Financing options for solar and renewable energy systems

Purchasing a renewable energy system means paying for it up front or financing your purchase through a bank loan. You can purchase the system from an approved contractor. You own the entire system, which most manufacturers guarantee for up to 25 years.

Leasing allows you to “rent" the renewable energy system for a set period of time. Generally, you pay a fixed monthly rate no matter how much energy the system produces each month.

Similar to leasing, a third party owns and maintains the renewable energy system on your behalf. Typically, you pay for the electricity generated at a rate per kilowatt-hour (kWh) specified in your agreement.

• Lower monthly electricity bills.
• Greater return on investment.
• Increased home value.
• Minimum 10-year warranty.
• Possible 26 percent federal investment tax credit and other deductions.

• Lower monthly electricity bills.
• No large, upfront investment.
• Typically no costs for system operations, monitoring and maintenance.
• Fixed monthly rate, regardless of how much electricity is produced.
• Typically break even or saves money in the first year.
• Typically performance guarantees provided.

• Lower monthly electricity bills.
• No large, upfront investment.
• Typically no costs for system operations, monitoring and maintenance.
• Fixed rate per kWh produced.
• Typically break even or saves money in the first year.
• Typically performance guarantees provided.

• Expensive components, like the inverter, might need replacement after the warranty expires.
• Extended service agreement for maintenance, repairs and insurance.

• The monthly price of your lease may escalate over time.

• Rates per kWh typically increase over time.

• You are responsible for maintenance costs.
• A performance monitoring system might be necessary as an add-on service to monitor your energy production.

• If lease provider goes out of business, they may cease to provide contracted operations and maintenance.
• You should understand purchase or buyout options in your contract.

• If PPA provider goes out of business, they may cease to provide contracted operations and maintenance.
• PPAs usually include long-term commitments of over 25 years.
• You should understand purchase or buyout options in your contract.

You may be able to finance your purchase of a solar or renewable energy system by taking a business equity loan or secure line of credit, which is often eligible for tax deductions. Speak with your tax advisor about the implications before your purchase.

Agreements are long term, and specific fees may rise over time. Be sure to understand any changes in your monthly rate over the lifetime of the lease agreement, and ask about purchase options. Prepaid leases may also help reduce your monthly payments.

Agreements are long-term, and specific fees may rise over time. Be sure to understand any fluctuations in the price per kWh rate over the lifetime of the PPA contract, and ask about purchase options.