Generating the Green to Go Green with Solar Power

Most homeowners already know about the benefits to going solar. The great news is that it's actually pretty easy to obtain the funds you need to pay for solar power for your home, even with no money down. Here's a look at some of the ins and outs of the payment options available.

These last few years, the market has proven to be a wild ride. So as a savvy homeowner considering solar in 2025, the first thing to consider is whether you want to buy or lease your solar system. A homeowner can choose to:

• Pay cash upfront
• Take out a solar loan
• Enter into a lease or Power Purchase Agreement (PPA)

There are pros and cons to each scenario, so make sure you know how it will work for your situation. Because there are several unique reasons any homeowner might go with any of these payment options, depending on the resources available, it's time to take stock of a few key determining factors.

Paying Cash

The most obvious way to deal with upfront solar costs is to pay in cash, and there are real benefits in doing so. When a homeowner owns their system outright, they benefit from a bump in property value, and they can take advantage of the federal tax credit (ITC). Also, unlike a loan or lease, there's no interest rate to consider.

However, in a post-pandemic economy with rampant inflation, there aren't too many people sitting on that kind of capital. Luckily, those without the cash up front still have options.

Solar Loans

Solar loans are another way to "own" your system from day one, and also qualify for the federal ITC. They work just like any other standard home improvement loan. When it comes to solar loans, knowing your credit score is key. Your rate and monthly payments will be dependent on your credit score, and the most-desirable low monthly payments are reserved for those with the best credit scores.

It's also important to consider whether you want a secured or unsecured loan. A secured loan is tied to your home mortgage and usually results in a lower interest rate. An unsecured loan is not dependent on your home equity, and usually has a higher interest rate.

Solar Lease

A solar lease involves a fixed, monthly payment to a third-party owner, which functions like a property rental. This type of financing helps homeowners gain access to solar who might otherwise not qualify for a loan.

Power Purchase Agreement (PPA)

A PPA differs from a lease in that, rather than a fixed monthly payment, the homeowner agrees to receive solar energy at a set kilowatt per hour (kWh) price, which is almost always less than the current utility bill.

As with a loan, monthly payments are dependent on credit score. However, because the homeowner doesn't directly own the system, they won't see a federal tax credit or a bump to their property value. Instead, the third-party-owner (TPO) receives the tax credit and other rebates, and uses that to reduce the total cost of the system so the homeowner still benefits from reduced costs. At the end of the lease or PPA contract, the homeowner has the option to renew the lease, purchase the solar system for a low buyout fee, or have the equipment removed.

ESP is proud to partner with a range of TPO organizations to provide flexible financing options for homeowners.

The Bottom Line

When considering financing options, no one wants to get stuck with a bad deal, but the worst deal of all is being stuck paying a never-ending power bill with no end in sight. Solar provides a path to energy independence and long-term savings, regardless of which payment option you choose.

Contact ESP today to learn more about the financing options available to help you go green!