Solar System Financing

There are multiple financing options to fund your solar investment, and loans and leases continue to be two of the most popular choices. Before making a decision on a solar loan or solar lease, it is important to know what each of these financing options entails.

Solar Loans

A solar loan is a type of home improvement loan. You make a down payment and pay in installments (plus interest) to recover the loan amount. You can secure such a loan from your solar retailer, bank, or non-banking financial companies (NBFCs). Bear in mind that the terms and conditions of loans vary from source to source. Because going solar increases the valuation of your property by 4.1% on average, you can make good on your solar debt if you plan for it.

There are different types of solar loans. For example, you can get a secure loan by staking collateral and get very low interest rates. Or, you could take a partial “green mortgage” on your recently purchased house. Another common type of solar loan is offered by the Residential Property Assessed Clean Energy Program (R-PACE), where you can pay the debt amount as property tax over a 10 to 20-year period.

One of the most significant differences between a solar loan and a lease is ownership. If you want to purchase a solar array for your home, a loan will fund your investment. Owning your solar setup gives you complete freedom and control over what you buy, how you set it up, and how you use it. You can go off the grid or remain grid-tied while making the most of your local net metering regulations.

Solar Leases

Leases is a contractual agreement for your solar installation. You pay a monthly rent to your solar provider for the solar array, and you are free to use all the power it produces. Unlike some lease financing options, a solar lease through Seacoast Solar does not require a down payment.

The Seacoast Solar program is guaranteed to produce the power/kilowatts quoted for 25 years, warrantied for 25 years, insured by a leasing company, and it is transferable to new homeowners with cost savings of up to 60% of their current electric bill.

While you don’t own the solar setup initially, the lease can be purchased and bought out after five years for the energy tax credit, in turn, you then own the complete solar installation. Either way, you reap the benefits of renewable energy and reduce your utility bills. Leasing is ideal if you don’t want to commit to taking a loan or making a hefty initial investment for your solar setup. Seacoast Solar’s leasing option comes with a 25-year fixed monthly rate.

However, don’t confuse this with solar power purchase agreements (PPAs). Leases have a fixed monthly payment that you need to make, irrespective of the amount of power you produce. For solar PPAs, the provider sets a fixed rate for every kWh of energy you produce (lower than what your utility provider charges) at the time of signing the contract. You make payments based on this rate multiplied by the energy you produce that month. The “rent” you pay is variable, and so are the savings you make.

Leasing a solar array does not give you ownership rights. The solar service provider you lease it from owns the system and will take care of its maintenance. You only use the power generated by the solar setup for your residential energy needs.