You've determined that a solar photovoltaic (PV) system is the right choice for you. Your next decision is how will you pay for it? Solar PV purchases have several options: an outright purchase, a loan, a solar lease or a power purchase agreement (PPA). Leases and PPAs are generally only available for Solar PV system purchases, but they're starting to catch on for other technologies, too.
The decision about how to pay for your solar PV system is a function of your particular goals. Everyone's goals are different, so the best payment option varies from individual to individual. With so many variables, these purchases can get really complicated. That's why EnergySage is here to help you simplify the process.
The main things to consider are:
Now, you have the information you need to explore financing options.
As solar PV systems became more popular, companies created new purchase plans that provide flexibility in how consumers pay for their systems. Solar Leases and Solar Power Purchase Agreements (PPA) make the decision more complicated, but their benefits are often worth it. Today, in states like California, Massachusetts, New York and New Jersey, these options finance up to two-thirds of all solar power systems. Used mainly for solar PV purchases, leases and PPAs are beginning to be used for solar hot water and small wind systems, too.
Solar Leases are similar to renting your solar PV system. There may be some upfront costs (just like there are some upfront costs to renting an apartment, e.g. the security deposit), but they are significantly less (half or more) than the upfront costs needed for a loan down payment. They range from no money or $0 down to a small down payment (usually $1,000) to pre-paying the entire lease. With the first two options, you make monthly lease or "rent" payments over the lease term (usually 20 years). With the pre-paid option, you pay all your lease payments upfront when you sign the contract. With each option, the leasing company, not you, owns the solar PV system. The ownership benefits, such as purchase rebates, tax credits, or other incentives belong to the leasing company. The company also is responsible for maintaining and repairing the system. As the system "lessee" or "renter," you are entitled to the benefits of using the system, i.e. the energy that the system generates.
The Solar Power Purchase Agreement is similar to a solar lease but differs in one key way. Instead of "renting" the system and receiving the benefits of using it, you instead agree to buy the power generated by the system at a set price per kWh. This price you pay for the power generated is either fixed over the PPA term (usually between 10-20 years) or increases agreed upon times and rates each year. The monthly solar lease and PPA costs are approximately the same. Both options hedge against rising energy costs, reduce the upfront investment required (zero down or small down payment), and have the same ownership and maintenance characteristics.
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