Solar can be a great investment that can save you money on your electricity bills and reduce your carbon footprint, but thinking about how to pay for the panels and installation can feel overwhelming.
Fortunately, there are different ways you can finance your solar project and find the best option for your budget and needs. Keep reading for an overview of five common ways homeowners can pay for solar panels: loan, purchase, lease, power purchase agreement (PPA), and pre-paid PPA:
A loan is a type of debt financing that allows you to borrow money from a lender and pay it back over time with interest. You can use a loan to buy the solar panels and own them outright. You will be responsible for the maintenance and repairs of the system, but you will also benefit from any tax credits and incentives that are available for solar owners. If you have a good credit score, a loan is a good option and can maximize your savings in the long run.
A purchase is when you pay for the solar panels upfront with cash. This is the simplest and most straightforward way to finance your solar project. You will own the system and enjoy all the benefits of solar ownership, such as tax credits, incentives, net metering, and increased home value. Purchasing solar can be a good option if you have enough money to cover the upfront cost and want to avoid paying interest or fees.
A lease is a type of contract that allows you to rent solar panels from a third-party company for a fixed monthly fee. The company will own, install, maintain, and repair the system for you. You will not have to pay anything upfront, but you will also not be eligible for any tax credits or incentives that are available for solar owners. You will only pay for the use of the system and save money on your electricity bills. A lease can be a good option if you want to go solar with no upfront cost and hassle-free maintenance.
Power Purchase Agreement
PPA is similar to a lease, but instead of paying a fixed monthly fee, you pay for the electricity that the solar panels produce at a predetermined rate per kilowatt-hour (kWh). The rate is usually lower than what you would pay to your utility company, so you can save money on your electricity bills. The third-party company will own, install, maintain, and repair the system for you. You will not have to pay anything upfront, but you will also not be eligible for any tax credits or incentives that are available for solar owners. A PPA may be for you if you want to go solar with no upfront cost and pay only for what you use.
Pre-paid PPA is a type of power purchase agreement (PPA) where you pay a lump sum at the beginning of the contract for a fixed amount of electricity that the solar system will produce over a certain period of time. You can benefit from locking in a low and predictable electricity rate, while a third-party owns and maintains the system. You won’t be eligible for tax credits or incentives, but a pre-paid PPA may be suitable for you if you want to enjoy the advantages of a PPA without having to worry about monthly bills or variable production.
A plan for everyone
As you can see, there are different ways homeowners can pay for solar panels, each with its own advantages. The best option for you will depend on your financial situation, preferences, and goals.
If you have questions about different payment options contact us today, or visit our Plan and Services page for more information.