Wouldn’t you love the chance to save money on your utility bill? If your roof is in good shape, solar panels can provide you with an affordable way to make that happen. There are plenty of reasons why people choose solar panel installation as a means of energy generation. Whether it’s for the environment, economic savings or green energy — or all of the above — there’s no doubt that going solar is a great way to take advantage of the benefits of renewable energy.
With the increased popularity of this green technology, it’s no surprise that more people are considering solar panel installation in central Florida and elsewhere in the US. In 2022, solar energy accounted for 5% of the total electricity generation in the US, according to the Electric Power Annual report of the US Energy Information Administration (EIA). This is projected to rise to 20% by 2050.
If you’re thinking about going solar, you probably have a few questions. Like, how much does it cost? And can I afford it? If you’re interested in going solar and financing options available to you, here’s what you need to know:
Solar power financing options available to you
There are a variety of ways for paying for solar panels. It’s important you understand your finance for solar systems options so that you can pick the best one for your situation.
If you have cash available to purchase your PV system, this is the simplest way to pay for it. You simply write a check or give the installer or power company cash, and they’ll get started right away. This is a good option as there are no interest charges associated with this method of payment. The only downside of paying for solar panels outright is that this isn’t an option for most people. This is because most people don’t have enough cash sitting around just waiting to be spent on PV panels.
With a loan solar panels arrangement, you borrow money from a bank or other financial institution to pay for your power-generating panels. You then make monthly payments on the loan until it’s paid off. The advantage of this option of financing solar power is that you don’t have to worry about making any payments after the system is installed because the loan is paid off once the system is paid for — meaning there’s no ongoing cost for energy production or maintenance. The downside of loans for solar panels is that they can be more expensive than leasing because your monthly payments will be higher than what you’d pay with a lease payment plan, depending on how much you borrow and the interest rate on your loan.
A solar lease is a contract that allows you to use solar energy without having to buy the equipment. You pay a monthly fee for the amount of electricity your owned solar panels produce, as well as any extra fees for maintenance and repairs. The utility company owns and maintains the panels, so you don’t have to worry about them breaking down or becoming outdated. Lease solar power payment plans often have no upfront costs and are relatively easy to obtain. The downside of this option of financing solar energy is that the terms of the contract can be long (20 years or more), so it may not be a good option if you plan to move soon.
Power purchase agreement (PPA)
Power purchase agreements (PPAs) are a popular option for getting panels at a low cost. A power purchase agreement (PPA) is a contract between you and a solar power company such as PPM Solar that installs your panels, where they agree to buy the electricity generated by your system for a set price per kilowatt hour (kWh). This price is usually lower than what you would pay the utility for your electricity, meaning you save money on your electric bills.
With a power purchase agreement, you’re essentially leasing your rooftop system to a third party. If you want to go the rooftop solar PPA route, don’t expect any state or federal incentives — they typically don’t apply with PPAs. A PPA can be an attractive option if you have little or no equity in your home and don’t want to put more money down on a PV system project. If you have significant equity in your home, it may be more affordable to finance through loans or cash-out refinances.
Which financing should you choose?
Solar financing options are a great resource for installing solar power for home or business. Whether you choose cash payment, a loan, lease, or a power-purchase agreement (PPA) will depend on a few different factors, including the amount of money you can spend upfront and your current financial situation. If you have good credit, a FICO score of 750 or higher, and at least $10,000 in savings, and you’re considering home solar panels in Florida or other cities in the US, a loan may be the way to go for residential solar panels. If you don’t want to make monthly payments, look into a lease or PPA. If your credit is less than stellar or you have limited or no down payment money, choose a lease or PPA. With all three options, with the proper research and careful decision-making, you can get started today!
Deciding on the smartest financing option
Bottom line, solar panels financing is a smart choice for many households. Though it might be a bit confusing in the beginning, it’s an easy process once you know what options are available to you. So if you’re on the fence about how best to pay for PV system panels, don’t hesitate to get in touch with a solar financing company to determine your different financing options. In the end, you could very well be saving more money than you ever imagined!