Going solar is a great option for anyone looking to save energy, for a variety of different reasons, some of which your average homeowner may not even be aware. Not only is solar a way to embrace the challenges and benefits in a booming era of environmentally conscious technology and energy, but it also proved to be the long-sought after solution to the 6,560,000 American homes in need of power, as estimated by the Solar Energy Industries Association.
It’s easy to see how so many people would turn to solar in the midst of an energy crisis; in fact, an estimated 5% to 22% of a US family’s income may go toward energy payments, after accounting for monetary reduction, thanks to personal income taxes. These figures, of course, are dependent upon where an individual lives. Some homeowners are lucky enough to receive significantly lower rates than others due to differing location prices. Fortunate homeowners live in zones with more accessible charges: a relatively reasonable price tag of about 8 cents per kWh; while others in the country have no choice but to fork out 20 cents or more for similar services. In the current economic environment, an increasing number of citizens are beginning to understand the importance in saving for the long term, so they are opting to buy solar instead of relying on more traditional, expensive means of energy generation. Up to 36% of all newly installed devices used in the production of electricity during the year 2016 is estimated to have been solar, and thanks to its proven benefits to family, economy, and environment, solar energy is ex[ected to make up about 5% of total generation by 2020.
Switching over to solar energy is useful for more than just reducing or eliminating your electric bill – in fact, it’s also beneficial to the value of your home or establishment. Homeowners who have decided to go green have proven to recover nearly all of their initial investment (an average of 97%) and sell faster in comparison to those who rely on more traditional forms of energy.
The increasing growth of the market is one of the bigger reasons that solar energy is becoming more accessible price-wise. The cost to install solar power has dropped 70% since 2010, and thanks to the Solar Investment Tax Credit (ITC), solar has experienced an annual expansion of 68% across the country. States with higher electricity costs and better local incentives have experienced the most remarkable transformation and may be a great place to launch personal solar energy projects or other similar ventures.
What is the best way to go solar?
There are several ways to approach the idea of converting to solar energy. Previously obtained by renting a system through a Solar Lease or a Solar Power Purchase Agreement (PPA), the world of solar finance is now changing quickly, thanks to the introduction of Solar Loans. Such loans have made it accessible to own, maintain, and fully pay a complete solar installation for $4/W or less.
What is a Solar Lease, and what are PPAs?
With a lease, a customer agrees to the installation of the system on their property, paying for the service in addition to the power provided by the equipment. This payment system is negotiated through a monthly “rent,” based on the approximate amount of power the service expects to generate for the user. With a Solar PPA, you agree to pay a set per-kWh price for the power generated, which some may argue is more financially sound, as well as a household’s fluctuation of power use and changes in solar energy over time. In both cases, the monthly payment will increase 1% to 3% every year due to annual escalation. Although most of the companies that sell this service promote this process as free of upfront costs, it could require a starting investment of $5,000 to $20,000 depending on your location and the specifications of your system, including size and quality. It is also important to note that several areas do not legally permit PPAs, so you might need to consider your options and forgo enrolling in a solar leasing program altogether.
Why choose a Solar Loan?
By installing solar panels with the help of a solar loan, a recipient becomes the sole proprietor of the system – a title capable of garnering some additional financial benefits for the homeowner. Those individuals that receive a solar loan may be applicable for state tax credits, cash rebates, and performance-based incentives that reward solar system owners. One of the most well-known tax credits available to solar loan investors is the Investment Tax Credit (ITC), provided by the federal government. This credit allows homeowners to deduct up to 30% of income from their taxes. During a PPA or a solar lease, the owner of the system would receive these financial incentives instead, but unlike PPAs, solar loans exist in all 50 states. Additionally, the accumulative savings from a solar investment are higher than savings from a PPA or a solar lease, since you usually pay the total loan within a reasonable time frame. These typically fixed payments are not affected by annual escalation.
Loan installments are usually “$0-down,” resulting in zero cost to the recipient until they have had the panels installed and monthly payments have begun. Despite this lack of an initial payment, however, the owner of the system is rewarded immediately after installation with clean energy, reduced costs, rebates, and possible tax deductions. Because of this, solar loans are typically seen as the best option when considering different financing opportunities.
Thankfully, there are a wide variety of different loan opportunities able to assist with solar installation costs. These may include credit cards, personal bank loans, home equity, and the government-backed Title 1 Home Improvement Loan. However, the approval periods for these methods can be rather lengthy; the process for Title 1 funding may require several months. The exception to this rule would be to use a credit card, although costs can rack up due to annual percentage rates.
Solar-specific loan providers and property assessed clean energy (PACE) have made this process simpler for those who wish to invest in eco-friendly energy, with a much faster approval time of about 24 hours. PACE also have a surprisingly-accessible annual percentage rate, keeping in mind that rates are dependent on an individual’s credit. PACE is easy to apply to online. After applying, a home or property owner is given a quote for the project and may receive advice or technical support regarding the maintenance of the solar panels.
Many understand the environmental and cost benefits associated with switching over to solar energy, but it is imperative that homeowners research their options before committing to an investments plan. The benefits of purchasing solar with the use of loans, rather than simply leasing a unit, may very well outweigh short-term price cuts and other surface incentives.