Our Financial Options

When financing a residential solar project, homeowners often consider either a Power Purchase Agreement (PPA) or a solar loan. Both options enable homeowners to install solar panels without paying the full upfront cost, but they differ in ownership, payment structure, and long-term benefits.

Power Purchase Agreement (PPA and TPO)

TPO: Third Party Ownership

Ownership: The solar company or a third party owns the solar system. The homeowner does not own the panels.

Payment Structure: The homeowner agrees to buy the electricity generated by the solar panels at a predetermined rate, usually lower than the local utility rate. Payments are based on the actual amount of electricity the system produces.

Maintenance: The solar company is responsible for maintenance, monitoring, and repairs since they own the system.

Upfront Costs: Typically, there are little to no upfront costs. The homeowner only pays for the electricity produced.

Incentives: The company owning the system receives any federal or state incentives (including the 30% ITC), rebates, and tax credits.

Agreement Terms: PPAs usually have long-term contracts (often 20–25 years), and homeowners may have the option to buy the system at the end of the term.

Transferability: If the homeowner sells the property, the new owner must agree to take over the PPA, or the seller might have to buy out the contract.

Solar Loan

Ownership: The homeowner owns the solar system from the start.

Payment Structure: The homeowner takes out a loan to cover the cost of the solar system and repays it over time, usually with fixed monthly payments. Payments are independent of the system’s energy production.

Maintenance: The homeowner is responsible for maintenance and repairs, though warranties often cover many issues.

Upfront Costs: Depending on the loan terms, there might be a down payment, but many solar loans offer 100% financing.

Incentives: The homeowner benefits directly from any federal or state incentives, rebates, and tax credits.

Agreement Terms: Loan terms vary, typically ranging from 5 to 30 years. Once the loan is paid off, the homeowner fully owns the system and continues to benefit from free electricity.

Transferability: If the homeowner sells the property, they may need to pay off the loan, or the buyer could assume the loan, depending on the loan terms.

 

 

CASH

Purchasing a solar system with cash offers several advantages, particularly in terms of financial savings, ownership, and long-term benefits. Here’s a summary of the key benefits.

No Interest Payments: By paying cash, you avoid interest payments that would come with a loan, maximizing your overall savings.

Immediate Reduction in Energy Costs: Once the system is installed, your electricity costs are drastically reduced or even eliminated, depending on your energy needs and the system’s output.

Great Return on Investment (ROI): The investment in the system will pay itself off when the amount you would have spent in electricity equals the total investment. At that point every dollar you would have spent on the electricity the system is producing is staying in your pocket.

Asset Ownership: You own the solar system outright from day one, giving you complete control over it.

Increased Property Value: Fully owned solar panels can increase the value of your home, making it more attractive to potential buyers.

Direct Access to Incentives: As the system owner, you are eligible for federal, state, and local tax credits, rebates, and incentives, which can significantly reduce the overall cost of the system.

Depreciation Benefits: For businesses or rental properties, you can also take advantage of depreciation benefits.

Purchasing a solar system with cash is an excellent option for those who can afford the upfront cost, as it provides the highest financial return, complete ownership, and access to all available incentives. It’s a long-term investment that can lead to significant savings and energy independence.

 

Summary

PPA: Lower upfront costs, no ownership of the system, and payments based on electricity production. Ideal for those who prefer minimal responsibility for the system and lower initial costs.

Solar Loan: Homeowner owns the system, benefits from incentives, and makes regular loan payments. Suitable for those who want to own the system and take advantage of long-term savings.