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There are financial incentives available that make it easier for homeowners to invest in solar energy systems, including a number of solar tax exemptions at the state and local levels. These solar tax exemptions can vary by location and may include relief from sales taxes, property taxes and more.

In this article, we'll discuss which tax exemptions are available to homeowners who invest in renewable energy systems in each state, as well as the federal solar tax credit. Read on to learn more, or fill out the form below to get a free, no-obligation quote from a solar installer near you to see how much can save on a solar panel system.

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.

Solar Sales Tax Exemptions

Solar sales tax exemptions are a common financial incentive designated by state governments. According to the Solar Energy Industries Association, there are currently 25 states that offer a solar sales tax exemption.

What does this mean, exactly? Most states levy a tax on consumer purchases, which can range from 2.9% to 9.5%. With a solar sales tax exemption, these taxes are waived on purchases of solar panels, solar batteries and other forms of solar equipment. Naturally, this can reduce the total purchasing cost considerably, making a solar investment a bit more affordable.

For example, if your state has a sales tax of 6% and you purchase a solar panel system for $16,000, you'll end up paying $16,960 in total. If your state has a solar sales tax exemption, however, you'll only pay $16,000.

Solar Property Tax Exemptions

The Solar Energy Industries Association notes that 36 states currently offer a property tax exemption for homeowners who install residential solar systems.

Here's what this means: A solar panel installation typically results in a significant increase in your property values. (On average, homeowners see a solar-related property value increase of about 4.1%.) In states that have renewable energy property tax exemptions, homeowners whose property values rise are protected from a comparable increase in property taxes. In other words, the worth of the home goes up, but homeowners do not have to pay anything more come tax time.

Solar Tax Exemptions: State By State Breakdown

Different states have different laws when it comes to sales and property tax exemptions for solar installations. To learn about the tax incentives available in your area, check the table below:

State Solar Property Tax Exemption* Solar Sales Tax Exemption*
Alabama No exemption No exemption
Alaska Local exemptions No sales tax
Arizona 100% exempt 100% exempt
Arkansas No exemption No exemption
California 100% exempt until 1/2/2025 No exemption
Colorado 100% exempt 100% exempt
Connecticut 100% exempt 100% exempt
Delaware No exemption No state sales tax
Florida 100% exempt 100% exempt
Georgia No exemption No exemption
Hawaii 100% NHL only No exemption
Idaho No exemption No exemption
Illinois Special assessment No exemption
Indiana 100% exempt No exemption
Iowa 100% exempt for 5 years 100% exempt
Kansas 100% exempt No exemption
Kentucky No exemption No exemption
Louisiana 100% exempt No exemption
Maine No exemption No exemption
Maryland 100% exempt 100% exempt
Massachusetts 100% exempt for 20 years 100% exempt
Michigan 100% exempt No exemption
Minnesota 100% exempt 100% exempt
Mississippi No exemption No exemption
Missouri 100% exempt No exemption
Montana 100% exempt for 10 years No state sales tax
Nebraska Exemptions only for systems over 100 kW No exemption
Nevada Exemptions only for certain systems over 10 MW No exemption
New Hampshire Local exemptions No state sales tax
New Jersey 100% exempt 100% exempt
New Mexico 100% exempt 100% exempt
New York 100% exempt for 5 years 100% exempt
North Carolina 80% exempt No exemption
North Dakota 100% exempt for 5 years No exemption
Ohio Exemptions in Cincinnati and Cleveland 100% exempt
Oklahoma No exemption No exemption
Oregon 100% exempt No state sales tax
Pennsylvania No exemption No exemption
Rhode Island 100% exempt 100% exempt
South Carolina No exemption No exemption
South Dakota Exemption of either $50,000
or 70% of total property value
No exemption
Tennessee Tax value no more than 12.5% of installed cost 100% exempt
Texas 100% exempt No exemption
Utah No exemption Exemptions only for systems
over 2 MW
Vermont 100% exempt 100% exempt
Virginia Local exemptions No exemption
Washington No exemption Exemptions only for systems
up to 10 kW
Washington DC 100% exempt No exemption
West Virginia No exemption No exemption
Wisconsin 100% exempt 100% exempt
Wyoming No exemption No exemption

*Accurate as of time of publication.

Federal Solar Tax Incentives

In addition to these state-specific incentives, there is also a federal tax incentive that is available to all Americans who invest in solar power. The solar investment tax credit (ITC) is currently valued at 26% of the total solar installation cost, meaning homeowners can essentially deduce 26% of that up-front cost.

This tax credit covers:

  • The cost of solar panels
  • Labor costs for installation
  • Additional solar equipment, like inverters, wiring, etc.
  • Energy storage devices, including solar batteries
  • Sales taxes paid for eligible solar installation expenses (in states that do not have sales tax exemptions)

Note that the federal tax credit is available for all homeowners who purchase a system, whether they buy it outright or finance it with a solar loan, but it is not available to those who lease solar panels.

Frequently Asked Questions: Solar Tax Exemptions

Are solar panels exempt from sales tax?

In states that have a solar sales tax exemption, yes, the purchase of solar panels is shielded from sales tax. Currently, at least 25 states offer a solar sales tax exemption.

Is solar sales tax exempt in Texas?

No, Texas solar incentives do not currently include a sales tax exemption.

Is solar exempt from property taxes?

Currently, there are 36 states that offer solar property tax incentives. Take a look at the chart included above to find out whether your state offers a solar property tax exemption. Some municipalities may have local property tax abatements as well, so property owners considering going solar should check government websites for additional information about incentives and rebates.

Are solar roofs tax deductible?

Your solar roof shingles can be claimed via the federal solar investment tax credit, allowing you to deduct 26% of your total clean energy system costs.

Do solar panels decrease property taxes?

Solar projects usually increase residential property values, which in some states may actually mean an increase in property taxes. However, in the 36 states that offer a solar property tax exemption, an increase in home values does not result in an increase in property taxes.

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Installing a residential solar system brings the promise of incredible long-term cost savings, particularly in the form of low monthly electric bills, but also a rather steep initial investment. Before deciding whether to purchase solar panels, homeowners should keep in mind their expected solar panel payback period, or the amount of time it will take to recoup their investment.

There are several factors to keep in mind as you calculate your estimated solar panel payback time, including your electricity rates, the total cost of your home solar system and how much you'll save with rebates and the federal solar investment tax credit. We'll walk you through all of this and more below.

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.

What is a Payback Period for Residential Solar?

For most homeowners in the U.S., it takes roughly eight years to break even on a solar panel investment. For example, if your solar installation cost is $16,000 and the system helps you conserve $2,000 annually on energy bills, then your payback period will be around eight years (16,000/2,000 = 8).

To put it a little differently, the solar payback period represents the time it will take for your utility savings to eclipse your initial investment cost. It is at this point that you might say the solar panel system has "paid for itself."

Keep in mind that there are a number of basic determinants that go into calculating solar payback periods, including installation costs, interest rates if you're taking out a solar loan, applicable tax credits and solar rebates, and energy bill savings. The latter is always going to be relative to the costs of electricity in your region, so areas that have higher utility costs tend to have slightly shorter payback periods.

Average Solar Panel Payback Period in the U.S.

Though the average solar panel payback period is somewhere in the eight- to 12-year range, this can vary quite a bit from home to home. For some, it may be as little as five years. For others, it may be as long as 15 years. Local electricity costs and state-specific financial incentives, such as tax credits, solar rebates or net metering programs, are determinative factors.

What's Considered a Good Payback Period for Solar Panels?

One way to determine whether you're getting a good return on your solar energy investment is to look at the entire lifespan of your system. Most residential solar systems last between 25 and 30 years. If your payback period is eight years, you'll be "making money" on the system for 17 to 23 years.

Most solar industry experts say that if your solar panel payback period is less than half the life of your system, it's a decent investment.

Another thing to keep in mind is internal rate of return, or IRR. Basically, think about what would happen if instead of investing in solar power, you placed your money into a more traditional financial investment. How well would that investment have to perform in order for it to be more financially advantageous than a solar system?

Depending on your investment strategies, solar panel installations may or may not offer a higher ROI than purchasing stocks, real estate or other investments. It's important to weigh IRR carefully to ensure the most prudent decision.

How to Calculate Your Solar Payback Period

While it is impossible to calculate your exact solar panel payback period, getting a quote from an installer will allow you to make a fairly accurate, well-informed estimate.

Here's how to do it:

  1. Calculate or get a quote for your overall total system cost. Talk with a solar installer near you to determine the gross upfront cost of your system. Note that this will be dependent on the size of the system as well as the type of equipment you need and add-ons like solar battery storage.
  2. Factor in the federal tax credit and any applicable local rebates or credits. These financial incentives can dramatically reduce your solar expenses. In particular, the federal tax credit enables you to deduct 26% of the total installation cost on your tax return. This is above and beyond any state- or city-specific incentives. Don't forget about solar renewable energy certificates (SRECs) from net metering programs.
  3. If financing solar panels, factor in any fees or additional associated costs. If you're taking out a solar loan to pay for your system, you'll need to account for any other expenses associated with the loan.
  4. Calculate your average annual electricity consumption and costs to determine the amount you'll save on energy by switching to solar. Solar installers will do their best to create a system that matches your electrical consumption, but there are a lot of variables to think about, including seasonal shifts. Even so, knowing about how much you spend on electricity each year can give you a decent sense of your potential savings.
  5. Take into account the rate of increase. In calculating the cost of electricity, remember that local rates may increase over time. You can always call your utility company and ask about any expected increases, or look at bills from past years to determine previous rate increases.
  6. Divide the cost of the system (including financial incentives) by the annual amount you'll save on electricity bills. This will tell you roughly how many years it will take for you to recoup your initial investment. Beyond that, every month that you run your solar system can be counted as financial gain.

To get started with a free, no-obligation quote from a top solar company in your area, fill out the form below.

Frequently Asked Questions: Solar Panel Payback

What is the payback period for solar panels?

In the U.S., the payback period for solar panels is about eight years on average, but this can vary quite a bit from one homeowner to the next. In fact, your solar payback period may fall anywhere between five and 15 years.

Do solar panels really pay for themselves?

A well-designed and properly installed solar panel system will usually pay for itself, though it will take several years to reach this point. Beyond the break-even point, every month that you operate your solar system can be considered financial gain.

How much money do you get back from solar?

The federal tax credit will allow you to recoup 26% of your investment right off the bat. Additional savings can be obtained through local and state-level incentives, net metering programs, and savings on your month-to-month electric expenses.

How do you calculate the payback period for solar?

The basic formula for calculating a payback period for solar is to divide the cost of the system, including tax rebates and financial incentives, by the annual amount you'll save on utility bills. This will give you the number of years required for you to "break even" with your solar panels.

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With a growing market for vegan makeup and cruelty-free cosmetics, more and more beauty brands are ditching animal ingredients and animal testing. While many luxe animal-friendly companies have high prices, there are a number of cruelty-free makeup brands producing affordable personal care products as well.

In this article, we'll recommend 11 essential beauty products that have drugstore price tags and cruelty-free certifications. An easy switch to make in your day-to-day makeup and skincare routine is to invest in cruelty-free cosmetics that work to protect the most vulnerable among us — animals.

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Though summer is the most popular season for RV travel, fall is close behind it. Indeed, there are plenty of folks across the country who love to load up their campers and head out to witness the changing foliage, bask in cooler temperatures and herald the coming of crisp autumn air.

One of the challenges that RV owners face? How to keep their treks eco-friendly. After all, traveling by RV comes with a number of environmental challenges. RVs get low gas mileage, plus they produce more carbon emissions than flying or simply taking a car.

The good news is that, by following a few basic tips, it's possible to make your RV travels more eco-friendly. Here are some earth-conscious steps to take for your next RV adventure.

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As solar power becomes increasingly popular in the U.S., many homeowners have jumped on the opportunity to adopt clean energy, and Georgia residents have been some of the quickest to make the switch.

According to data from the Solar Energy Industries Association, Georgia is one of the top solar adopters in the country, ranking ninth for overall residential solar panel installations. The question is, what are the top cities for solar in Georgia? Read on to find out.

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When you think of states that have made a heavy investment in solar energy, Virginia may not be at the top of your list. Yet in recent years, Virginians have made a massive amount of progress; in 2019, the state was ranked No. 19 in the country for solar installation, and in 2020 it jumped to No. 4.

But what are the top cities for solar in Virginia? We've done some digging and come up with a comprehensive list.

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Solar panels allow you to harness the sun's clean, renewable energy, potentially cutting your electric bills as well as your environmental footprint. But do solar panels work on cloudy days, or during seasons of less-than-optimal sun exposure? For homeowners who live outside of the Sun Belt, this is a critical question to consider before moving ahead with solar panel installation.

In this article, we'll go over how solar panels work on cloudy days, whether solar panels work at night, and how to ensure you always have accessible power — even when your panels aren't producing solar energy.

How Solar Panels Work on Cloudy Days

Photovoltaic (PV) solar panels can use both direct and indirect sunlight to generate electrical power. This means they can still be productive even when there is cloud coverage. With that said, solar panels are most efficient and productive when they are soaking up direct sunlight on sunny days.

While solar panels still work even when the light is reflected or partially obstructed by clouds, their energy production capacity will be diminished. On average, solar panels will generate 10 to 25% of their normal power output on days with heavy cloud coverage.

With clouds usually comes rain, and here's a fact that might surprise you: Rain actually helps solar panels work more effectively. That's because rain washes away any dirt or dust that has gathered on your panels so that they can more efficiently absorb sunlight.

Do Solar Panels Work at Night?

While solar panels can still function on cloudy days, they cannot work at night. The reason for this is simple: Solar panels work because of a scientific principle called the photovoltaic effect, wherein solar cells are activated by sunlight, generating electrical current. Without light, the photovoltaic effect cannot be triggered, and no electric power can be generated.

One way to tell if your panels are still producing energy is to look at public lights. As a general rule of thumb, if street lamps or other lights are turned off — whether on cloudy days or in the evening — your solar panels will be producing energy. If they're illuminated, it's likely too dark out for your solar panel system to work.

Storing Solar Energy to Use on Cloudy Days and at Night

During hours of peak sunlight, your solar panels may actually generate more power than you need. This surplus power can be used to provide extra electricity on cloudy days or at night.

But how do you store this energy for future use? There are a couple of options to consider:

You can store surplus energy in a solar battery.

When you add a solar battery to your residential solar installation, any excess electricity can be collected and used during hours of suboptimal sun exposure, including nighttime hours and during exceptionally cloudy weather.

Batteries may allow you to run your solar PV system all day long, though there are some drawbacks of battery storage to be aware of:

  • It's one more thing you need to install.
  • It adds to the total cost of your solar system.
  • Batteries will take up a bit of space.
  • You will likely need multiple batteries if you want electricity for more than a handful of hours. For example, Tesla solar installations require two Powerwall batteries if your system is over 13 kilowatts.

You can use a net metering program.

Net metering programs enable you to transmit any excess power your system produces into your municipal electric grid, receiving credits from your utility company. Those credits can be cashed in to offset any electrical costs you incur on overcast days or at night when you cannot power your home with solar energy alone.

Net metering can ultimately be a cost-effective option and can significantly lower your electricity bills, but there are a few drawbacks to consider, including:

  • You may not always break even.
  • In some cases, you may still owe some money to your utility provider.
  • Net metering programs are not offered in all areas and by all utility companies.

Is Residential Solar Right for You?

Now that you know solar panels can work even when the sun isn't directly shining and that there are ways to store your energy for times your panels aren't producing electricity, you may be more interested in installing your own system.

You can get started with a free, no-obligation quote from a top solar company in your area by filling out the 30-second form below.

FAQ: Do Solar Panels Work on Cloudy Days?

How efficient are solar panels on cloudy days?

It depends on the panels, but as a rule of thumb, you can expect your solar panels to work at 10 to 25% efficiency on cloudy days.

How do solar panels work when there is no sun?

If there is literally no sunlight (e.g., at night), then solar panels do not work. This is because the photovoltaic effect, which is the process through which panels convert sunlight into energy, requires there to be some light available to convert.

However, you can potentially use surplus solar power that you've stored in a battery. Also note that solar panels can work with indirect light, meaning they can function even when the sun is obscured by cloud coverage.

Do solar panels work on snowy days?

If there is cloud coverage and diminished sunlight, then solar panels will not work at their maximum efficiency level on snowy days. With that said, the snow itself is usually not a problem, particularly because a dusting of snow is easily whisked away by the wind.

Snow will only impede your solar panels if the snowfall is so extreme that the panels become completely buried, or if the weight of the snow compromises the integrity of your solar panel structures.

Will my solar panels generate electricity during cloudy, rainy or snowy days?

Cloudy days may limit your solar panel's efficiency, but you'll still be able to generate some electricity. Rainy days can actually help clean your panels, making them even more effective. And snowy days are only a problem if the snow is so extreme that the panels are totally submerged, without any part of them exposed to the sun.

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Solar power represents one of the best, most reliable forms of renewable energy. Homeowners who install solar panels can harness the sun's energy and convert it to usable electric current. In the process, they can curb or even eliminate their dependence on utility companies, and dramatically scale back their ecological impact.

Solar energy tends to be most advantageous in states that get consistent sun exposure year-round, such as Utah. Naturally, communities throughout the Beehive State have shown an admirable commitment to solar power. According to the Solar Energy Industries Association, Utah installed the tenth-most solar of any state in 2020, and the ninth-most during the first quarter of 2021. But what are the top cities for solar in Utah? Let's investigate.

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Many homeowners can benefit from installing solar panels, harnessing the sun's energy to help reduce or even eliminate their dependence on traditional utilities. Although solar panels can be expensive, solar loans make residential systems more accessible to homeowners.

Indeed, if you live in an area that gets consistent year-round exposure to the sun, solar panels can be an effective way to lower your home's energy costs while minimizing your environmental footprint. The biggest obstacle to solar adoption is the initial cost of solar panels.

All in, solar panel installation costs typically range from $10,000 to $35,000. In this article, we'll explain how solar loans can make that initial investment much easier to handle.

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.

Solar Loan Basics

So, how do solar loans work, exactly? Well, they're similar to home improvement loans, or any other type of purchase loan: They enable you to buy a residential solar system and pay it off over time.

There are plenty of solar loan options to choose from. For example, to finance solar panels, you can typically choose from any of the following:

  • An unsecured personal loan
  • A home equity loan or line of credit
  • In-house financing through your solar installation company

For the most part, the terms and conditions of solar loans mimic those of any other standard loan. Specifically:

  • Getting a lower interest rate means having a lower overall cost to borrow.
  • A shorter loan term generally means higher monthly loan payments but a lower overall cost to borrow.
  • Loans are available in a wide array of interest rates, term lengths, loan amounts, credit requirements, etc.

An important thing to note is that homeowners who finance their solar energy systems with a loan are still eligible for the federal solar tax credit. This gives you a credit worth 26% of your total solar installation costs.

How to Choose the Right Solar Loan

As you seek the best solar loan for your situation, there are a number of factors to keep in mind. These include:

  • Monthly payment amount: If you end up choosing a shorter loan term (i.e., a loan that you must pay off in a shorter amount of time), your monthly payments will probably be higher. The overall cost of the loan will be lower, but it's nevertheless important to consider the impact on your household budget.
  • Down payment amount: Depending on the loan you choose, you may or may not be required to put down a payment on the solar panels. Generally, larger down payments will mean lower interest rates and a more affordable loan overall.
  • Fees: Some solar lenders may charge prepayment penalties or monthly fees in addition to your monthly principal and interest payments. Always make sure you get fee information upfront, so as to ensure there are no surprises on your loan statement.

Secured Vs. Unsecured Solar Loans

Another important factor to consider is whether you'll get a secured solar loan or an unsecured solar loan. Here's what homeowners should know about these two options:

  • Secured loans are usually connected to some piece of collateral, such as a piece of equity in your house; this provides the lender with some protection. If you fail to make your payments, the lender can claim their piece of collateral. Because the lender has some insurance, secured loans usually offer lower interest rates and more favorable terms overall.
  • Unsecured loans do not have any collateral or security provisions for the lender. They represent a greater risk on the lender's part, and thus usually come with higher interest rates and less favorable terms.

Ultimately, the decision about which type of loan to seek comes down to this question: Do you have enough equity in your home to take out a secured loan? If so, and if you are willing to use some of that home equity to pay for solar panels, then a secured loan may be the smarter choice overall.

How to Get Low Interest Rates for Solar Loans

In addition to choosing the right type of loan, there are other steps you can take to keep your interest rates manageable when you finance a solar panel system:

  • Shop around: It's usually best not to go with the very first lender you find. Spend some time shopping around and comparing rates. Most lenders will give you a free quote that's good for a number of days while you compare offers from other companies.
  • Have someone co-sign: Having a co-signer on your solar loan — especially one with excellent credit — creates extra assurances for the lender and will usually result in more favorable rates.
  • Improve your credit score: There are several ways to improve your credit score to get a lower interest rate on a solar loan. For example, you can pay down old debts and credit card balances, be on time with monthly bill payments, and ensure you don't open any new credit cards as you apply for your solar loan.

Also be aware that there are things you can do to pay less over time other than getting a lower interest rate. Examples include choosing a shorter repayment period, looking for discounts like paperless or auto-pay discounts, avoiding loans with high fees and, if applicable, making a more substantial down payment.

Local Solar Loan Programs

Homeowners who are interested in going solar should also know about Property Assessed Clean Energy (PACE) loan programs. According to the Department of Energy, PACE programs "allow a property owner to finance the up-front cost of energy or other eligible improvements on a property and then pay the costs back over time through a voluntary assessment." What makes these programs unique is that the assessment is tied to the property itself, not to the individual.

PACE financing legislation exists in some form in 36 states plus Washington D.C. A handful of states have separate loan programs for homeowners interested in solar. Here are some current programs worth knowing about:

State Solar Loan Program Maximum
Loan Amount
Interest Rate Longest
Repayment Term
Connecticut Energy Conservation Loan Program $25,000 0% to 7% 12 years
Louisiana Home Energy Loan Program (HELP) $6,000 2% 5 years
Michigan Michigan Saves Home Energy Financing $50,000 4.44% to 7.90% 15 years
North Carolina State-regulated municipal loan options Varies Up to 8% 20 years
Ohio Energy Conservation for Ohioans
(ECO-Link) Program
$50,000 3% APR reduction
on bank loans
7 years

Additionally, certain municipalities and local utility companies may offer low-interest solar loans. We recommend researching your specific area before turning to banks or credit institutions.

Where to Get a Solar Loan

If your state doesn't have its own solar energy loan program or you're not eligible for enrollment, there are plenty of other places to get solar loans. Some of the best places to check include:

  • Credit unions
  • Lending institutions
  • In-house financing through your solar installer (which will come from a third-party solar lender)

Again, it's crucial to shop around and compare rates before deciding on which solar lender is the best fit for your needs. To get started with a free quote and find solar loan information from a top solar company in your area, you can fill out the form below.

Frequently Asked Questions: Solar Loans

Are solar loans worth it?

There are various factors to consider as you decide whether getting a solar loan is worth it. Solar loans help you increase the value of your property, lower utility bills, minimize your impact on the environment and potentially claim some tax incentives. Then again, financing does decrease your overall savings, and extends the break-even point for your residential solar system.

Do banks do solar loans?

Some banks do offer solar loans, though often with interest rates that exceed what you'd pay elsewhere. It may be worth checking with your local bank, but always remember to shop around and compare.

What is the best way to finance solar?

If you have sufficient home equity, a secured solar loan is often the most cost-effective approach. If you don't have sufficient home equity, an unsecured solar loan can work just fine.

What type of loan is a solar panel loan?

Solar panel loans are generally considered to be a type of personal loan, similar to a home improvement loan.

Can you buy a solar battery with a solar loan?

Most often the answer is yes, but make sure you double-check the terms of your loan.

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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.

In this article, we'll break down avenues for solar financing including paying in cash, taking out a loan and solar panel leasing. Read on to learn which option might be the best choice for you.

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.

To find out more about the cost of solar for your home and receive a free, no-obligation quote, fill out the form below to get connected with a solar installer in your area,

Most Common Solar Financing Options to Choose From

When buying solar panels, there are generally three ways for homeowners to pay for their systems: cash, loan or lease.

1. 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 system outright, you're essentially paying in advance for 25 to 30 years of electricity to use in your home. This means your 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 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.

2. Solar Financing Through 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 lines of credit, 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 solar investment tax credit, which may make it a bit easier to pay off that loan.

Some states and local governments have low-interest 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.

3. Leasing Solar Panels

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.

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
  • Homeowners who really want to maximize their savings
  • Homeowners who have enough tax liability to take advantage of the federal credit
  • Homeowners with enough cash liquidity to pay for their solar installation outright
Solar loan
  • Homeowners who don't have the funds to buy a solar system outright, but still want to reduce their electric bills as much as possible
  • Homeowners who want to be eligible for all rebates and tax incentives
Solar lease or PPA
  • Homeowners not ready to commit to a system of their own
  • Homeowners who are ineligible for tax credits but want to reduce their environmental footprint

Saving Money on Solar Power

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 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.

To start with a free, no-obligation quote from a top solar company near you, fill out our 30-second form below.

Frequently Asked Questions: Solar Financing

What is the best way to finance solar?

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.

Are financing options available for solar?

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.

Is it smart to finance solar panels?

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.

Are solar loans worth it?

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.

Can you rent solar panels?

Yes, leasing solar panels is an option. However, for most homeowners, it is not financially prudent to do so.

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Solar energy is most frequently associated with states smack in the middle of the Sun Belt. And yet, there are some notable outliers, with New York being foremost among them. According to data from the Solar Energy Industries Association, New York installed the eighth-most solar of any state in 2020. And in the first quarter of 2021, New York was ranked No. 10 in the nation for solar installations.

There are a number of reasons New York tends to be a top state for solar, not least of which is its excellent solar incentives. However, some cities in New York are more commendable in their solar investment than others. In this article, we'll rank the top 10 top cities for solar in New York.

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As you seek to optimize the performance of your residential solar panels, there are a number of factors to consider. One thing you'll want to think about is the best direction for solar panels. The orientation of your roof in relation to the sun can have a huge impact on overall solar efficiency.

In this article, we'll outline the best direction for solar panel orientation as well as the optimal angle. We'll also explain solar tracking technology, which can ensure your panels face the sun for as long as possible each day. Read on to learn more.

Basics of Solar Panel Orientation

So, what is the best direction for solar panels? For homeowners who live in the Northern Hemisphere, the rule of thumb is that solar panels should be oriented toward true south. (For those in the Southern Hemisphere, solar panels should be oriented toward true north.) This is the best orientation because it ensures that solar panels receive direct sunlight throughout the day.

It's also worth noting that solar panels are most efficient when the sun's rays strike them perpendicularly. Again, this true south/true north orientation can be helpful, but angle also plays a large part in this parameter.

Best Direction for Solar Panels

As you consider solar panel installation, it's crucial to remember that, for the highest energy production, you'll want your panels to receive direct sunlight throughout the day. Again, for those who live in the Northern Hemisphere, this means orienting your panels toward true south, and vice versa in the Southern Hemisphere.

Note that, when we talk about true south, we're talking about geographic south, not magnetic south. In other words, you should orient your solar energy system based on the lines of longitude on a map, not by the directions on a compass.

Something else to keep in mind is that it may be beneficial to have a rotation slightly away from the best direction if you want to adjust the hours that your solar panels provide you energy (like facing them southwest to get more energy in the late afternoon as the sun is setting).

Hopefully, you have a south-facing roof that is optimally positioned for your solar panels. If the orientation of your roof isn't quite right, however, that doesn't mean solar power is off the table. There are several other options to consider, including solar carports and ground-mounted solar panels that can utilize south-facing panels for optimum electricity production.

Best Angle for Solar Panels

In addition to choosing the best direction for your solar panels, it's also helpful to select the right angle. Here, the general rule of thumb is to set the solar panel tilt angle equal to the geographical latitude. In other words, if you're at 35 degrees latitude, set your panels at a 35-degree angle.

The angle of your solar panels will help ensure the sun hits them perpendicularly, promoting the highest solar production and, thus, the highest electricity bill savings for your household.

With that said, you'll also want to consider how weather impacts solar panels. A good example of this is heavy snowfall. If you live in a part of the country where there is excessive snow accumulation, that could ultimately impede the efficacy of your solar panels. By tilting your panels at a sharper angle, you can minimize the buildup of snow or other debris.

This may all sound technical, but it's worth noting that professional solar installers will work with you to design a solar power system that works optimally; that includes recommending where to place your panels, how to angle them and more.

Solar Panel Tracking Systems

For ground-mounted panels, you might also consider installing a solar panel tracking system. Solar trackers maximize panel efficiency by rotating your panels throughout the day, allowing them to follow the movement of the sun from its rise to its set.

Just how much more efficient can a tracker make your solar panel system? One study showed that on a clear day, the average efficiency of a tracking panel was about 67%, while fixed panels only got about 40% efficiency.

As you consider solar panel tracking systems, you'll need to decide between a single-axis or a dual-axis system. Single-axis systems only move in one direction, typically north to south. A dual-axis system allows for movement along the north-south axis and the east-west axis.

Dual-axis systems take up more space, and thus are mostly used in commercial settings. They can certainly be effective, enabling your solar panels to reposition in accordance with changing seasons when the sun is higher or lower in the sky, but they typically aren't necessary for residential use.

Are Solar Panels Right for Your Home?

When deciding whether solar panels are worth it for your home, roof position should always be taken into consideration.

Most reputable solar installers offer free home consultations, during which a representative will survey your roof and let you know whether rooftop solar would be a good idea based on your roof's positioning and how much sunlight your home receives throughout the year.

To get a free, no-obligation quote and set up a consultation with a top solar company near you, fill out the 30-second form below.

FAQ: Best Direction for Solar Panels

Is east or west better for solar panels?

For most homeowners in the Northern Hemisphere, panels need to face toward the geographic south, but not necessarily toward the east or west. The north-south axis tends to be more determinative of a solar panel's efficiency.

Should solar panels face south or west?

For homeowners in the Northern Hemisphere, geographic south is typically the best direction for solar panels.

Do solar panels need to be south facing?

For homeowners who live in the Northern Hemisphere, it is recommended that solar panels be oriented toward geographic south (as opposed to magnetic south). In other words, orient your panels according to lines of longitude rather than magnetic poles.

Which is the best direction to face solar panels in Australia?

For Australian homeowners, north-facing solar panels tend to be most effective, though a professional installer can give a more specific recommendation.

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With the adoption of solar panels, homeowners have the opportunity to derive clean energy directly from the sun. When a homeowner decides to install solar panels on their home, they make the decision to combat greenhouse gas emissions, reduce their carbon footprint and minimize humanity's collective dependence on traditional forms of energy. Moreover, they stand to benefit by saving money through lowered utility bills. Solar energy has been embraced by homeowners across the U.S., and this is especially true in Massachusetts.

According to a recent report from the Solar Energy Industries Association, Massachusetts ranks eighth in the nation for solar panel installation, with the state generating 18.49% of its total electricity from solar. The state's total investment in solar is $9.1 billion, and it is anticipated that this number is only going to grow in the next few years as more homeowners realize the astounding benefits presented by solar energy. With that thought in mind, you may be wondering: What are the top cities for solar in Massachusetts?

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