You know you want to go solar, but aren’t sure if you should lease, finance through a loan, or pay for it outright. Well, there’s no “right” answer to this. The fact of the matter is, there are ways for almost anyone to reap the benefits of going solar, and each option depends on your situation, needs, and goals. Let’s break it down:

Solar Lease/PPA (Power Purchase Agreement)

A Solar Power Purchase Agreement (SPPA) is a financial arrangement in which a third-party developer owns, operates, and maintains the photovoltaic (PV) system, and a host customer agrees to site the system on its property and purchases the system’s electric output from the solar services provider for a predetermined period.

Pros:

• $0 down
• You can typically expect 10-20 percent savings over utility bill costs with a solar lease or PPA.
• More qualifying options if you cannot qualify for a solar loan.

Cons:

• You do not own the solar equipment on your property.
• If you sign a solar lease or solar PPA, the tax credits and other financial incentives belong to the owner of the system (not you).
• You agree to purchase the power generated by the system at a set price per kilowatt-hour (kWh) (i.e. $0.15 per kWh) instead of paying a fixed amount per month. Because solar panels typically produce more electricity during the summer than during the winter, most people with a PPA have higher solar bills in the summer during the summer months. Although it does typically even out on average in your yearly average.
• If you move you do not re-coupe your expenses.

Solar Loan

With a solar loan the homeowner borrows money from a lender, either a bank or a solar company, and then pay it back with interests through monthly installments. Solar loans help homeowners go solar for $0 down while financing the whole system.

Pros:

• $0 down
• You can typically expect 15-30 percent savings over utility bill costs with a solar loan.
• The homeowner owns the solar system fully by the end of the loan’s term when fully paid off.
• Lock in your monthly payment so you know exactly how much you owe each month.
• Low interest rates
• Loan is transferable

Cons:

• The interest rate affects the total cost of the loan over its lifetime.
• It can be difficult to qualify if you don’t have adequate credit or taxable income.

Cash

Paying for your solar system in cash is exactly what it sounds like, you own your system outright, day one.

Pros:

• Own your solar system day one.
• No interest, lowering your total system cost.
• No monthly payments.

Cons:

• Large upfront costs that could be invested elsewhere with how low interest rates are for loans.
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