Financing options for solar and renewable energy systems

Purchasing a renewable energy system means paying for it up front. You can purchase the system from an approved contractor or manufacturer. Another option is financing the system through a bank loan. 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 time period. 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 your renewable energy system. Typically, you pay for the electricity generated at a rate per kilowatt-hour (kWh), which your agreement specifies.

• 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.
• Extended service agreement for maintenance, repairs and insurance.

• The monthly price of your lease might increase 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.

• Might cease to provide contracted operations and maintenance if the lease provider goes out of business.
• You must consider purchase or buy-out options in your contract.

• Might cease to provide contracted operations and maintenance if the PPA provider goes out of business.
• PPAs usually include long-term commitments of over 25 years.
• You must consider purchase or buy-out options in your contract.

You might be able to finance your purchase of a solar or renewable energy system by taking a home equity loan or secure line of credit. Both options may be eligible for tax deductions. Speak with your tax advisor before you purchase.

Agreements are long-term, with specific fees that might increase over time. Understand any changes in your monthly rate over the lifetime of the solar lease agreement. Ask about your purchase options. Prepaid leases might also help reduce your monthly payments.

Agreements are long-term, with specific fees that might increase over time. Understand any changes in the price per kWh rate over the term of the PPA contract. Ask about your purchase options.