After you’ve made the decision to go solar, the next step is figuring out how to pay for it.
The simplest way to finance a solar installation is through a loan, which can save you anywhere from 40% to 70% over the lifetime of your solar panels. Other alternative programs include a Solar Power Purchase Agreement, where the customer buys the services produced by the solar system instead of the actual equipment. This model allows the customer to avoid the complex upfront costs, permits, and system downtime risk while cutting their net electric bills as soon as the system is turned on.
In some cases, a hybrid loan may be an option, which combines the payments for a loan with the payments for a power purchase agreement, deferring the upfront costs for as long as 15 years or more. It’s important to look carefully at the terms of the deal and carefully analyze the risks and rewards to make sure it is the best option for you.
Finally, it’s important not to overlook the tax benefits to purchasing your solar system outright, deferring the payment of any federal tax liabilities as well as state taxes for as long as 25 years after the installation, and the capital gains treatment can be deferred forever.
These are complicated issues and the right person for the project should be thoroughly discussed with a qualified solar contractor so you get the best result. A qualified consultant should understand the topic thoroughly, have experience with how to pay for solar installations and be available to consult for months or even years so you don’t have to wait too long for answers.
After the system is installed – which should be a two or three week job if you have a reputable company with experience in the area– you should be able to receive your electricity bill showing your savings and the system value after the installation. It should also provide a tax credit, which is what our tax system offers for residential systems.
This is the main point of contention between solar and other forms of renewable energy and the reason why these forms are not used more widely. And the reason why it’s important to understand the issues thoroughly before making a purchase.