One of the best things a homeowner can do for their money and the planet is to switch to solar energy. With the promise of lower electricity bills, more energy freedom, and a smaller carbon footprint; more people than ever are getting on board with the solar revolution. Additionally, the homeowner controls the system production and power credits, and not the installer.

Of course, one of tne of the biggest questions people who want to go solar have is, “How do I pay for it?”

Fortunately, there may be ways not to have to pay for a solar system all at once. Aside from paying cash, solar loans, solar leases, and Power Purchase Agreements are the three main ways to pay for a solar system. Each of these choices has its benefits, so people can switch to solar in a way that fits their budget, financial goals, as way of life.

In this guide, we will discuss the three ways to pay for solar panels without any upfront costs.

Solar Loans

What Are Solar Loans?

With a solar loan, homes can buy and own a solar energy system without paying for it all at once. The monthly loan payments spread out the cost over time, making solar power easier for homes that would rather own their own system.

How do solar loans work?

Lenders provide solar loans to cover cell installation and costs.  Depending on the lender and loan terms, you return the loan in set payments over 5–20 years.

When you pay off the loan, you own the solar system outright. You can use it for years without paying for energy and make as much money as possible.

Benefits of Solar Loans

• Complete Ownership: After you pay off the loan, you own the solar system outright.

• Tax incentives and rebates: As the system’s owner, you might be able to receive up to 30% in federal tax credits that lower the total cost.

• Increased Home Value: Putting up solar panels can raise the value – typically by 4-6 percent – of your home, making it more appealing to sellers.

• Reduced long term costs: Getting a loan to buy solar can be cheaper in the long run compared to leasing or PPA.

Things to Consider

• After the warranties expire, you are responsible for repairs and upkeep.

• You need decent credit to get some loans or the best interest rates, usually of at least 600 with 650 being the norm.

• Taking out a loan may change your debt-to-income ratio, affecting your ability to borrow money in the future.

Who should get a solar loan?

A solar credit is the best way to pay for your system if you want to save money over time, own it outright, and be eligible for tax breaks.

Solar Leases

What is a Solar Lease?

When people lease solar panels, they can use solar energy without coming out of pocket. Instead, you lease the system from a solar company who maintains ownership.

How do solar leases work?

A solar lease deal lets a company put the system on your house and you pay a set amount each month to use the electricity it generates. In other words, you get lower energy bills without paying for the system’s purchase, repairs, and upkeep.

The lease term is usually between 10 and 25 years. You can renew the lease, buy the system or ask to remove it at the end of the term.

Benefits of Solar Leases (e.g. LADWP)

• Low or Zero Upfront Costs: Perfect for homeowners who can’t or don’t choose to use cash or credit card. 

• Maintenance-Free: The solar company handles fixing, repairs, and monitoring of the system.

• Lower Electricity Costs: When you compare these rates to regular utility prices, you still save money on energy costs.

• Reliable Payments: Planning for energy costs is easy when you have fixed monthly lease payments.

Things to Consider

• You won’t be able to get tax credits or other solar benefits because you don’t own the system.
• The monthly payments may increase over time if there is a lease multiplier, usually 2.99 to 3.50% annually.
• Leasing comes with more comprehensive warranties.
• If you sell your house, the lease is either bought out or simply transferred to the new owner.

Who should lease solar?

A solar lease is a great option if you want lower energy bills without having to pay for them upfront or maintain them.

Power your home with the sun! Switch to solar with Dowd Solar Group and enjoy lower bills, bigger savings, and a brighter future.

PPAs (SCE, SDG&E, PG&E)

What is a Power Purchase Agreement (PPA)?

A PPA is like a solar lease, but you only pay for the power your solar system makes each month instead of a set monthly fee.

How do PPAs work?

A solar provider puts solar panels on your house and charges you a set price for the power they make. You can save money on power because this rate is usually less than what you would pay a utility company.

The solar company owns the system and oversees fixes, maintenance and keeping an eye on it. PPAs usually last between 10 and 25 years. 

Benefits of PPAs

• No Cost Up Front: Same as leasing, a PPA typically doesn’t require money upfront.

• Instant Energy Savings: Your monthly savings can begin immediately, and savings grow exponentially over time because your starting rate per kilowatt hour is lower than your current utility rate.

• Cost-free maintenance: The solar company takes care of all repairs and upkeep by providing extensive comprehensive warranties.

Things to Consider

• You won’t get tax breaks or refunds for the solar panels because you don’t own them.

• If your contract has a yearly escalator, your energy rates may increase, but generally at a considerably lower pace than your privatized utility company.

• If you move, like a lease, the agreement is simply transferred to the new owner or bought out.

What People Should Use PPAs?

A PPA is a great way to get solar energy without paying for it all at once. You only pay for the power you use and storage, if you have a batter.

Conclusion

It is smart to switch to solar electricity for the savings and the environment. There are multiple ways to GO SOLAR with impacting your liquid assets and/or debt-to-income ratio.

You can borrow money to buy them, lease them with a fixed monthly payment, or sign a power purchase agreement (PPA) and only pay for the power you use.

Loans, lease, or go PPA—no matter how you choose, Dowd Solar Group makes going solar simple, affordable, and stress-free! Get started today with free consultation.