Financing Your Solar – Your Money or Someone Else’s Money – Part 1

By Phil DelNegro

Financing solar panels

Financing your solar panels has never been easier or more confusing.

By now, most homeowners in California have heard the benefits of solar energy and many realize first hand that solar really does work.  Financing your solar panels can be a way to offset the rising cost of energy made available through investor owned public utilities such as SDG&E, SCE and PG&E.  Others see solar as an investment in their future or tax shelter much like one would a 401K or profit sharing plan. While others might view solar as yet another home improvement project to add value to their home and property. All those views are accurate and incredibly important to understand.  Any way you look at it, there are several ways to finance solar which often adds angst to a homeowners decision. When consulting with homeowners to better understand their solar needs the discussion often very much turns to one of financial strategy centering around a simple question of “Are you going to pay for the solar system with your money or someone else’s money?”  Many homeowners simply do not go solar for fear that they can’t afford it.  The answer is that in today’s solar climate the homeowner simply has too many options involving either their own money or some else’s money.  These many options and pressures of the in-home visit sometimes leads to confusion and very often “analysis paralysis” as today’s homeowner simply doesn’t know who to trust.

In an attempt to make it easy on your wallet and financial thinking as it relates to solar for your home, it is best to first  draw a line in the sand that has helped many navigate through the vast waters’ of solar financing –

What would you do with a 30% Federal Tax Credit on the gross cost of your solar system?

Can you use a 30% Federal Tax Credit to offset taxes that you owe?

Can you carry a 30% Federal Tax Credit forward to better plan your future tax burden?

Ultimately, the giant disclaimer here is to check with a tax professional or Certified Public Accountant (CPA) in all matters related to taxes.  However, for the purpose of illustrating ways to finance your solar system, if you are unable to take advantage of essentially a 30% discount from Uncle Sam, you might be a great candidate for a solar lease or a prepaid solar lease. In the case of such leases, a solar leasing company will install, insure, monitor and maintain the solar system on your roof and simply sell you the power at a predetermined rate for a contracted time frame, on average 20 years.  Essentially the leasing company will enjoy the 30% Federal Tax Credit, accelerated depreciation on their asset on your roof and any profit margins made after the installer of the system is paid by the leasing company for the materials, time and labor.  Solar leasing is often the first option considered when it comes to “using someone else’s money” to finance your rooftop solar system as generally these programs offer no money down or zero out of pocket for qualified buyers.  In fact, many of the solar companies of today resemble the infrastructure of an investment bank or brokerage versus that of a traditional home improvement contractor.

Please be on the lookout for Financing Your Solar System – Your Money or Someone Else’s Money – Part 2 of 3 where we will cover someone else’s money in the form of solar loans.  In the meantime, make sure you talk with a solar professional from a reputable company like Helio Energy Solutions.

Contact me, Phil DelNegro directly at 619.861.8145 or email at [email protected]

I am an energy expert and pride myself on a consultative and straightforward approach as it relates to your home improvement experience.   Have a sunny day!