How to Finance Solar Panels

Installing solar panels can be expensive at first. But don’t worry! There are ways to pay for them that make solar power easier to get. Homeowners and business owners have several choices to afford solar panels without spending all their money at once. We’ll look at different payment options so you can choose the best one for you. This way, you can start using your own clean energy without emptying your bank account. Let’s explore these options to find one that fits your needs and budget.

Government Incentives and Rebates

The US government wants to help people get solar panels. They offer different ways to save money when you install them. These savings make solar energy cheaper and easier to afford. Homeowners can use these government programs to pay less for their solar panels. The exact savings you can get depend on where you live, as different states and cities have their own rules. But in general, you might be able to get money back on your taxes, cash back from your state or city, or special grants for using clean energy.

Federal Tax Credits

In August 2022, the government changed the tax credit for solar panels. Before, if you installed solar panels in 2020 or 2021, you could get 26% of the cost back on your taxes. Now, Congress has made the tax credit even better. If you install solar panels between 2022 and 2032, you can get 30% of the cost back. This is the same amount people got if they installed panels before the end of 2019. After 2032, the tax credit will start to go down. In 2033, you’ll get 26% back, and in 2034, you’ll get 22% back. If Congress doesn’t extend it, the tax credit will end in 2035. This tax credit helps homeowners save money when they switch to solar power, making it a good choice for many people.

Let’s See How that Looks

State and Local Rebates

Besides the tax credit from the federal government, many states and cities also give money back when you install solar panels. These local rebates are extra savings that can make solar panels even cheaper. The amount you can save depends on where you live, so it’s a good idea to look up what’s offered in your area. By using these local rebates, along with the federal tax credit, you can save a lot of money when you get solar panels for your home.

Renewable Energy Grants

The government also offers special money called renewable energy grants to help people get solar panels. These grants come from federal or state agencies and are meant to encourage more people to use clean energy. If you apply and get one of these grants, you can receive extra money to help pay for your solar panels. This can make the cost of installing solar panels much lower. With these grants, more homeowners can afford to switch to solar power without spending too much money at the start.

Solar Financing Options

Solar Loans

Solar loans are a way to pay for solar panels without spending a lot of money all at once. You can borrow money to buy and set up the solar panels, and then pay it back over time. The rules for these loans depend on who gives you the money and how good your credit is. Some loans might even cover the whole cost of the solar system, including putting it up. As a homeowner, you can also get extra savings from your area. So, even if you need to borrow money, these savings can help make solar energy cheaper for you.

Power Purchase Agreements (PPAs)

Power Purchase Agreements, or PPAs, are a way to get solar panels without paying a lot of money at first. With a PPA, you don’t own the solar panels. Instead, another company owns them and puts them on your house. This company makes electricity with the panels and sells it to you at a set price for a certain time. You get to pay less for your electricity without having to buy the solar panels yourself. Also, you don’t have to worry about taking care of the panels because the company does that for you.

Solar Leases

A solar lease is a good way to get solar power if you can’t buy the panels outright. You make a deal with a solar company to use their panels for 20 to 25 years. Instead of paying high electric bills, you pay the solar company each month. This payment is usually less than what you’d pay for regular electricity. The solar company puts up the panels and takes care of them. You start saving money on your electric bills right away. If you sell your house before the lease is over, you can pass the deal to the new owner.

Property Assessed Clean Energy (PACE) Financing

PACE financing is a way to pay for solar panels through your property taxes. Both homeowners and businesses can use this option. Instead of paying back a regular loan, you pay extra on your property tax bill each year. What’s special about PACE is that it’s connected to your house, not to you. If you sell your house, the new owner takes over the payments. PACE helps by covering the big cost of putting in solar panels at the start.It’s important to know that PACE financing has different rules depending on where you live.

You’ll need to check if it’s allowed in your area before you can use it.

Utility Programs and Initiatives

Net Metering

Net metering is a way for people with solar panels to save money on their electric bills. When your solar panels make more power than you need, you can send the extra electricity back to the power company. Your electric meter keeps track of how much power you use from the company and how much you send back. If you send back more than you use, the power company gives you credit. This credit helps lower your future electric bills. So, net metering lets you save money even when your solar panels make more power than you need.

Feed-in Tariffs

Feed-in tariffs, or FITs, are a way for power companies to encourage people to make clean energy. Here’s how it works: The power company agrees to buy electricity from people who have solar panels. They promise to pay a set price for a long time. When you have solar panels, you can send extra power to the main power grid. The power company then pays you for this electricity. Often, they pay more than what regular electricity costs. This helps people with solar panels earn money while also helping to make more clean energy.

Time-of-Use (TOU) Rates

Some power companies use Time-of-Use (TOU) rates. This means they charge different prices for electricity at different times of the day. The idea is to get people to use less power when everyone else is using a lot, and more power when fewer people are using it. This often matches up with when solar and wind power make the most electricity. If you have solar panels, you can save money by using more electricity when it’s cheaper. You can do things like run your washing machine or charge your car when rates are low. This way, you can lower your power bill and help use more clean energy.

Community Solar Programs

Community Solar Programs help people use solar power even if they can’t put solar panels on their own homes. Power companies set up these programs so more people can benefit from solar energy. Here’s how it works: A big solar project is built in your area. You can buy or rent a part of this project. Then, based on how much power your part makes, you get savings on your electric bill. These programs are great for people who rent their homes, have too much shade on their roofs, or can’t afford to buy their own solar panels. This way, more people can use clean energy and save money on their electric bills.

Don’t let the upfront costs scare you away!

There are several options available for getting solar panels, even if you don’t have significant savings. You can get a loan, rent the panels, or make a deal to buy the power they make. These choices make it possible for almost anyone to use solar energy and save money on their electric bills. Local and federal government provides financial benefits through tax refunds and other savings. This means you can start saving money on your bills right away, even if you can’t pay for the whole solar system at once.