Financing Options for Residential Solar Systems…Choices

by Toni Black on January 26, 2013

Arizona solar Phoenix Scottsdale rebate installing solar panels financingPost #9 – Black Platinum Solar & Electric, Solar Financing – Toni and John Black

Are you ready to join the growing number of homeowners throughout the state of Arizona who are enjoying the benefits of solar energy? Well, congratulations! And we’re speaking not as the solar installers Black Platinum Solar & Electric but as homeowners who decided to install our own grid-tied residential PV system just about two years ago.

If solar is something you want to do, then you’re probably ready to ask the twin questions of cost and financing…

How Much Will My Solar System Cost Out of Pocket?

It depends. How we answer this question really does depend on your objectives. So let me ask you: Are you hoping to cut your electric bill in half? Or are you determined to eliminate your bill completely? The cost of your system will also depend on your home. How large is your roof? Is it flat? If pitched, does one side face south? Is your roof shaded by trees or other buildings?

And then there’s the matter of the renewable energy incentive payments, or rebates, being offered by your utility company. These change, but you can rely on Black Platinum Solar to keep you current on your options. Here’s a link to our most recent post on APS incentive rebates.

I know, I still haven’t answered your question. In fact, you probably have even more questions at this point. So here’s what you can do: Call Black Platinum Solar at 623-434-3340 for a FREE CONSULTATION. We’ll answer your questions, explain the options and give you a cost estimate.

What’s the Best Way to Pay For (Finance) My PV System?

There is no right (or wrong) answer to this question. It’s a very personal decision, and the choices you make need to serve your specific requirements. There are some aspects of your decision, however, that you may want to discuss with your tax or financial advisor.

Although neither Black Platinum Solar nor any other solar installer can instruct you, we’re using this blog post and other pages on our site (under the heading Financing Your PV System) to identify some of the important issues you need to consider. Whether you are thinking about purchasing outright, leasing, or considering a Home Improvement Loan, there are pros and cons…advantages and disadvantages. The more you know, the easier your decision will be.

While you’ll find more detailed information on solar financing options on our Financing Your PV System pages, here are three critical questions that will give you an idea of the significant distinctions between purchasing and leasing:

  1. Who gets the solar rebates from the utility company?
  2. Who actually owns the PV system and what are the upfront costs?
  3. What are the electrical savings and payback period?

#1 Solar Rebates, Incentives and Tax Credits

When you PURCHASE your solar system (whether directly out of pocket or with the help of a second mortgage or home improvement loan) you retain all the utility rebate incentives and tax credits. Here’s a list of solar benefits to Arizona residents. The incentive rebate comes off the cost of the system. Then working with your tax or financial advisor, you can determine when and how best to use your state and federal tax credits.

When you LEASE a solar system for your home, you do not benefit from incentive rebates or tax credits, because you must assign your incentive rebates to the leasing company. The leasing company also gets the tax credits and any depreciation.

#2 System Ownership & Upfront Costs

If you PURCHASE your solar system, you own it. It’s that simple. And, it’s an asset that Arizona Public Service estimates can increase the value of your home as much as $25,000.

When you PURCHASE, you and your solar installation company will determine the payment schedule and what percentage of the total you’ll pay up front.

If you LEASE, the leasing company owns your system for the duration of the lease (typically 15 years or more). If you decide to move before the contract is up, you can transfer the solar lease to the new homeowner.

At the end of the lease, you can decide to: 1) purchase the system from the leasing company at the fair market value of the equipment, which by then will be at least 15 years old (don’t forget, though, that solar panel warranties are typically 25 years), 2) negotiate a new lease contract, or 3) remove and return the equipment to the leasing company.

As this is a lease, you pay $0 down. So if cash for a down payment is tight, leasing may be a good option for you.

#3 Electrical Savings and Time to Payback

When you PURCHASE–and depending on your objectives and the size of the system you install–you can conceivably offset 100 percent of your electric bill, including the utility service delivery fees, meter-reading fees and taxes. Many people choose to put in PV systems that will cover about 50 percent of their electricity usage, but this will not cut their bills in half because there are still the matters of service delivery fees, meter-reading fees and taxes.

At Black Platinum Solar we will work closely with you to make sure you get the PV system that will deliver the savings you want–whether that covers all or a portion of your electrical usage, cutting your electricity bill in half or eliminating it all together. These are important distinctions.

The Time to Payback when you PURCHASE will also depend on the size of the system you choose to install. Systems that cover 100 percent of the electric bill will reach the payoff point faster. That can be anywhere from 4 to 10 years. Payback will be longer for 50 percent systems. Furthermore, as electricity costs rise, the time to payback actually decreases.

When you LEASE, you are paying the leasing company as per your contract for the use of the solar system installed on your home. And as per your lease agreement, you can expect your payment to increase 3 or 4 percent annually. Now here’s where it gets interesting: If your system is designed to provide anything less than the elimination of your electric bill (covering usage, system delivery fees, meter-reading fees and taxes), you will get a bill from your electrical utility company in addition to making your monthly lease payments.

Time to Payback doesn’t apply to the LEASE because at the end of the lease agreement, you still will not own the solar system (see #2 above).

Still have questions? Black Platinum Solar & Electric custom designs and installs residential photovoltaic systems in Scottsdale and the Phoenix Metropolitan Area. We handle everything required to install and activate your PV system. Black Platinum is a certified installer of Enphase Energy microinverter systems and an Arizona Public Service Qualified Solar Installer (QSI).

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