New CESA Guide Explains Options for Residential Solar Financing

Author: Maria Blais Costello | Project: Clean Energy States Alliance

blogphoto-Solar-Financing-Guide-Cover-with-borderThe number of residential solar PV installations has increased rapidly in recent years, due in part to the emergence of financial products that give homeowners the ability to spread out the costs of going solar over time. Coupled with state and federal incentives that help reduce the costs of PV systems, new financing approaches are helping homeowners to install solar at a remarkable rate.

According to a recent report by the Solar Energy Industries Association, nearly 600,000 homes and businesses have installed solar PV systems in the U.S. Since the end of 2010, the average price of a PV panel has dropped 63 percent. While this is good news for the potential solar purchaser, the increasing number of solar vendors and financing options can make homeowners’ choices more complicated.

There are two primary ownership models for solar PV: third-party ownership and homeowner ownership via direct purchase or a loan. (A story offering the perspectives from two homeowner’s on these models, “The Great Solar Panel Debate: To Lease or to Buy,” was recently aired on National Public Radio.)

Third-party ownership models–Solar Leases and Solar Power Purchase Agreements (PPAs)–allow homeowners to get the benefits of solar PV with no upfront costs, since the third-party developer owns the PV system and essentially “sells back” the power generated by the system to the homeowner. But with third-party ownership, there are questions that should be considered such as what are the buyout options for the system, what are the home ownership transfer provisions if the home is sold, and who has the responsibility for maintaining the system once it’s installed.

Solar loans are now available to help those who wish to own their PV system while paying for it gradually over time. Some questions to consider with loans are how to structure the repayment terms, what entities offer solar loans, and whether to purchase an extended warranty.

With these new financial products, many potential consumers for solar PV systems are not quite sure what the best way to finance a system is, and what the advantages and disadvantages are for each.

Clean Energy States Alliance has prepared “A Homeowner’s Guide to Solar Financing – Leases, Loans, and PPAs” that will assist homeowners in making the right decision as they weight the benefits of direct ownership versus third-party financing. This guide explains “What You Need to Know about Leases, PPAs, and Loans” as well as “Common Terms in Solar Financing.” It also provides a check list of questions that homeowners should consider when making their decision.

This free guide is available here.

It provides useful analysis to compare residential Solar Leases, PPAs, and Loans. The guide is an objective resource that should be helpful to homeowners who are considering how to finance solar PV on their homes or property.