Payment Options for Residential Solar

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

The first thing to consider is whether you want to buy or lease your residential solar system. A homeowner can do any of the following:

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

Several studies confirm that solar homes are valued higher, and that in California, each 1-kilowatt (kW) could add $5,911 to a home's value, so buying is often a smart choice. But there are unique reasons a homeowner might go with any of these payment options depending on the resources they have available to them, how much home equity they have available, their credit score and how involved they'd like to be with their solar system and the excess energy it produces.

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.

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. 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.

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.

Conclusion

There are many ways to finance your solar installation, making it accessible to homeowners in various financial situations. Contact ESP today to discuss which payment option might be right for you!