Ways to Pay for Solar

19 Jun Ways to Pay for Solar

There are 3 basic options when going solar: system ownership, leasing, and a Power Purchase Agreement (PPA). While we are big proponents of the ownership model, we wanted to give you a summary of how these options work and the benefits that come with each.

Owning Your System

You can outright buy a new solar system by paying in cash, or you can take out a loan to fund the purchase. With this method of owning your solar array, you reap all the benefits of any available tax credits and other financial incentives. This is by far the most profitable way to go solar and offers a great return on your investment.

No matter where you live, purchasing a new solar array provides you with a Federal Tax Credit of 30% in 2019 (will decrease to 26% in 2020 and 20% in 2021). These significantly cut the cost of going solar, so you can pay it off sooner and see the savings flow in. Once the system is paid off, which is typically between 5 and 7 years, your electricity is basically free forever! These monthly savings add up to tens of thousands of dollars over the life of the system.

Many solar loans offer a $0-down initial cost and the payments are structured to be lower than your old electric bill. This means you’re really saving money from the minute you go solar! They’re also a great option because they’re not a mortgage, offer attractive interest rates (currently around 5-6%), and may lend to borrowers with credit scores starting around 620. For more information about available solar loan options, check out the links below:

www.umassfive.coop/personal/loans/sustainability/solar-loans
www.masssolarloan.com/

Leasing and Power Purchase Agreements (PPA)

When you lease a solar panel system, it is not technically yours. It is like you are renting the equipment from the solar company. They will receive the tax benefits and rebates, while you see about a 10-30% savings on your electric bills by using renewable energy. These leases are usually around 20-year commitments and are structured so that you make a lower monthly lease payment than your existing electric bills.

In this case, the solar company is in charge of maintaining the system and while some charge for the installation – most don’t. This is another scenario in which you could have solar panels at $0 down, but you wouldn’t benefit from the available tax credits, rebates, net-metering incentives, or long term savings. They may be beneficial to non-profit organizations, or individuals without tax liabilities that may not benefit from the tax credits.

A Power Purchase Agreement is very similar to leasing solar panels in that the solar company owns and maintains the system, and you will not receive the tax credits, rebates or other incentives. The key difference with a PPA is that instead of making a lease payment to the solar installer, you agree to purchase the power generated at a set price

Whichever way works best for you, we’re here to help you along every step of the process. If you have any questions please feel free to give us a call, or fill out our contact form to request a free estimate for purchasing a new solar system for your home or business.