How Does Financing Solar Panels Work?

How Does Financing Solar Panels Work

Installing solar panels in your home is one of the best ways to save the environment. It also saves energy costs and increases the value of your house.

There are many reasons to switch to solar energy. But the process is not always cheap. In this article, we help you find the best ways of financing solar panels. Keep reading to find out!

Financing Solar Panels

Do solar panels sound expensive? In some ways, they are. According to the Clean Energy States Alliance, a system can cost up to tens of thousands of dollars to install.

The upside is that you can expect to save 10-30% of the cost of your utility bill every month once you’ve installed the panels. That’s worth the hustle!  

Moreover, for those who can’t afford it, there are options. The costs are steadily decreasing and there are programs out there to make them more affordable.

You also don’t have to do it alone or pay the amount upfront. Firstly, there are various solar providers out there that make your transition to solar power easy. Secondly, there are a few common ways to approach solar panel system financing that could suit anyone.

These are cash purchases, a lease-to-own, a solar loan, and a Power Purchase Agreement. Let’s dive into them.

1. Cash Incentives

If you have the money and the tax incentive, then you are best suited to buy the solar power system. This avoids a third party and interest rates. You completely own the system and benefit from the savings of your investment. You also receive the 26% federal credit and any other incentives.

2. Solar Loans

A solar loan means you take out a loan from lending partners to finance your new solar power system. Your monthly payments are often less than what you’d be paying for your utility every month. You’re also liable to receive the tax incentives. You also avoid any upfront cost if you want to avoid paying cash.

3. Solar Leases or PPA

When it comes to the lease or purchasing power agreement (PPA), you do not own the solar panel system that you will use. You do, however, reduce the initial investment costs. Often, the electrical savings outweigh the costs, which means you’re instantly saving money on electricity. There are two types of leasing, outlined below.

A solar lease is when you agree to pay a monthly amount to rent the solar panel system. The rent is calculated according to the electricity that is produced. 

A solar PPA is different from leasing. Instead of renting the solar panel system, you buy the power generated by the systems at a set price per kWh.

Solar Energy Is for Everyone

As you can see, there are various methods for financing solar panels. You do not need to pay upfront in cash if you can’t afford it. It’s important that solar energy becomes more widely available so that we can create a better future for our children.

If you want to read more information about the latest technologies or business trends, then head over to our blog!