Understanding solar module financing options

Solar financing options have made it possible for more homeowners to reap the benefits of having solar modules installed. By eliminating the high price tag for equipment and installation, solar financing is becoming a popular option for installing solar modules. There are a few different types of solar financing options available, so we’ve gone through the basics below to help you better understand them.

Power Purchase Agreements

A Power Purchase Agreement, commonly referred to as a PPA, allows the homeowner to negotiate the purchase price for the power only. This is done through a third party financing company who owns and installs the solar module. The benefit of a Power Purchase Agreement is the ability to purchase energy at a much lower rate than a consumer could get from a utility company. Most Power Purchase Agreements have credit score qualifications which must be met.

Pros:

• In most scenarios, no money is needed upfront.
• Savings on energy prices for the term of the contract.

Cons:

• No ownership over solar module, so homeowner will not receive tax credits.
• Transfer of contract may not be permitted if homeowner is selling home.

Solar Leases

In a lease, the solar module is also owned by a third party. This option is just like what you would find if you wanted to lease a car. You’ll stick to a payment schedule which is determined by the cost of the system. Your agreement may also include a buyout option before the end of the contract term, so you may choose to own your solar module system in the end.

Pros:

• Usually no money down.
• Savings on energy prices.
• Potential for ownership of system.

Cons:

• Contract is only transferable to a new homeowner if they qualify credit-wise.
• You won’t receive tax credits.

Solar Loans

A solar loan is just what it sounds like. A homeowner can borrow money to pay for the installation and equipment. You’ll stick to a repayment schedule and have to qualify based on your credit score and other considerations.

Pros:

• You’ll own the system.
• You’ll receive tax credits.

Cons:

• You may be required to make a down payment.

Property Assessed Clean Energy

Property Assessed Clean Energy (PACE) is a program ran by the government to help homeowners purchase solar modules. There are no credit score qualifiers and no money down is needed, but you must have 10 percent property equity. You’ll be billed when you receive your property tax invoice bi-annually.

Pros:

• No money down is available.
• Tax-deductible interest.
• You can receive tax credits.
• Financing usually will transfer to new owner upon sale of the home.

Cons:

• Your property tax bill will be higher.

More homeowners taking advantage of solar installation thanks to leasing

Have you been seeing more rooftop solar installations in your neighborhood? Their high price tag once put them out of range for many homeowners. Now, thanks to lease options, more homeowners are able to undergo solar installation and reap the benefits of generating their own electric power

Lease options eliminate upfront costs for installation, labor, and equipment. With a solar lease, you can enjoy immediate energy savings without the hefty price tag. You won’t have to worry about waiting until after your payback period has been met to truly gain energy savings from your solar installation.

In locations across the United States, solar lease options are helping new demographics of homeowners take advantage of using solar energy use. While you may only have seen them in more affluent neighborhoods before, solar installations are springing up in neighborhoods everywhere. The difference is that some homeowners choose to own their systems outright while others choose to lease.

A study performed by the United States Department of Energy's National Renewable Energy Laboratory found a correlation between owning a solar panel system outright and a household’s income. Neighborhoods with households averaging income of $150,000.00 or more each year have been found more likely to own solar panel systems outright.

The solar lease options are more popular in neighborhoods with lower household incomes. While the upfront cost to own a solar panel system might be out of the question for many households, solar leasing makes the solar power option a possibility. Choosing to lease a solar installation has opened the doors for many new homeowners to add solar panels to their homes and reap the benefits.

Solar panels for homes can improve resale value

Installing solar panels for homes is a significant investment. These systems cost several thousand dollars and take years to recover costs through energy savings because of their high price tag. If you don’t plan to stay in your home for the entirety of your payback period, should you forgo solar installation?

The answer is no! Studies of home sales indicate that installing solar panels for homes can significantly increase resale value. If you don’t recoup the cost of installation over the amount of time you remain in the home, you will likely be able to recover a great deal thanks to a higher selling price. This benefit can make installing solar panels for your home the right choice even if you plan to move in the future.

Studies show that solar panels for homes increase the value by 3 to 4 percent. The average home has a 5 kW solar energy system, which can increase equity by about $9,000.00. Before you decide to install a solar panel system in your home, think about how long you plan on staying and then energy savings you’ll achieve during that time period. If you won’t be meeting the payback period on energy savings alone, think about how the raised resale value will benefit you come time to sell.

Not only are the systems a valuable addition to the home, they also create value. Interested buyers can be attracted to homes with solar panels because they present a higher potential for energy savings. Wouldn’t you want to move into a new home that is going to help you save for all the years you are living there?

Solar panels for homes are also attractive for buyers looking to go green. Because they limit utility use, homes with solar panels reduce pollution and greenhouse gases. Greening your home through solar panel installation not only improves resale value, but can also attract another market of buyers to your property.

Choosing an electric solar energy contractor

If you’re thinking about installing solar panels for your home or business, choosing the right contractor can improve your experience. Do you know the qualities you should look for in an electric solar energy contractor and the questions you should ask? There are some guidelines you should follow when selecting a contractor which can help ensure you have a positive experience and receive quality work.

Use this checklist when you interview contractors to help find the right fit.

About the company:

• Are you licensed in New Jersey and Pennsylvania to install electric solar energy systems?
• Are you insured for Liability and Worker’s Compensation?
• Do you know what permits are needed to install solar panels in my area? Will you be responsible for obtaining permits or will that be my responsibility?
• How many years of experience do you have in this field? What sort of training do your installers and technicians complete?
• Does your company complete all work or will you use subcontractors to install electric solar energy systems?

About the installation:

• How will my roof be protected during the installation?
• What type of equipment will be used to mount the solar panels to my roof?
• Will your design team help me to determine the best configuration of solar panels for my home?
• How long will installation take from start to finish? Do you foresee any delays when ordering my equipment?

About the aftercare:

• Does your company warranty the workmanship of my new installation?
• Will you provide me with information about the product warranties for system components?
• Does your company also provide service and maintenance for installing electric solar energy systems?
• Are representatives of your company available to provide technical support by telephone or email?

Make the most of your investment by choosing the right electric solar energy contractor for your job. Smith Sustainable Design is a reputable electric solar energy contractor serving New Jersey and Pennsylvania home and business owners; call us today if you have any questions about how to choose the right contractor for your job.