Solar Panel Financing In 2022 (Homeowner's Savings Guide)
In this EcoWatch guide on solar panel financing, you’ll learn:
- How to take advantage of low interest programs like PACE
- What the main solar financing options are
- When does it make sense to pay for your solar panels in cash
- Which solar financing option is best for you
This guide has helped thousands of homeowners save money when going solar by helping them find the best financing option for their home. Let’s get started!
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Residential solar energy systems provide homeowners with a way to minimize their environmental impact and reduce their dependence on electric utilities. One of the biggest obstacles to going solar is the cost of installation, but thankfully, there are a number of solar financing options that homeowners can choose from.
Jump to Section:
- What Are the 3 Most Common Solar Financing Options?
- Which Solar Financing Option Is Right for You?
- How Can You Save Money When Going Solar?
- FAQs: Financing Solar Panels
Disclaimer: This article is for informational purposes only. It should not be relied on for and is not intended to provide accounting, legal or tax advice.
Nationwide Service
Average cost
SunPower
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Most efficient panels on the market -
National coverage
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Cradle to Cradle sustainability certification
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Great warranty coverage
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Expensive
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Customer service varies by local dealer
Most efficient panels on the market 
Expensive Services Offered
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Solar Panels
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Solar Batteries
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EV Chargers
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System Monitoring
Solar Panels
Regional Service
Average cost
Blue Raven Solar
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Industry-leading in-house financing
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Competitive pricing
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Excellent reputation
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Doesn't offer solar batteries (coming 2022)
Services Offered
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Solar Panels
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System Monitoring
Regional Service
Average cost
Sunpro Solar
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Industry-leading warranty coverage
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Expansive service area
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Some reported communication issues
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No leases or PPAs
Services Offered
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Solar Panels
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Solar Batteries
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EV Chargers
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Energy-Efficiency Upgrades
What Are the 3 Most Common Solar Financing Options?
When buying solar panels, there are generally three ways for homeowners to pay for their systems: cash, loan or lease.
Paying for Solar Panels in Cash
For homeowners who wish to maximize their savings, paying in cash is the optimal way to go. After all, by buying a residential solar power system outright, you’re essentially paying in advance for 25 to 30 years of electricity to use in your home.
This means your home energy rates are locked in for decades, and you don’t have to worry about inflation or rising utility costs. The big problem with paying in cash is that the upfront cost of solar power equipment tends to be fairly high.
Even when you take into account incentives like federal tax credits and rebates, you’re looking at an investment of at least $10,000 to $15,000. This isn’t going to be feasible for every homeowner.
Solar Panel Loans
Another option is to borrow money from a solar lender, using it to finance your solar installation, then paying it back over time. The most common types of solar loans include unsecured personal loans, home equity loans (or home equity lines of credit), home improvement loans, and in-house financing through your solar panel installation company.
If you choose a loan as your solar financing route, pay special attention to your annual percentage rate (APR), origination fees and loan terms. How much you pay in interest, fees, and your repayment period will often increase the overall cost of your renewable energy system.
However, rest assured that homeowners who finance their systems with a loan are still eligible for the federal government’s solar investment tax credit (ITC), which may make it a bit easier to pay off that loan. Some states and local governments have low-interest rate loan programs for clean energy systems that you can take advantage of, such as Property Assessed Clean Energy (PACE) loans.
Borrowers sometimes have solar programs as well, like Fannie Mae’s HomeStyle® Energy mortgage. If you’re interested in paying for a solar installation via a loan, make sure you research all low-interest financing options available to you.
Watch Below: The below video quickly explains what you should look for in a solar panel loan and how to find the best deal for your needs.
Homeowners may also choose to either lease their solar panels or participate in a power purchase agreement (PPA), through which you buy the electricity the panels on your roof are producing. Solar leases and PPAs are pretty similar, but with one significant difference:
A solar lease means you’re making fixed monthly payments to use solar panels and other solar equipment, whereas a PPA means you’re making monthly payments simply for the electricity produced by solar panels. Naturally, the amount of electricity may fluctuate quite a bit from month to month.
Solar leases can seem attractive at first, but for most homeowners, they don’t make much financial sense. One reason for this is that homeowners in PPAs or leases are not eligible for the federal solar tax credit. Another thing to note is that solar leases don’t enhance your property values, which can be one of the big financial incentives of a residential solar system. Other financing options will allow you to save a lot more money in the long run.
Click below to get started with a quote from one of our preferred partners.
Read Also: Paying For Solar – Tips For Financing a Residential System
Which Solar Financing Option Is Right for You?
Ultimately, the way you choose to pay for your solar panel system will depend on a number of factors, including your expendable income, your credit score and ability to get a good loan rate, and more. Here’s a breakdown of which type of solar panel financing may be right for which homeowners:
| Solar Financing Option | Who it May Be Right For |
| Cash payment |
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| Solar loan |
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| Solar lease or PPA |
|
Read Also: Green Power Markets financing
How Can You Save Money When Going Solar?
While the initial solar investment can be steep, there are options available to homeowners who wish to save money on their solar installation.
- Federal solar tax credit: Currently, installing a solar system qualifies you for a tax credit that’s worth 26% of the total equipment and installation cost. (This number is set to decline in the coming years, so to take full advantage of it, act soon.)
- Local utility rebates: Many municipal utility companies offer rebates (such as a property tax exemption) to homeowners who go solar. Research your local utility providers to learn more.
- Net metering: Also see if there is a net metering program available in your area. Net metering gives you the opportunity to funnel any surplus energy you generate back into the electrical grid, in exchange for a credit from your utility company.
- Shopping around: Finally, remember that not all solar installers are created equal. Shop around and compare quotes to ensure you’re getting the best value.
Click below to get started with a quote from one of our preferred partners.
Read Also: The Federal Trade Commission’s (FTC) Consumer Advice on Solar Financing
FAQs: Financing Solar Panels
Below are a few questions EcoWatch readers regularly send in about financing their solar panels. If you have anymore, do not hesitate to contact us!
If you have the funds, paying in cash is the most advantageous way to finance solar. For those without the funds, a solar loan is usually the best way to go. For most homeowners, leasing doesn’t make as much financial sense.
Yes, there are plenty of ways to finance solar panels. Banks, credit unions and even some solar installers offer their own lines of credit, specifically to be used for installing solar equipment.
For those without the funds to buy solar equipment outright, financing solar panels can be a flexible and affordable way to lower monthly utility bills and reduce environmental impact.
Taking out a solar loan delays your break-even point, but it still lets you cut your electric bills and enhance your property value. For many homeowners, solar loans are well worth it.
Yes, leasing solar panels is an option. However, for most homeowners, it is not financially prudent to do so.
