Thursday, August 23, 2012

Solar Financing or Purchase Options

With all the options available today for designing and installing the right Solar System for your home, there are really only 3 considerations for financing or purchasing the system.  These are:
1)      Purchase – depending on your tax and cash flow status, this may the best option.  The average cost of a system is $25-30K, so be prepared.  You will immediately receive a 30% Federal tax credit, and will also see the most significant reduction in your utility bill.  Depending on the size and configuration of your system, the payback period is usually between 5-7 years.  However, after that you will have free electricity for as long as the system is in operation, usually 20-25 years or more.
2)      Lease – this is a standard agreement where the homeowner pays a flat monthly fee for having the ability to use power generated from the system.  There will be immediate savings on your utility bill, and those savings will increase in future years because the of the typical utility company rate increases of 3-5% per year.  Also, the homeowner usually has the option to purchase the system at a fair market value, if it makes financial sense to do so. 
3)      Power Purchase Agreement – this is a relatively new option, and is similar to a lease.  The difference is that the homeowner agrees to purchase electricity generated from the solar panels at a reduced rate, instead of from the utility.  The PPA also allows homeowners to lock in their rates for the length of the agreement (typically 20 years or more), so they have a hedge against the typical utility company rate increases of 3-5%.
With each of these options, the home must qualify by (1) being relatively free of shadows to allow the maximum amount of the sun’s rays at all times of the year, and (2) having few obstacles on the surface of the roof so there can be an optimal number of panels.  Either way, it’s a great time to install Solar, so you can generate a lifetime of savings!

3 comments:

  1. hey, thanks for sharing such informative post. thses are very helpful for those who consider going green but think its out of their budget.

    Unirac

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    1. You are welcome! If you have any other questions, please feel free to call our solar experts at 866.83.SOLAR or send them an email at GoSolar@1stlightenergy.com.

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