Solar Financing Options & Solutions

So, we know that Solar Power is the cleanest, most abundant source of Energy for our homes and businesses. We have also learned that the cost of solar energy is actually less than the cost of power from the grid. So why is it that only about 3% of rooftops in California have PV solar installed? It turns out that solar financing is one of the biggest challenges to overcome before finalizing the decision to go solar.

solar financing solutionsFirst, it is important to look at a Day One Solar Energy System as more than a reliable source of energy, but as a smart investment with many benefits beyond the money you’ll save each year on your utility bill.  Second, it is important to understand the long term pros and cons of each available payment option.

 Below are the five solar financing options and the pros and cons for each option.

1. Up Front Cash Payment

  • Pros:  Best value and highest ROI;  Owner eligible for 30% federal tax credit;  Lowest cost per watt
  • Cons: Opportunity cost of cash unavailable to invest
  • Best Suited For: Most homeowners and small businesses

2. Home Equity Line Of Credit (HELOC) or Credit Union Loan

  • Pros: Second best value and ROI;  Deductibility of mortgage interest on federal tax return;  Owner eligible for 30% federal tax credit; conserves cash
  • Cons: ROI declines as interest rates riseMay need equity in home
  • Best Suited For: Homeowners with some equity to fund purchase

3. Bank Loan

  • Pros: Owner eligible for rebates and federal income tax credit; conserves cash
  • Cons: May need sufficient assets to secure loan, as well as secondary source of repayment; adds to debt load and may limit future borrowing
  • Best Suited For:  Businesses and Homeowners with borrowing capacity that need to conserve cash

4. Operating Lease

  • Pros: Conserves up front cash
  • Cons: Highest cost per watt; no ownership of PV system and therefore ineligible for rebates and tax incentives; Usually modest utility bill savings, if any
  • Best Suited For: Businesses paying little or no taxes with limited borrowing capacity

5. Power Purchase Agreement

  • Pros: Conserves up front cash
  • Cons: Highest cost per watt; no ownership of PV system and therefore ineligible for rebates and tax incentives; Usually modest utility bill savings, if any
  • Best Suited For: Businesses paying little or no taxes with limited borrowing capacity

Make an informed choice; if the other guys are making promises that seem too good to be true, they probably are. Let us help with your financing decision. As you review each option,  you can do so knowing that with Day One Solar, you’ll get the facts without the gimmicks.