transferred to the next owner. Electricity savings usually exceed the loan payments in this case which makes this a great solar panel financing option for going solar. Currently, 27 states across the USA offer PACE programs.

Shared Solar

Many homeowners cannot go solar due to ownership and shading issues. According to the NREL, only 20-22% of the area on a roof is eligible for solar panels in most cases. Shared solar is a great way to save money on installation and maintenance costs by going with solar panel financing. You can go for community solar or third-party ownership. In both cases, you will be paying an electricity bill equivalent to the amount of energy you consume from the panels each month.

After that breakdown, we’re sure you already feel more comfortable with the idea of going solar for your energy needs. Your research won’t end here, we suggest you do a thorough check on which option suits you best and then arrive at a decision.