Solar power is a renewable and clean source of energy used for a variety of applications. With solar panel financing, prospective solar panel owners can apply for financial assistance to help pay for solar panel purchase and installation.
Continue reading the many solar financing choices available and find out which option would be the best fit for you.
What Determines the Best Solar Panel Financing Option for You?
The price of solar panels fluctuates quite often, so it is important to find the best financing option for your needs. You may have to consider many factors when deciding on the best solar panel financing option.
Some of them are listed below:
- Evaluate the installation cost as per your energy use. For example, reduced energy use enables owners to install a smaller, more affordable solar panel.
- Analyse your budgetary constraints.
- Evaluate the total cost savings of using solar energy in the long run.
- Research well for tax credits, whether for commercial or residential purposes.
- Evaluate the post-installation maintenance.
How Does Solar Financing Work?
Now that you have found your ideal solar company and selected a few solar panels to use, it’s time to look into different financing options.
Owners are looking to make the switch to solar power, but they often find themselves at a loss as the initial cost of a solar panel is quite high. Solar panels are a great way to save on energy bills, but financing them can be hard.
Here are three excellent solar financing options for you to consider:
Financing through Cash
Cash payments for solar panels can help you to maximise your long-term savings.
It may come as a shock to you but consider the potential return – by acquiring a whole household solar system, you are effectively prepaying for around 25 years of electricity.
Cash purchases offer a variety of advantages, including protection from rising utility costs, inflation, and interest, which can save you tons of money in the long term.
However, it is well known that the initial cost of solar equipment is typically rather high, and so the disadvantage of paying cash is upfront. Paying in full might be a concern for homeowners.
Who may opt for it:
- Owners who want maximum savings
- Owners having sufficient funds to pay for their solar unit in full
Financing through Loans
For solar panel owners who are unable to pay this amount upfront, solar loans enable you to borrow money from a lender to finance your installation. You may repay over time with energy savings.
The most prevalent types of solar loans are:
- Unsecured personal loans
- Home equity loans or lines of credit
- In-house financing
The essential benefit of a solar loan is that it gives borrowers greater budget freedom while still providing the benefits of system ownership. If you go the loan route for solar financing, pay close attention to the annual percentage rate (APR), down payment amount and other loan payment conditions.
Interest rates and fees will be a major driver for your solar payback period and the total cost of your system. Access to low-interest financing options could save you a lot of money.
Don’t forget to do a thorough study on this as well.
Who may opt for it:
- Owners who lack the financial means to purchase a solar panel system yet want the benefits it offers
- Owners who wish to take advantage of all available discounts and tax benefits
Financing through Lease
You can also lease solar panels or sign a power purchase agreement (PPA) to buy the electricity generated by solar panels.
While leasing, the solar company retains ownership of the panels.
The only significant difference between solar leases and PPAs is:
- A solar lease requires fixed monthly payments to use solar panels and other solar equipment
- A PPA only requires monthly payments for the power generated by the panels.
While the convenience of a solar lease may appear appealing at first, do note that without system ownership, you will be ineligible for a solar tax credit.
Who may opt for it:
- Owners that are opposed to system upkeep
- Credit-challenged owners
- Owners ineligible for a tax credit
- Owners who are more concerned with environmental stewardship than with cost savings
There are numerous reasons why a shoe company or almond farmer would invest in a solar panel system.
An expanding small business owner may decide to install a few low-cost solar panels just to reduce overhead costs and increase revenue.
A large corporation’s board of directors may choose to leverage its vast solar array as a marketing tool, demonstrating its dedication to sustainable energy.
Whatever the cause, there are various factors to consider when selecting a solar panel system for business use. So, every possible factor should be equally reviewed, researched, analysed, and evaluated.
Solar energy plays a critical role in environmental conservation. It contributes to averting the threat of global warming, which is a concern. Installing a new solar panel system for your home or business contributes to the green energy movement.
Solar energy accounts for 2% of global electricity usage. The source has steadily increased throughout the years.
Without question, the growing popularity of solar power has resulted in the introduction of new financing options for prospective owners. However, it is equally crucial to weigh all the benefits and drawbacks of any financial investment you want to make.