Homeowners especially, might have heard that installing solar electric improves the value of your house. Hmm. My opinion is it helps ‘curb appeal’. All things being equal, a home with solar will get more looks, and by virtue of more looks, will more than likely sell quicker than a home without. But lets not get too far ahead of ourselves….
Solar Electric-Cash purchase
Green money. This is by far the simplest and most cost effective way to acquire solar electric. If your payback is ten years or less, you’re in good company. A simple but effective way to calculate your payback is to take your net install cost (install cost minus any tax incentives, rebates, etc) and divide by your annual cost of electricity.
There also other factors to consider, such as the degradation of your system. Solar electric modules degrade over time. The main cause of degradation is the constant exposure to sunlight (ironic isn’t it!). Some panels degrade more slowly, others, more quickly, making your purchase more or, depending on the quality of the panel, less of an investment value. More about different panels and equipment in another post.
There are quite a few consumer loan programs that offer unsecured loans for your solar electric. As you might expect, factors such as FICO, DTI-if you’re a homeowner, credit history, etc, all affect how much interest you’ll pay, the term, or even whether or not you qualify for a particular finance program. Solar lenders include Mosaic, Enerbank, Matadors Credit Union, Sungage Financial to name just a few. I don’t endorse any of the aforementioned companies-caveat emptor!
More often than not, with ‘solar loans’ you need to repay the monthly payment plus the equivalent of your 30% ITC within an eighteen month period to retain a low or preferred monthly payment amount. Even so, if your dealer has done their maths, you’re still better off each month rather than being stuck with a PG&E bill.
A lease is exactly that. You lease the solar equipment for a monthly fee that is ( or should be) lower than your average monthly electricity bill and generates the annual amount of kWh you need. As with the solar loan, the quality of the panels and equipment determine whether or not a lease is cost effective. Bear in mind that a lease is zero money down, so it takes the lessor a few years to see a return on this investment. And frankly speaking, there’s only one panel maker who’s lease I recommend because of the efficiency, power production and quality of their equipment.
Power Purchase Agreement-PPA
A power purchase agreement is closer to a lease than a solar loan. The PPA provider sells the kWh the solar electric system produces at a guaranteed lower price per kWh. There are a couple of programs whereby you can pay a flat rate per kWh or a tiered rate that’s lower than PG&E (or your local utility). The flat rate appeals because it’s flat and you know what’s coming each month. The adjustable is tied to the amount of kWh you generate vs. the amount you use. As with the lease, because the customer does not own the equipment, the PPA provider guarantees and warrantees the equipment and kWh generation.
The advantages that leases and PPA’s have over loans is that the finance company usually offers a power production guarantee and equipment warranty. Since the equipment belongs to them, they take full responsibility for maintenance and repairs. Again, there are good and not-so-good lease/PPA programs out there.
PACE Loan-Property Assessed Clean Energy
PACE financing is a federally-backed finance program for renewable energy projects. The loans are offered and managed through third-party brokers. In N.California there’s YGRENE, Spuce Finance, MPower, HERO, Figtree and California First. Again, I do not endorse any of these companies or products-caveat emptor!
PACE financing is a secured loan that’s re-payed through your property tax. Unlike the unsecured finance options, you get to keep the ITC . You may possibly also deduct the interest payments. Check with a finance professional about this.
There are probably other methods and programs that allow for purchase or acquisition of solar electric. A reputable dealer installer will have details.
I’ll deal with selling your home with solar in a follow-up post. In the meantime feel free to leave a comment or contact me with a question HERE.