Thursday, March 10, 2011

Home Solar Electricity: What financing options are available to the beginner?

One of the big problems a beginner faces when he seriously considers adopting Home Solar Electricity is where to get the fund to finance the project. By this time, he already knows that a sizable amount is needed which should be financed from sources outside of the family budget.

Several questions may come into the beginners mind. Are there financing plans available to him? Will he qualify? Are these plans practical and affordable? It is wise for the beginner to check out very carefully and find out which of the plans fit him best.

Financing Plans:
Prospective solar users have multiple options when financing their home solar systems:

1.       Cash Purchase (commercial) – This plan allows the beginner to take advantage of the federal and state solar incentives which may amount to 50% of the total installation cost. Cash purchase of home solar electricity yields the highest return on investment.The beginner saves money from day one and can also expect increase in home value.

2.       Local Government Loan - Some municipalities will lend the beginner money to install solar panels and allow him to pay the loan back through an increase in property taxes. There is flexibility in this option because if a beginner decides to move out later, the solar panels stay with the house and the new owner takes over the property tax payments (agreements may vary). Check it out if the local government offers this type of loan.  

3.        Solar Lease - This is an option made available by some solar companies like SolarCity. A solar lease makes it possible for a beginner to get solar panels with no money down and allows him to start saving money on electric bill from day one.

Also, since the solar leasing company is the owner of the solar panels, they are usually responsible for monitoring power output and performing any necessary repairs. When the lease is over the beginner usually has the option of extending the lease or having the solar panels removed.

4.       Energy Efficient Mortgages - This is a federal government program available in the United States that enables beginners to get a mortgage for making energy efficiency improvements to their home. Since the loan is insured by the federal government, it can work for people who would otherwise not be able to acquire financing.

5.       Power Purchase Agreement - A power purchase agreement (PPA) is similar to a solar lease in that a company owns and maintains the solar panels on your roof. The difference is that instead of making a monthly lease payment, you purchase the power produced by the panels at a preset rate. This is an option that enables beginners to take advantage of solar energy with no capital outlay. A third party financial institution will own, operate and maintain the solar system.

6.       Bank Loans - Banks are now willing to offer loans for the purchase of a solar power system. It is structured so that payments are lower than previous electric payments in the beginning. These loans can be secured (usually by the equity in homes) or unsecured. Consult a tax expert to find out if interest on the loan is tax deductible.

Beginners should know that now so many people are willing to lend money if they decide to go solar. What's left to do is for them to check out which of the options will work out for their household.

We invite you to visit our Informative Solar Article page for more practical tips, simplified application guide and established solar benefits.

Author’s Box
 Jacinto Demonteverde, Jr., the owner, is a strong advocate of solar power adoption. He writes practical articles to keep established and prospective solar users well informed. Visit him at: You are welcome to republish or reprint this article free of charge provided the content remains unchanged including the Author’s Box. No permission is needed


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