How Can I Finance a Solar Energy System?

How Can I Finance a Solar Energy System?

How Can I Finance a Solar Energy System?


Sarah Lozanova – February 11, 2019

Are you considered installing a solar power system on your home? Do you have concerns about the affordability of a home solar energy system? This article is the second of a three-part series that explores the financial aspects of installing home solar.

In many cases, financing a solar system is a good idea financially, especially if you don’t have thousands stashed away to invest. Depending on the installation costs, the energy production, and the cost of grid electricity, many solar power systems are cash-flow positive from day one. This means that the savings from the solar system are greater than the loan payments. This is the ideal situation because it means you are saving money, increasing your property value with the solar system, and using clean energy. It’s a win-win all around.

However, if the term of the loan is short or you have very low electricity rates, you might pay more in monthly loan payments than your utility bill savings. But keep in mind that manufacturers design solar systems to last more than 25 years. So, you will continue to save money after you’ve paid off the loan.

When looking for solar financing, the same general rules apply as with any other type of loan.

  • A low-interest rate means you will pay less in interest over the life of the loan.
  • A shorter term means the monthly payments will be higher. But typically, a short-term loan will cost less over the life of the loan.
  • Loans are either secured or unsecured. Secured loans use an asset you own as collateral.
  • Consider all the fees associated with the loan, such as origination fees, and not just the interest rate.

Home Equity Loans

A home equity loan allows you to use the equity you have in your home as collateral for the loan. It typically has a fixed interest rate for a set term, and you receive the money in a lump sum. This arrangement functions similarly to having another mortgage on the home, but you may need to have your home appraised. Because the home is collateral for this loan, it is essential that you are able to make the payments.

The interest rate on home equity loans is typically pretty low. The payments are also fixed, so it is easier to budget. According to the IRS, the interest on a home equity loan is tax deductible if it is used “to buy, build, or substantially improve the taxpayer’s home that secures the loan.”

Solar Loans Through the Solar Installer

Many solar panel installers offer financing through a third party. These financing programs vary by the installer, but often offer both a fixed-rate and term loan. The home is not commonly used as collateral and the credit requirements vary by the program.

PACE Financing

Property assessed clean energy (PACE) financing is available in many areas of the United States, and solar energy installations often qualify. This loan enables home and business owners to pay for the upfront cost of a solar system and pay the loan back over time through a voluntary assessment. The loan is associated with the property and not the individual. The loan period is commonly between 10 and 20 years.

Just like shopping around for a solar installer, it’s a good idea to shop around for a solar loan to find the best rates and terms. Finding the best solar loan can make all the difference in being able to afford a solar energy system and save money over time.

Cities at the Forefront of America’s Solar Energy Revolution

Cities at the Forefront of America’s Solar Energy Revolution

Environment Colorado released a new report: “Shining Cities: At the Forefront of America’s Solar Energy Revolution”, a first-of-its kind comparison of the growth of solar in major American cities.

Rounding out the top 10 are:

#10: Denver

#9: San Francisco

#8: New York

#7: Indianapolis

#6: San Antonio

#5: Honolulu

#4: San Jose

#3: Phoenix

#2: San Diego

#1: Los Angeles

Hop on one of the new added flights to Denver, Los Angeles, San Jose, or Phoenix from the new SLO Airport terminal to see for yourself. United also began using larger aircraft on existing routes from SBP. We hear the new planes might be solar powered.

8 Reasons To Reconsider Home Solar

8 Reasons To Reconsider Home Solar


1. Rebates: There is still currently a 30% federal tax rebate. Rebates will gradually drop beginning in 2020.

2. Control: Utility companies do not like giving up control of power generation and profits. States are enacting more regulation that is anti-solar. Utilities are adjusting rate schedules to penalize solar users. Those who get in early will save the most money and be grandfathered into existing policy. Take control of your energy needs and costs.

3. Rate Increases: PG&E just announced another series of rate increases before Diablo Canyon closes. Between December 2015 and December 2016, “a number” of approved rate increases resulted in residential rates increasing 21%. In 2017, a high usage surcharge was added, tiers were consolidated from 3 to 2, and we saw a tier price (adjustment) of +5%.  – Business Times, Feb. 17, 2017, Riley McDermid

4. Low Panel Costs: Panel prices are on the rise for the first time since 1977. In 2015, prices were $0.57/watt. In June of 2017, prices hit a low of $0.40/watt. New import tariffs and taxes are expected to kick panel prices above $0.80/watt.

5. Rising Labor Costs: As the renewables industry grows, so does demand for skilled workers. Solar energy labor costs will continue to rise over the next few years.

6. Financing: Programs like $0 down financing, low-interest loans, HELOC, and leases are still easy to acquire. Qualifying credit scores are 675 and up, making financing possible for most homeowners.

7. Savings: Homeowners who installed solar electric just four years ago have already seen a 100% return on investment. Waiting for “something to happen” will cost you thousands/year in lost savings.

8. Trust, Experience, and Value. We use every tool in the toolbox to deliver value in everything that we do, so that your system costs less to install, and saves you more. Since 1975, we have installed over 5,200 solar energy systems across the central coast, saving homeowners $45 million and counting.