Solar: good for Mother Earth, great for your wallet and a guaranteed way to increase the value of your home. But how do you pay for it?
The good news is paying for solar is not as tough as you’d think. For one thing, lower manufacturing costs and the dropping price of silicon are making solar more affordable everywhere. Also, solar installation companies offer flexible options that puts solar within reach for the average homeowner. Let’s compare those options:
What it means: you pay upfront for the entire cost of a PV system
Pros: electric bill greatly reduced or eliminated; leverage state and federal rebates and tax incentives; the quickest and greatest return on your investment
Cons: highest upfront cost
Need to know: consider that it only takes 5 years on average for your system to pay for itself. The savings could add up to $80,000 over the next 20 years. Purchasing also immediately increases the value of your home — $20 for every $1 reduction in annual energy savings (Source: Appraisal Journal). This means that for every $1,000 you save on electricity a year, you increase your home value by $20,000.
Financing: Financing is great option that puts purchasing within reach. Many solar companies partner with reputable banks to offer solar-specific loans. Some people also refinance their mortgages or take out a home equity line of credit to pay for the system.
Lease and Power Purchase Agreement (PPA)
What it means: you pay as little as $0 down to have a solar installer install and maintain the PV panels on your roof. You then pay a fixed monthly payment (either to your installer or a third-party solar lease company) to use the electricity your panels generate, regardless of how much energy your panels produce.
A PPA is similar to a lease except you pay a fixed monthly rate, and only pay for the electricity your system produces each month.
Pros: reduced electric bill; a guaranteed, consistent monthly bill; get solar on your home without paying for it
Cons: you still have an electric bill; you don’t own your panels; you can’t leverage state and federal incentives
Need to know: Leasing is ideal if you’re unable to pay for the entire cost of a system up front, and is a great way to spread your liability over a long period of time. You will also save on your monthly electric bill. The value of your home still goes up, but the lease payments get passed on to the new buyer should you decide to sell.
The bottom line: Purchasing your solar system makes the most financial sense in the long run, and it’s a lot easier to do nowadays thanks to state and federal rebates and creative financing options. Just keep in mind that many incentives are set to expire within the next 2-3 years, so the best time to go solar is now! Leasing is also a great option for many and can help you gain control over high electric bills.