Many homeowners are concerned about the costs as more Americans consider converting their homes to solar power. Residential solar installation costs today range from $15,000-$35,000 depending on your roof, location, and the electricity you need. This report from the Lawrence Berkeley National Laboratory, Tracking The Sun, contains information on solar costs in the United States.
Thanks to state and federal incentives, most homeowners only pay part of the cost of solar for their homes. The federal investment tax credit is 30% of the price of a solar system for a residential home installed before December 31, 2032. Many states provide tax incentives and credits that can make owning a home solar system more affordable. Find out about the incentives available in your form by visiting the Database of State Incentives for Renewables and Efficiency ( DSIRE). Ask around for incentives offered by your local municipalities and utilities.
You can lease or borrow a solar system if you do not have the money to buy it upfront. You have several options for solar financing.
Loans – A loan can be obtained to buy a system. Some banks, credit unions, and solar installers offer loan options, including zero-down finance. Loans come in many forms:
Personal Loans have fixed monthly payments and interest rates so that you know exactly how much you pay. Long-term loans will allow you to pay for your solar installation for several years. However, there are shorter-term loans (12-18 months), also known as bridge loans, which let you use ITCs and state credits immediately without waiting until taxes have been filed. You can even combine this short-term with a longer-term loan to cover the remainder of your solar installation.
Residential property assessed as clean energy PACE loans Some states allow you to repay your loan through your property tax. The loan is transferred to the new owner if you sell your house.
Home Equity loans are similar to personal loans with fixed interest rates and monthly repayments, but you can borrow against your house.
Home Equity Lines of Credit offer you the same lines of credit you can borrow from, but with variable interest rates. This means you will see your payments fluctuate over time.
A government loan is available to both current and new homeowners. Fannie Mae’s HomeStyle Program allows you to upgrade your home with solar panels or other clean energy improvements by up to 15%. You can install solar panels when you purchase or refinance a house using the HomeStyle Energy mortgage program and the Federal Housing Administration Energy Efficient mortgage program.
Lease – Like leasing a vehicle, you can also rent a solar system to lower your upfront costs. In this arrangement, the solar installer, financier, or third party maintains and owns the design you install on your roof. The solar system company will charge you a monthly fixed rate. You should check with your insurer if your policy covers the leased panels. A typical lease lasts 20-25 years. How your lease is transferred to the new owner will be decided during the sale if you choose to sell your home.
Power Purchase Agreement (PPA) This is another term for a lease. It’s all about how much and who you pay. In a solar PPA, you buy the electricity generated by the system from the system’s owner at a fixed rate per kilowatt hour. You can often get PPAs with no down payment so that you see savings in your monthly energy bill immediately. You should ask if your PPA will increase your monthly payment over time and consider this when making your decision.
You will not be eligible for tax incentives and rebates if you have a PPA or lease, but you can save on energy and reduce your carbon footprint.
You can sell the ownership of your system to the buyer when you sell your house. Residential solar energy systems can increase the value of your home. According to Zillow, in 2019, homes with solar panels sold for 4% more than comparable homes without solar. This could add thousands of dollars if you decide to sell.
The Homeowner’s Guide to Solar Installations is an excellent resource for consumers to learn about their available resources and guidance to help demystify the process.
This post is part of DOE’s Summer of Solar Campaign, highlighting the stories of diverse Americans using solar energy. It also highlights the communities and organizations that make it easier for people to go solar.