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Solar Financing and Rebate Options Impact How Homeowners Go Solar

September 01, 2015 | Kerry Inserra

If solar is such a good thing, saves us all money, and is good for the environment then why don’t we all have solar panels on our roofs or hillsides?  Does anyone else feel like an environmental slug if they don’t have panels reflecting the sun’s light?  And why don’t we?

There has been a proliferation of solar opportunities within the Bay Area.  As the opportunity for residential solar utilization grows, homeowners are teased with a wide spectrum of marketing messages from the solar industry.  We are being marketed catchy messages like: “own solar tomorrow”, or “the payback period is really short”, “energy independence can be yours”, and “lease and reduce power bill to nothing”. 

It seems there is one factor in addition to “how the sun catches your roof” that matters most.  Money! The estimates for usage and cost savings are alluring, if not totally confusing.  When was the last time the general population tried to finance a kilowatt of energy?  We don’t even use the metric system.  Until recently we as power users have been beholden to the one size fits all power grid and its murky monthly billings.  The industry needs to produce comprehensive and reliable data on the cost and price of PV systems. The benefit of solar entices, while the industry works to reduce the cost to install for wider adoption. 

How do you get the deal done?  Cost effective financing is the most direct path to achieve a greater degree of energy independence.  Independence that comes through residential installs.  The intensifying competition in solar continues to evolve how solar providers work with residential owners.  For over ten years, the industry has adopted a wide variety of policies and programs around PV (photo- voltaic) systems for residential use.  PV system prices have declined by about $0.5 per watt (6-8%) per year on average since 1998 (solartoday.org).  However financial incentives are also declining as the government and utilities evolve their energy policies.  Cash incentives in the form of rebates and performance-based incentives have been diminishing.  Make note: the current government incentive offering a 30% federal tax credit for solar is scheduled to sunset December 2016. This tax credit has helped drive solar affordability for residential installs. 

To own, to lease or PPA? Owning requires the cash outlay to purchase and install panels.  Owning requires a sizable upfront financial investment and is not in reach for many residential homeowners.  Leasing allows an entity other than yourself to own the panels on your house while you rent the energy at a fixed cost from the owner. Leasing eliminates initial cash outlay, while still gaining benefits of solar.  A down side is after 20 years you typically have nothing to show as it’s not a “lease to own” contract.  PPA or Power Purchase Agreement is a lease where you only pay for the energy you use (your actual kwh production).  If you produce less than estimated you receive a check in the mail. 
The options to access solar energy are out there.  The 30% Federal tax incentive window is yet open.  Solar providers may offer financing directly while many have referrals that have become niche players in the solar lease universe.  Even if you cannot afford to outright purchase solar panels, you can still move away from finite fossil fuels and lower your energy bills at the same time. While the early stages of solar development may have seemed like the wild, wild West; the last decade has brought amazing and rapid change to the sun as an alternative energy viable for homeowners.  A little research will remove much of the guesswork and improve the clarity of ownership options widely available.