If you live in a location with high electric rates and local incentives, it’s very likely that the economics for a rooftop solar system are favorable. But many people don’t have the $20-25 thousand cash that these systems typically cost. Fortunately, over the past few years a range of new residential solar financing options have been developed. These new financing options have spurred the growth of rooftop solar throughout the U.S.
In addition to a cash purchase, solar financing options also include a home equity loan (secured) or ordinary bank loan (unsecured), lease or Power Purchase Agreement (PPA), and Property Assessed Clean Energy (PACE) loan. Although the details of these financing options can get pretty complex, with some “back of the envelope” calculations you can figure out the economics for yourself.
First, add up your total electric bill for the next 25 years, then subtract out the cost of the system (either up-front cost or periodic payments) to get the total lifetime benefit of the system. You will also need to consider what happens when you sell your house, and any special contractual terms (such as escalation rates or warranty provisions). Because most solar equipment is reliable and guaranteed for 25 years, maintenance (except periodic washing) is usually not an issue.
In general, up-front cash purchases offer the best Return on Investment (ROI). Home equity loans (now that the real estate market has recovered) and PACE loans (if they are available in your location) offer the next best ROI option. Lease/PPA purchases are a great “no money down” alternative if you don’t have available cash or don’t qualify for a bank loan. For a practical and candid overview of residential solar financing options, listen up to this week’s Energy Show on Renewable Energy World.
About The Energy Show
As energy costs consume more and more of our hard-earned dollars, we as consumers really start to pay attention. But we don’t have to resign ourselves to $5/gallon gas prices, $200/month electric bills and $500 heating bills. There are literally hundreds of products, tricks and techniques that we can use to dramatically reduce these costs — very affordably.
The Energy Show on Renewable Energy World is a weekly 20-minute podcast that provides tips and advice to reduce your home and business energy consumption. Every week we’ll cover topics that will help cut your energy bill, explain new products and technologies in plain English, and cut through the hype so that you can make smart and cost-effective energy choices.
About Your Host
Barry Cinnamon is a long-time advocate of renewable energy and is a widely recognized solar power expert. In 2001 he founded Akeena Solar — which grew to become the largest national residential solar installer by the middle of the last decade with over 10,000 rooftop customers coast to coast. He partnered with Westinghouse to create Westinghouse Solar in 2010, and sold the company in 2012.
His pioneering work on reducing costs of rooftop solar power systems include Andalay, the first solar panel with integrated racking, grounding and wiring; the first UL listed AC solar panel; and the first fully “plug and play” AC solar panel. His current efforts are focused on reducing the soft costs for solar power systems, which cause system prices in the U.S. to be double those of Germany.
Although Barry may be known for his outspoken work in the solar industry, he has hands-on experience with a wide range of energy saving technologies. He’s been doing residential energy audits since the punch card days, developed one of the first ground-source heat pumps in the early ‘80s, and always abides by the Laws of Thermodynamics.
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