Given the benefits of going solar, including saving money on electricity bills, saving the environment, and gracious tax benefits, the obvious next step is deciding how you will pay for it all. Given the average residential installation costs about $18,000 according to SEIA, solar investors will need to research all the options for financing their solar system available to them and decide works best for them. There are five major ways to pay for solar panels:
- Solar leases
- Solar PPA
- Solar Cash Purchase
At CRJ Contractors, we regularly show clients how to finance their solar panel installation. Our consultations include assessing investor’s credit, debt-to-income-ratio, and financial goals for installing solar panels. We help both businesses and residents in the Pikes Peak region reap the benefits of solar installation with our expert knowledge in the renewable energy field.
Four Ways to Finance Your Solar Installation
1) Solar leases
Solar leasing is easily the most popular option for solar investors. Homeowners can have solar panels installed for $0 down. There’s predictable monthly rates, solar panel companies will come and install it on your home — and ultimately you get to save a little cash every month with very little hassle. Think of leasing as renting solar panels for a typical 20 year agreement.
2) Financing Solar Loans
There are five popular ways to finance your solar loans for Colorado residents:
1) Energy Efficient Mortgage — For homeowners, you can take out a energy efficient mortgage in addition to your house mortgage. The eligibility is similar to if you can afford a home mortgage, but works in favor for those with energy efficient homes: for example, homeowners with low utility bills and those who can afford to pay a more expensive mortgage payment given debt-to-income ratio. The EEM loan will cover the costs of installation, repair and maintenance, in addition to the solar panels themselves, which will be serviced by credited solar panel companies in your region.
2) Home Equity Loan – Many homeowners take advantage of their HELOC (Home Equity Line of Credit) for home improvements: 29% use the loan for home renovations and improvements. Luckily, you can use the Home Equity Loan for solar installation too. Make sure you have a great credit score and can afford the payments. Rates start at a fixed rate of 5%.
3) Solar Loan — Colorado homeowners can take advantage of Elevations Credit Union’s generous loans for rooftop solar panel installations. APR starts at a gracious 2.75% for 36 month terms. For 15 year agreements, APR starts at 5.5%.
4) RENU— in partnership with the Elevations Credit Union, Colorado homeowners can receive up to $50,000 in loans for Solar PV installations. There are 3, 5, 7, 10, and 15 year loan terms available to solar investors. There is no money down required in addition to low fixed interest rates.
5) CPACE — Commercial Property Assessed Clean Energy is a program that finances business owners to build eligible energy efficient projects, including but not limited to PV installations. CPACE offers financing that is repaid through an added assessment billed with your property tax at the end of the year. Technically, the debt is tied to the property rather than a loan provider, making this not a loan but a lien.
3) Solar Cash Purchase
For those who have the funds, buying a system outright is a true luxury. Buying outright means you pay no money in interest, loan servicing fees, and can reap the benefits of the ITC now at 26%. Of course the only downside is that it requires some serious capital: $10,000 – 20,000 given the average residential installation. The pluses outweigh the minuses, however if you happen to be a “baller” for solar.
4) Solar PPA
Power Purchase Agreements (PPA) are similar to lease agreements in it costs no money down, solar panel companies will install the solar panel system on your residence or business, and you can immediately start saving on your energy bills.
However, with PPA’s you agree on a set amount of Kilowatts per hour regardless of how much energy is conducted. This is good news on cloudy days, but this is bad news on sunny days. In both cases, you won’t be benefiting from either of the tax benefits, rebates, or added property-value, as you don’t own the PV systems under the lease agreement.
Finance Your Solar Panel Installation Today | CRJ Contractors
Financing your solar panels is the next step for serious solar investors. Luckily, there are many options available in the form of leases, loans, and PPA agreements. We recommend talking with a solar panel professional who can assist you in discovering the best way to finance your bright future in solar. At CRJ contractors, we consult many business owners and residents of Colorado Springs on financing their next big solar project, saving them thousands of dollars. If you have any questions about financing solar today, feel free to contact us, we would be glad to talk with you!