Financing residential solar energy can be done in one of three ways. Homeowners can purchase the equipment outright, take out a loan, or lease it. Each option has known benefits and drawbacks, but one is right for you.
Ownership
Purchasing a set of panels can run more than $50,000 in some circumstances. However, the average ROI on panels is five years if bought outright. In addition to breaking even on your investment, you can qualify for a federal income tax credit of 30%. Likewise, some localities give out incentives, like on your property taxes. Depending on your installer, you will likely get a 25-year warranty.
Solar Loan
Qualified buyers can get a $0 down loan and use it to finance their purchase. You would still qualify for the federal income tax credit of 30%, and you could still reduce your bills. Similar to buying outright, you benefit from increased property values. However, you do not have to pay anything extra on your taxes since they are unrealized gains.
Solar Lease
Instead of buying the panels, you can buy the power they produce. Power purchase agreements are a $0-down way to start using solar fast. Some companies offer the ability to buy the panels at milestones. Nevertheless, the main benefit is that you can hedge against rate increases. Plus, you can still leverage the boost to your home’s value when you decide it is time to sell. Their 25-year warranty would still apply, so if repairs are needed, then it will not be a problem.
