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Solar Solutions: Financing Your Switch to Solar Power

HannahWhittenly

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If you’ve kept up with the trends in electricity savings, then you must know that solar energy is one of the most popular outlets available. Unfortunately, a partial or full switch to solar mechanisms can cost thousands of dollars, so loans and financing play a vital role in the affordability of solar panels. Here, you will learn the four most popular methods of solar financing to ensure a steady, reliable source of savings and electricity.

Solar Lease/PPA

Getting a solar lease is by far the most popular method of financing solar panels. In this practice, a solar energy company will install solar panels on your property. However, the company will be the rightful owners of the panels and mechanisms involved. This means that they will be entitled to the 30% federal tax credit involved. This does even out on your part because they will be responsible for paying maintenance, audits, and other routine procedures that would normally be charged to the homeowner instead. Every month, you will pay the solar provider a preset amount; the volume of energy produced will not affect the payment in any way, it is essentially concrete. A power purchase agreement follows the exact same guidelines, with the exception of a preset monthly fee. With a PPA, you will be charged according to how much energy is produced by the panels.

Home Equity Loans

A home equity loan is another option of finance available to solar seekers. If you choose this route, you will establish a structured loan with your property as collateral. This will reduce its equity. On the bright side, with the right loan structure, savings with this practice are almost immediate, as many homeowners tend to save more on electricity than what they pay for a loan monthly.

Energy-Efficient Mortgage

The federal government offers EEMs, which credit your home’s energy production based off solar power. EEMs differ from typical mortgage loans in that they usually require a home energy rater to perform an energy audit for your home before you can be approved. Once the official audit is completed, the lender will determine if your home is suitable for the efficiency it may offer, which will affect your payment through financing.

Shared Solar

A shared solar option is quickly growing in popularity for many homeowners wanting to make an energy switch. This is because the vast majority of homes cannot sustain the conditions necessary to produce solar energy. In this practice, a community or third-party owned solar arrangement is set in a suitable area, and the costs and savings are divided evenly among the owners.

Assessing options carefully will provide the best outlet for solar financing. Every homeowner is different, and your unique conditions will obviously be the most important factor in determining your best course of action. With cautious consideration, you can afford solar energy and enjoy the benefits in the long run.

 


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