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A quick start guide to solar financing

There are a lot of ways to pay for solar – which option is right for you?

Vicky Volvovski
June 4, 2024

Purchasing solar doesn't mean you have to spend a lot of money up front to reap the benefits. There are many financing options available, which can bring the cost down to an affordable monthly payment.

Here are a few ways you can purchase solar:

Solar lease

A solar developer installs and owns the panels on your roof (not you), so you don't have to pay the upfront installation cost. Instead, you pay a pre-determined monthly payment to the installer.

If the panels produce 100% of your electricity needs, you don't pay a utility bill. If the panels can't provide all the electricity you consume, you still pay your utility or the energy you pull from the grid.

Power Purchase Agreement (PPA)

A solar developer installs and owns the panels on your roof (not you). Instead of a monthly lease payment, you pay your installer for the electricity you use at a fixed rate, which is lower than what you would pay your utility.

Solar loan

With a loan, you do own the panels on your roof, and the loan for the upfront purchase and installation cost is paid back like any other loan. A “home equity loan” would be one where your home is used as collateral, while an “unsecured loan” might have only the solar equipment itself as the collateral.

Property Assessed Clean Energy (PACE) financing

Note: we recommend avoiding PACE financing. PACE financing is not a loan, but a property tax lien on your house, where you pay for your solar installation as part of your property taxes. Having this lien recorded against your house can make it more difficult to sell or refinance it without first paying off the lien.

If you'd like to learn more about these options, read Clean Energy States Alliance's full financing guide.

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