Understanding Solar Financing: Myths vs. Facts

3-29-2015 Understanding Solar Financing: Myths vs. Facts

Choosing to go solar is a big decision. It can save you money, and it’s great for the environment. On the other hand the upfront costs can be a deterrent. Unfortunately, solar financing options can also be difficult to navigate.

To help clear up some confusion, lets take a look at four common solar financing myths.

Myth 1: Solar is too expensive, even with financing.

A few decades ago, this wasn’t a myth. When solar first entered the energy market, it was a fairly expensive technology used by only the wealthy. The industry was just beginning to figure out how to streamline the manufacturing and installation processes. The higher costs of materials didn’t help matters, either

Fact: Today, solar is more affordable than ever.

The price of a solar panel has dropped 60% since 2011. In 2001, the average PV system cost about $10 per watt. By the end of 2014, the cost per watt fell to $3.48. Analysts expect the cost of solar to continue decreasing. However, the cost of a PV solar system can still be prohibitive to some Americans. Fortunately, there are multiple financing options available.

Myth 2: There are only two ways to get solar financing.

Loans and third-party ownership (TPO) are often dueling companions in the solar world. While TPO is a viable option, some analysts expect it to see a slight decline in the next few years. The number of residential solar loans, however, is expected to increase in 2015. This may be the result of the reemergence of a third financing option: PACE loans.

Fact: There are three ways to get solar financing.

In addition to conventional loans and TPO, PACE solar loans are making a comeback. Unlike standard solar loans or TPO, PACE loans are part of a local government initiative to help homeowners invest in energy updates. Approved homeowners often receive 100% financing and pay the loan back through a property tax assessment.


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Myth 3: There are only a few solar incentives in my state.

Many people know about the federal solar investment tax credit (ITC). However, homeowners don’t often know about state or local incentives, leading to the perception that there aren’t any solar incentives except federal ones.

Fact: There are more solar incentives than you think.

To find out just how many incentives are available in your state, check out the Database of State Incentives for Renewables & Energy. It’s got a mix of incentives that include state, federal, business, and residential. You may discover that there are one or two more incentives you can take advantage of.

Myth 4: Homeowners who lease their solar systems can still get the 30% federal solar ITC.

The federal solar ITC is often a deciding point in residential solar purchases. However, homeowners who choose to lease their system don’t benefit from the federal government’s tax credit. All the incentives, rebates, and tax credits go to the leasing company.

Fact: Only homeowners who buy their solar system get to keep the 30% tax credit.

The only people who receive the tax credit are the owners of the PV system. Under a lease, the leasing company owns the system, not the homeowners. However, homeowners who pay for their system in full or with the help of loans will receive the 30% tax credit and any other incentives or rebates their state offers.

Tip: Do Your Research

Before you decide to go solar, do your research and make sure know your financing options. Having a grasp of the ins and outs of solar financing can make your transition to solar more enjoyable. The last thing you want to do is have to worry about finances after installation. Once your system is installed, you should be enjoying the positive impact you’re having on the environment and watching your energy bill shrink.

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