by Anders Alexander
Financing for solar has been a major breakthrough to allow the average homeowner to invest in solar. The upfront price of solar is easily above $12k and often more like $20k. Here in Washington State we have solar financing lower than the more typical 6% rate seen in other States.
The most important aspect of financing is avoiding the upfront price and avoiding too much in interest payments with interest rates below 5%. Once the incentives start to come in then you can use the incentives to pay the monthly loan amount or pay down the principal on the loan.
Since solar is fully paid for by the federal tax credit, the Washington State incentive and lower utility bills the loan will be paid for by solar. On a car payment you actually owe money out of your paycheck every month to pay it off, for solar you are leveraging the 3 revenue streams to pay back the loan.
Solar loans can get more complicated but I don’t necessarily see the need. For example, you can avoid any payments for a year but a balloon payment is always due and there is usually a big penalty for not making the full payment on time.
Partial financing is also a good option for someone that wants to pay off the system quickly and wants to pay out of pocket for some portion of the cost. For example, on a $20k system, if only $10k is financed then the loan would be paid off with the federal and State incentives in 3 years.
Some Washington banks, usually credit unions, will give low fixed rate solar loans. A home equity loan is also an option for those that have access, and this approach makes payments on interest tax deductible.
More complicated financial products like leasing or PPA are not available in Washington due to their exclusion from receiving the Washington incentive. Without the incentive companies that offer these products choose to not operate in Washington.
Financing is discussed during the quoting process here at Bloom Solar Energy, we will connect you with good local options that fit your needs.