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solar financing options

Solar Panel Financing

Understand your solar financing options


How do you pay for solar panels?

Here are the basics. There are three ways to get solar panels: cash purchase, solar loans and solar leasing, otherwise known as a Power Purchase Agreement (PPA).

The benefits of buying your home solar system with cash include greater long-term savings, especially since your system could pay for itself in fewer than ten years. While the upfront costs are the highest, your future energy costs are predictable and the setup that powers your home is already paid for. With federal incentives, local incentives and statewide rebate programs contributing toward your solar installation, owning your energy through solar is more affordable than ever.

When you finance your solar panels through a solar loan, you might be eligible for a zero down payment but will still have a monthly payment. The savings over the lifespan of your panels are less than a direct purchase, but also significant in their own right. The best part of this trade-off is that your payments will end at some point, and your electric bill will be greatly reduced or eliminated.

With solar leasing or solar purchase agreements (PPA), you’ll experience a less expensive install upfront with sometimes higher or lower interest rates, while your solar company will be responsible for maintaining your solar system. However, your monthly payments will be relatively high compared to other options and you will have no long-term benefits or cost incentives.

leasing vs buying chart

The types of solar financing options

Solar purchase and ownership

The easiest method for getting solar power is to simply pay for the installation yourself. In the long run this gives you the highest value for cost savings. Purchasing your solar panels outright also gives you the immediate benefits from solar tax credits, rebates and lower utility bills. When you buy your solar panel installation upfront, it means that there are fewer third-party financial conditions to worry about. It also makes the timespan to experience the return on your investment even shorter.

The typical payback period for rooftop solar in the United States is four to eight years; depending on the size of your system and the kind of solar panels and other equipment you selected. There are numerous incentives at your disposal, depending on where you live, that are designed to help you with the initial expense as well. These incentives will go a long way to get you going solar for the lowest cost.

The benefits of buying solar

The financial benefits of buying a home solar energy system with full cash upfront include:

  • Higher long-term savings for homeowners.
  • Monthly energy bill savings from the first month, with no monthly payment to offset the savings.
  • In some states, your solar purchase is tax deductible or exempt from property or sales tax.

Solar loans

A solar loan is a loan that is used towards the purchase of a solar power system for your home. Solar loan financing allows you to avoid the steep payments upfront while also giving you immediate ownership of your system. Like a regular loan, it is paid off in monthly payments with an applied interest rate. However, since you are considered the owner of the system, you are entitled to the benefits such as tax credits and rebates.

Compared to a solar lease, the savings will be higher because solar loans are paid down after a certain number of years, giving you greater savings with your solar system each month afterwards.

Like most home improvements, solar panels affect your home’s property value in a positive way. A solar system added to your home will sell for more and faster, according to studies. And since you’ll receive a higher amount for your home, you could even recover the amount of the loan.

The benefits of a solar loan

The benefits of financing your solar panels with a loan include:

  • Low upfront cost depending on type of loan (could be zero upfront in some cases).
  • Significant long-term savings.
  • Monthly utility bill savings.
  • Loan payment will get paid down and eventually disappear.

Solar leases and power purchase agreements (PPA)

When you lease your solar panels, you acquire a solar lease or PPA through which you make monthly payments. This means that you will never own your solar system. Compared to other solar financing options, a solar lease does come with its share of negatives. For instance, you cannot receive the deductions that come from the Solar Investment Tax Credit (ITC). You have to own your system in order to receive a state or federal tax credit.

The benefits of solar leasing
  • Lower upfront cost than purchasing with cash.
  • Maintenance for the solar system will be the responsibility of the leasing company.

As with any solar system purchase, you will still see monthly electricity bill savings; however, a higher monthly payment will offset the savings.

Schedule your free solar consultation

Enter your information. An ADT Solar Energy Specialist will contact you to schedule your estimate and help you determine if solar is right for you.

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Incentives for purchasing solar

When considering a solar lease, solar loan or direct purchase of solar, there are many different reasons why each financing option works. ADT Solar will take into account any available incentives to help you offset the cost of solar panels and solar installation.

Solar tax credits

When you schedule your free consultation with ADT Solar, we will explain to you the different types of tax credits available to you. This includes a potential 30% Federal Solar Tax Credit (ITC) and any incentives offered by your state.

State and utility rebates

In some states, the state governments and even local utility companies will help to make your switch to solar even easier — with the use of rebates applied to your investment of solar panels. Utility companies are realizing just how beneficial solar energy is, so to encourage customers to go solar, some utility companies are offering solar rebates as well as net metering programs to help with the cost of switching to solar.

Energy Efficient Mortgage (EEM) credits

Another option for affordable solar financing is to look into your eligibility for an Energy Efficient Mortgage, also called an EEM. An EEM is a mortgage that credits a home’s energy efficiency into the mortgage. This gives homeowners like you a chance to finance more energy saving measures, qualifies you for larger home loan amounts and gives you an energy efficient home. This home equity line of credit option is available either through the US government, or through an organization such as Fannie Mae. Buyers looking to make energy efficient upgrades like clean energy from solar panels to their current home may also qualify for refinancing options.

What you need before your free solar consultation

When you make an appointment with a ADT Solar Energy Specialist, it’s helpful to know the square footage of your roof, the age of your roof as well the square footage of your home ahead of time.

The size of your roof, its age, the level of sun exposure and amount of shade coverage are all things that determine how the solar system will be installed on your roof. A roof with plentiful exposure to sunlight is ideal. Even better, a roof that has an east-west ridgeline with little to no interference from trees or buildings is the perfect place for panels to capture as much energy as possible from the sun. If the space on your rooftop is more limited, there are smaller higher-efficiency panels made to suit your home energy needs.

The size of your solar panel system depends entirely on your energy needs and the kilowatt-hours of power you need your solar panels to produce. If you want to lower your electric bill, the amount of solar panels will be determined by exactly how much you want to lower it. If you just want half your electricity use to be reduced, your solar panel system will probably be smaller. If you want to cover all your electric needs, you’ll probably need a larger solar panel system, which means of course, more solar panels. However, if you have limited roof space you could instead use higher efficiency solar panels like the ones that ADT Solar uses. This would mean fewer solar panels, but greater generation rates.