According to the Solar Energy Industry Association, US residential solar installations recorded the largest quarter in history at the beginning of 2022.
During this time, installations increased by 30% when compared to the first quarter of 2021. If you’re excited to transition to solar too, but not sure how you will afford it, keep reading.
Here’s a breakdown of solar panel cost considerations and how solar panel financing can help you make the switch.
Average Solar Panel Cost
The cost to install solar panels in the USA varies from $11,160 to $46,500 depending on the size of the installation. Most homeowners require a 6kW system, which costs an average of $18,600.
When you buy your panels outright instead of leasing them, you can claim 26% off your income tax at the end of 2022.
Ways to Finance Solar Panels
If you can’t afford to pay cash for your solar panels, you can either apply for a solar loan or enter into a PPA or solar lease arrangement with a power provider.
Many states, local governments, and solar lenders offer favorable terms on renewable energy loans.
Some of the best ones include California’s Property Assessed Clean Energy loans and the federal energy mortgage from Fannie Mae. This home equity loan allows you to pay for your installation over 30 years instead of 15 or 20 years.
Another type of loan with favorable repayment terms, a HELOC loan, is a revolving line of credit where you often only pay interest on the first portion of the loan.
Homeowners who can’t enjoy federal tax credits can still enjoy the benefits of solar power by leasing their solar panels from a power company. These companies install and maintain solar panels and retain ownership of these solar systems.
Finally, you could enter into a power purchase agreement (PPA) with a power provider. This means, they install the solar panels on your roof, harvest the electricity they create, and sell it back to you at a reduced rate.
Buying vs. Leasing Solar Panel Systems
Whether you buy your solar panels with a solar loan or lease them from a third party, you’ll still pay less for electricity over time. You’ll save more when you buy your solar panels instead of entering into a lease agreement.
A few solar power companies have come up with innovative products that combine the benefits of a solar PPA and a solar loan.
With these arrangements, you don’t pay any money upfront for your installation and only start to pay for them after several months.
The contractors installing solar panels process all the permitting paperwork, and you still get to save with the federal solar tax credit.
Embrace the Best of Solar
Thanks to the many ways you can finance your solar installation and start saving on your electricity bill, there’s no question about whether you should finance your solar panel cost.
Rather, focus your attention on finding a loan that suits your budget or shopping around for other innovative ways to get your solar journey started.
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