Solar Financing: How Solar Financing Makes it Easy to Go Solar in 2024

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Last Updated on March 26, 2024 by Amber Lapez

Solar Financing How Solar Financing Makes it Easy to Go Solar in 2024

With solar loans, leases, power-purchase agreements and other financing mechanisms, it’s never been easier to go solar.

solar financing

You probably already know that solar energy is a great way to save money and protect the planet. But you might think that going solar is too costly or complicated. Well, we have some good news for you. Solar financing offers a number of simple solutions that will help you go solar without any hassle. Today, we will explain what solar financing is and how it will make it easy for you to go solar in 2024.

1. What is solar financing?

Solar financing makes it possible for you to go solar without paying for the whole system up-front. With financing you will pay for your solar system over a number of years. Solar financing reduces or eliminates upfront costs, allows you to pay low monthly installments, while still getting access to tax credits and incentives.

Based on your needs, budget and location, there are different types of solar financing options available to you. Each option has benefits and drawbacks.

2. Why consider solar financing?

Solar panels are a great way to generate renewable energy for your home, but they also have an expensive up-front cost. That’s where solar financing comes in. By choosing solar financing, you can:

  • Make solar power more affordable and accessible for your budget and needs.
  • Enjoy the benefits of solar energy without worrying about the maintenance and repair costs.
  • Take advantage of tax credits, rebates, and incentives that can lower your solar costs even more.
  • Increase your savings and return on investment as you reduce or eliminate your electricity bills.

3. What are the primary solar financing options?

There are three primary solar installation financing options available in most locations:

Solar Loans:

A solar loan works like most loans. You borrow money to pay for the solar system. It is similar to loans that you might use to get a car or fund a home improvement project. When obtaining a loan for solar installation, borrowers may have an option for an unsecured loan or secure the loan with collateral, such as their home.

The borrower repays the loan and interest over time, typically in monthly installments. Various lenders, including banks, credit unions, speciality financiers, and manufacturers, offer these types of loans.

Solar loans advantages & drawbacks


  • Under a loan, you own the solar system and get all the benefits of ownership. That includes tax credits, net metering (where available), and a higher home value.
  • You can choose from different loan options that vary in their interest rates and repayment terms.
  • By repaying your loan ahead of schedule, you can save money by paying less interest and avoiding any penalties for late payments.


  • The interest paid on loans can add to your solar system’s overall cost. This could increase your system’s total cost.
  • You need to make monthly loan payments.
  • You may have to pay charges or prices for the origination, processing, or closing of your loan.
  • Depending on the type of solar loan you choose, you may need to put up some collateral or make a down payment to secure your financing.

Solar Lease:

A solar lease is a way of financing a solar energy system without owning it. You pay a monthly fee for the solar panels installed on your roof by a solar company, and you use the electricity they produce to offset your electric bill. After the lease term is completed, the homeowner may opt to purchase the system outright. Here are the main benefits and drawbacks of a solar lease:

  • You can go solar with zero upfront cost and start saving on your energy bills as soon as the array is installed.

  • You don’t have to worry about the installation, maintenance, or repair of the solar panels, as the solar company is responsible for them.

  • You may still be eligible for some state or local incentives that reward solar energy use.

  • You don’t own the solar panels, so you can’t claim the federal solar tax credit or other tax benefits that reduce the cost of solar ownership.

  • You have to sign a long-term contract (usually 15 to 25 years) that may have annual payment increases or penalties for early termination.

  • You may have difficulty selling your home or transferring the lease to a new owner, as some buyers may not want to take over the lease or qualify for it.

Power Purchase Agreements:

A power purchase agreement (PPA) is a contract between a buyer and a seller of renewable energy. In a residential PPA the homeowner or host agrees to allow the project owner to finance and install a solar array at their home. The developer owns the installation and the homeowner pays a fixed price for the electricity generated by the system. These often have a term of 10 to 25 years. After that the homeowner can opt to purchase the system, extend the PPA or have it removed.

Some benefits of PPAs are:
  • No upfront costs: The company that installs the renewable energy system will own and take care of it, so the person using it doesn’t have to pay for setting it up or keeping it running.
  • Long-term price security: You can get a steady and lower price for electricity throughout the PPA agreement, which means you don’t have to worry about changing or unpredictable prices in the market.
  • Limited ownership and control: You don’t own the renewable energy system and can’t change or alter it unless the company that does own it says it’s okay.
  • Contractual obligations: You must follow the rules of the PPA, which might include fees for ending the agreement early, using too little, or using too much electricity.

Understanding the Differences in Financing Options:

They may sound similar but there are chief differences between the three financing options. Under a loan, the homeowner is considered the owner of the system and the homeowner gets all the incentives and assumes responsibility for the system and its maintenance.

The other option of the system is owned by a third party that maintains the system and shares some of the incentives with the homeowner by giving them access to power at a lower cost than power from the grid. With a lease, they’re paying a fixed price for the solar panels. Under a PPA they’re paying for the electricity the panels produce.

4. How to decide on the best solar financing options for you?

The best solar financing options depend on your circumstances. This includes your credit score, your ability to pay for part or all of a system, local regulations and financing options, as well as the size of the solar system you’ll need. Here are some tips to remember when choosing a financing option:

  • Consider the total fees and potential savings with each option. This includes any upfront costs, anticipated monthly bills, interest expenses, and taxes.

  • Keep in mind the ownership and maintenance requirements under each financing option. They can affect your home value, tax credits, and net metering benefits.

  • Seek advice from a solar expert, or a financial planner when you have any doubts or questions.

Deciding on to solar financing options

5. Is it better to pay in cash or finance solar panels?

Paying cash for your solar panels is the best option to maximize savings. But it requires having $15,000 or more in cash available to pay the up-front costs. Financing solar panels offsets that large up-front cost and allows you to make smaller monthly payments, making it easier to go solar. But, it means a long contract period and increases the price of the solar array overall.

Cash or Finance Solar panels


Solar financing options make paying for a solar system easier than ever before in 2024. The best options include solar loans, leases and power purchase agreements. The ideal solution for you depends on your objectives, budget, and personal preferences.

If you’re interested in powering your home or business with solar check out SolarSME’s solar estimator tool to explore residential and commercial solar solutions. Start saving now!”

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