Many people are considering getting solar panels installed. One of the biggest things that prevent homeowners from taking the plunge is installation cost. Is it necessary to take out a loan? How long would it take to pay off a solar panel installation?

Once upon a time, if a homeowner wanted solar panels, it was on them to come up with a way to finance them. A home equity loan, savings or some other means was necessary to generate the money needed.

Today things are a lot different. There are a number of ways to get solar panels on a home. And even after the cost of installing, there are solar tax credits that can be applied to make the cost of ownership lower.


One way to pay for solar panels is the old-fashioned loan. As stated, that could be a home equity loan. It could also be a PACE loan. PACE stands for Property Assessed Clean Energy loan. These loans pay 100% of the installation costs and you can take 20 years to repay it. can help you find a PACE program in your area.


Leasing of solar panels is gaining in popularity because under this arrangement, solar panels can be installed with $0 out of pocket. But there is a caution to be made. While it sounds good on the surface, many solar installation companies such as SolarCity, Vivint Solar, and NRG use something known as an “annual escalator” for the percentage rate. SolarCity, for example, says that the lease starts with a low, fixed rate with a “0 – 2.9% annual escalator”.

If you would like to see how this works, the U.S. Dept of Energy has an energy escalation rate calculator that you can download for Windows and Mac.

Also, make sure to check the fine print. The installation company may be able to choose where they will put the solar panels. This may not be in a place that is most convenient for you. If you move, they may offer to keep your program intact at the new location, similar to what the cable company will do when you move. Make sure you know if solar panels will even be allowed in your new location to see if this option is for you.


This one sounds a lot like a lease. And for all intents and purposes, it’s the same. There’s an interest rate with an annual escalation rate just like a lease. The difference is what you’re paying for. In a lease, you’re essentially renting the equipment. With a PPA, you’re paying for the power generated by the solar panel installation.

For PPA, your costs are based on a set per-kWh price. That cost is then calculated with the annual escalation rate. If you choose a lease or PPA, make sure that all the details for BOTH options are made before signing anything.


Finally, there’s the all-cash option. The advantages are no interest fees and no monthly payments. You still get all the other benefits that the other financing options give you including warranties, protection guarantees, etc. The biggest catch is having the money easily accessible.


It is true that solar panels are not “cheap”. You can’t go into a Home Depot or Loews and get your buddies to help you install them on a weekend. But the costs have come down from years past. There are also different financing options that may or may not be right for your personal situation. The key is to first know what the options are then getting the details on the differences between them.


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