The next step after you decide to go solar is to figure out how to finance it. Suppose you’re like most Americans and need more cash to purchase your solar energy system upfront. In that case, you can choose from various financing options that will help you jump on the solar energy bandwagon.
Solar panels can be purchased with a loan that will save you between 40% and 70% of the cost over your lifetime. These loans are very similar to the home improvement loans used to finish upgrades and renovations, such as finishing your basement or redoing your kitchen. Many sources, such as solar installers and banks, offer loans.
Solar energy is now more accessible than ever. Fannie Mae’sMae’s homeStyle(r) energy mortgage allows borrowers to make clean energy upgrades of up to 15% of the appraised value of their property. Borrowers can finance energy-efficient improvements when buying or refinancing their homes. This eliminates the need for subordinate liens, home equity lines of credit, Property Assessed Clean Energy loans (PACE), or unsecured loans. Homeowners must obtain a home energy audit to prove that the energy savings will outweigh the cost of the mortgage.
HomeStyle Energy’sEnergy’s mortgage is a game changer in the solar loan industry. The HomeStyle Energy mortgage will encourage solar companies to reconsider their loan practices. This will increase competition in the industry and reduce soft costs for consumers, such as permits and installation. Now, people buying or refinancing a home can include the cost of solar panels in their mortgages. This will reduce interest rates and allow for more competition within the industry.
Solar energy on your roof will add value to your house, regardless of what type of loan you get. Recent research found that buyers in the United States are willing to pay an additional $15,000 per home with a solar array of average size. A second study showed that homes with solar panels sold faster than those without.
You still have options if you cannot obtain a loan for a solar power system. Some solar installers offer a third-party-owned system via a power purchase agreement or lease. The installer will own and maintain your system. To lease a solar system, consumers must pay a monthly fixed payment based on the energy the system will produce. Solar PPAs allow consumers to buy electricity from rooftop systems back from their installer at a fixed rate per kilowatt hour. Usually offered without any money down, these arrangements do not provide consumers the same rebates, tax breaks, and other incentives that system owners enjoy. Data shows that when it comes time to sell these homes, even though the third-party systems may add some complexity, their overall impact is neutral.
SunShot Initiative awardees have been working hard to reduce the costs of financing solar energy. Sungage Financial, a SunShot Incubator Awardee, created a marketplace to provide homeowners with low-cost financing options for solar equipment. Pilot programs in the Northeast helped the company understand the needs of consumers and installers to efficiently and successfully deliver financing solutions. kWh Analytics Incubator Award also uses data analytics to assist investors in understanding the perceived financial and technical risks associated with residential solar systems. This will help build investor confidence and allow more capital to be invested in the market.
Solar financing is a complex process for consumers, but it’s worth it. It can lead to cleaner, cheaper energy, which could increase the value of your home.