Although residential solar installation has gained much hype these days, there are many factors that could impede the adoption of this renewable source of energy, one of which is the cost involved. Your task isn’t completed after you choose the best one from the list of solar panel installers; you still have to decide how you are going to finance the solar power, the upfront cost of which unfortunately is too high.
Obviously, installing residential solar panels is like making investments that could reap returns in a long run. However, the initial cost could discourage many households from pursuing towards the actual installation. The impact of course could differ from one household to another, one area to another. However, one need not worry as there are a lot of financing options for solar power installation, some of which are mentioned below:
- Cash purchase: The first, most obvious option is paying cash up front. You could check the financial incentives provided by the government on federal, state or local level, evaluate what the total cost would amount to and then finance the system and installation through direct cash.
With this form of financing, the return the buyer receives each year is maximized as there are no interests or administrative fees to be paid. Similarly, the Solar Renewable Energy Certificates (SRECs) accrue to the homeowner. However, not everyone could manage such huge amount of cash there and then due to which this option is inappropriate for many.
- Solar Leasing: In case, you want to avoid the huge upfront costs, the best option for you could be solar leasing, where a monthly fee is paid to the provider, who owns the system and gets all the benefits of the ownership. The good thing is, with the ownership held by the provider, he is also responsible for the associated repairs and maintenance.
Though all the incentives, SRECs accrue to the provider, this option could still be worthwhile when considering the fluctuating and comparatively larger electricity bills. Also, at the end of the lease, you are provided with all sorts of options that include buying the system or even disposing of the system forever.
- Home Equity Loans: In case, you want to pay all the solar costs at once but do not have the required cash, the best option for you would be Home Equity Loans. With these, you are provided with loans against the equity in your home. Though you would require a good credit history for this and though the returns from the investment would be quite low with all the interest and administrative fees to be paid, this option also results to complete system ownership and the ability to enjoy the incentives’ benefits.
- Power Purchasing Agreement (PPA): This option though is similar to solar leasing, there is a major distinction. In this case, the household purchases the monthly production of the system rather than renting the system from the provider. With this, you do not have to pay the lump sum and you do not need to get bothered with the repair. However, you get no ownership benefits such as government incentives and the homeowner’s monthly bill could fluctuate too.
Thus, you are recommended to choose the best financing option for yourself evaluating your situations and preferences. Keep in mind that no matter how discouraging the initial costs might sound, the returns are profitable and long term.