There are four main ways to pay for solar: cash, loan, power purchase agreement (PPA), or lease.
Paying for your solar system with cash offers the most savings over the lifetime of your panels. By paying upfront, you lock in your cost of electricity at a very low rate for the next 25 years or more, regardless of future utility price increases. Think of it as an investment: focus on your return on investment (often double-digit percentages) and the time it will take for the investment to pay for itself (typically 5-10 years, depending on your location).
Pros:
Maximum savings over time
Immediate ownership of the system
Cons:
Requires a upfront investment
Solar loans allow you to purchase your solar panel system over time. Once the loan is paid off, your solar panels will continue to produce free electricity for around 30 years or more. Solar loans function similarly to other loans, such as mortgages or car loans.
Things to Consider:
Loan length
Interest rate
Upfront fees (e.g., origination fees)
Pros:
You own the system after loan repayment
Spread out the cost over time
Cons:
Interest payments
With a solar lease, you pay a monthly fee for the installation, but you do not own the solar panel system. The third-party company that owns the system is responsible for performance, maintenance, and warranty claims. However, you are usually locked into a lease for a preset term (typically 25 years), and at the end of the term, you may not get to keep the panels or the free energy production.
Things to Consider:
Monthly payment
Potential escalators that increase payments over time
Pros:
No upfront costs
Maintenance and performance handled by the leasing company
Cons:
You do not own the system but can purchase it after 5 years
Long-term commitment
PPAs are similar to leases in that a third party owns your solar panel system. However, instead of a fixed monthly payment, you pay for the actual electricity produced by the panels. Payments can fluctuate month to month, but PPAs are generally offered at a discount to your existing electricity rate with an annual escalation rate.
Pros:
Lower initial payments
Maintenance and performance handled by the third party
Cons:
Payment fluctuations
You do not own the system but can purchase it after 5 years
When evaluating these options, compare the cost of each with your current electricity bill. Consider the following questions:
Is the monthly payment from your loan, lease, or PPA less than your current electricity bill? By how much?
Will the monthly payment change over time? If so, by how much?
How long will you have to make these payments?
By considering these factors, you can choose the best payment method for your solar installation based on your financial situation and long-term goals.
">There are four main ways to pay for solar: cash, loan, power purchase agreement (PPA), or lease.
Paying for your solar system with cash offers the most savings over the lifetime of your panels. By paying upfront, you lock in your cost of electricity at a very low rate for the next 25 years or more, regardless of future utility price increases. Think of it as an investment: focus on your return on investment (often double-digit percentages) and the time it will take for the investment to pay for itself (typically 5-10 years, depending on your location).
Pros:
Maximum savings over time
Immediate ownership of the system
Cons:
Requires a upfront investment
Solar loans allow you to purchase your solar panel system over time. Once the loan is paid off, your solar panels will continue to produce free electricity for around 30 years or more. Solar loans function similarly to other loans, such as mortgages or car loans.
Things to Consider:
Loan length
Interest rate
Upfront fees (e.g., origination fees)
Pros:
You own the system after loan repayment
Spread out the cost over time
Cons:
Interest payments
With a solar lease, you pay a monthly fee for the installation, but you do not own the solar panel system. The third-party company that owns the system is responsible for performance, maintenance, and warranty claims. However, you are usually locked into a lease for a preset term (typically 25 years), and at the end of the term, you may not get to keep the panels or the free energy production.
Things to Consider:
Monthly payment
Potential escalators that increase payments over time
Pros:
No upfront costs
Maintenance and performance handled by the leasing company
Cons:
You do not own the system but can purchase it after 5 years
Long-term commitment
PPAs are similar to leases in that a third party owns your solar panel system. However, instead of a fixed monthly payment, you pay for the actual electricity produced by the panels. Payments can fluctuate month to month, but PPAs are generally offered at a discount to your existing electricity rate with an annual escalation rate.
Pros:
Lower initial payments
Maintenance and performance handled by the third party
Cons:
Payment fluctuations
You do not own the system but can purchase it after 5 years
When evaluating these options, compare the cost of each with your current electricity bill. Consider the following questions:
Is the monthly payment from your loan, lease, or PPA less than your current electricity bill? By how much?
Will the monthly payment change over time? If so, by how much?
How long will you have to make these payments?
By considering these factors, you can choose the best payment method for your solar installation based on your financial situation and long-term goals.