How to Finance Solar Panels (Part 2)

You can finance solar panels

Two days ago, we went over some of the ways you can finance solar panels for your home or business.  You don’t need to have cold, hard cash in order to trigger the power of the sun.  There are a number of options that could allow you to finance solar panels to start a cleaner, greener life right now.

Be sure to check back to the original post to see the pros and cons about financing solar panels, first!

Continuing from the first 5 tips, add the following to your list:

6.  Cash Out Investments.  Well, these days, you may not have anything left with stock market plunges and the economy in a deep recession.  However, some people have considered cashing out CDs, money market accounts or even borrowing against their 401(k) investments.  My advice:  talk to a financial advisor first before deciding on this route.

7.  Power Purchase Agreement (PPA).  These agreements are becoming more common in both the commercial and residential markets.  Under a PPA, the provider will finance, install and own your solar panels, and you put in 0 money!  The way this works is that the provider acts in many ways as your utility company.  You will be billed for the electrical output of the solar panel system at a discounted rate.  During the term of the PPA you may have the ability to purchase the system yourself.  The benefits include the fact that the provider assumes risk, but the downside includes the possibility of onerous terms.  You may want a lawyer to review a PPA before you decide to go this route.

Finance solar panels for your home or business

8.  Local Government Loans. This type of financing is the latest and greatest!  For example, in California, municipalities have the authority to create special tax assessment districts.  These allow residents within the district to borrow money from the city and pay it back through an increase in property taxes over time.  One of the leaders in this financing opportunity is Berkeley, CA, which has adopted a Financing Initiative for Renewable and Solar Technology (FIRST).  You can get up to $37,5000 per solar panel installation without even saving for a down payment.  One word:  wow.

9.  Energy-Efficient Mortgage (EEM).  The federal government supports EEMs by providing insurance through the FHA or VA programs.  These mortgages (secured by equity in your home) allow financing of energy-efficient installations, including solar panels.  The Energy Star program partners with lenders who provide EEMs.  Those lenders can then use the Energy Star brand in their advertising.

10.  Bank Loans.  Either secured, or unsecured, loans offered by banks have expanded into the PV system market.  If you go the secured route, your money will likely be backed by the equity in your home.  Check with your tax consultant to determine if interest on the loan is tax-deductible.  Unsecured loans do not put your home equity at risk, but they will not result in a tax benefit to you.  Ask around, because these loans are getting more prevalent.

Now you have a number of options to finance solar panels.  Of course, like any loan, you may end up paying more than if you paid cash up front.  Be sure to consider your specific circumstances before entering into any agreement in this regard.  You’ll want to make the best decision from a financial and tax-based standpoint.

Enjoy your new solar panels!

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