Understanding Solar Financing

The cost of installing a solar system in property is usually high due to the high cost of individual system components. However, the property owner will enjoy significant energy savings for a lifetime. Fortunately, solar installation companies have come up with financing options that enable property owners to install these systems without incurring the high expenses. Here are some of the solar-financing options that property owners in Utah have:

Cash Financing

This financing option involves paying the system installation cost beforehand. It, however, applies to individuals with total cash in hand or a bank. The cash financing option is a cheap financing option as there are no extra fees or interest on the initial cost. Individuals who have substantial tax bills save on tax liability. Not many property owners have total cash at the time of the purchase, making this option viable for a few people.

Loan Financing

Individuals who need to buy the solar system but do not have the total cash can access loans to finance the project. Loans are available at any stage of project execution. These loans are similar to other home loans in several aspects. Low interest rates result in low installation costs. Also, monthly payments are high when the loan is short-term. In this financing option, a property owner should ensure that the energy savings they get from this project are higher than the individual loan payments in a month. PACE loans are a type of solar loans where the property owner repays the loan interest through the taxes on the property. Similar to cash financing, customers who opt for loan financing have access to tax incentives.

PPAs and Leases

Power purchase agreements and leases are the same as renting the solar system installation. You need to sign a written contract with the solar company before entering into any of these two options. When you sign a contract, you enjoy the energy from the system for a specified duration of time. However, the company retains the power to enjoy tax incentives on the project and also ownership of the system. In both situations, the solar installation company monitors the system’s energy consumption and caters for the maintenance costs. The differences between PPAs and leases are:


In the contract terms, the customer purchases the generated power at a certain price per kWh. The cost can be fixed throughout the period in the written contract or vary according to the terms. The contract ranges between 10 and 25 years. The legal restrictions in some areas make PPAs an unavailable option.


worker installing solar panel on the roofIn this situation, the customer agrees to pay a monthly amount. The system owner decides the payable amount depending on the produced electricity. Since the customer makes this payment during the contract duration, they are entitled the solar energy.

Regardless of the method you choose for solar financing, a solar panel will help you save tons of money on your utility bills. Each financing method fits a particular class of individuals. The options are available to help more homeowners embrace the use of renewable energy in their homes. Solar panel installation companies should offer these financing options to enable people to afford the installation cost.

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