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How to Pay for Installing Solar Panels

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More and more people are turning to solar energy

Solar panels can be the greatest addition to anyone’s home, considering that it reduces the need for traditional energy sources from which people get their electricity, such as fossil fuels. Moreover, aside from helping the environment, people save more from not having to pay as much for their electricity bills.

As people’s awareness of renewable energy increases, the use of solar energy in the United States has been booming more than ever. In fact, according to the Solar Energy Industries, a new solar panel system installed on the rooftop occurred every four minutes in 2013.

 

The two types of payment for solar energy services

There a variety of ways to put your money into solar photovoltaic (PV) installation, the two most common and popular being outright ownership and solar leasing. This hub will help you decide which of these two solar energy financing options is more feasible for your budget.

1. Outright ownership

9128304_f260About a decade ago, very few people could afford to pay for solar photovoltaic (PV) systems for their own homes out of their own pockets. Aside from that, before there were relatively few benefits people could see from solar installations. However, over the years, manufacturers have been pushing further the advantages of solar installations:

  • Continuing improvements on solar panel’s efficiency – Each year, solar panel manufacturers continue to promote the effectiveness and efficiency of sun-powered panels. This facilitates solar installations to provide an attractive and abundant amount of renewable electricity, generating lower electricity bills for household owners.
  • Decreasing solar panel prices – As more and more manufacturers are producing solar panels, consumer demand is on the rise, as well as national and international competition. Over the past five years, solar panel prices have been dropped to over 80%. This has enabled homeowners to find more affordable solar panels.
  • Increasing solar panel incentives – In the United States, there are a variety of federal and utility incentives that are created to promote solar PV installation to consumers. These incentives vary from state to state. Despite that, they carry the same purpose — to promote the use of renewable energy for electricity, which helps consumers in cutting back on electricity bills for household use. There are four incentives that are popularly utilized:
    1. Net metering – this is a type of service or billing arrangement where the company gives credit to consumers for the clean energy that has been added to the solar panel grid. For example, a customer consumes 1 kilowatt-hour but the grid feeds 1 kilowatt-hour of solar electricity, your net energy becomes zero.2. Feed-in tariffs – another billing arrangement where the company pays the consumers the premium for the energy that is fed to the solar panels. With this type of service, it is likely that you can bring some cash flow from the use of your solar panels.3. Solar rebates – a system where a consumer collects money for making a one-time investment in solar energy.4. State renewable energy credits or SERCs – this is a kind of a tax credit offered by a local or federal tax authority, where a consumer’s installation of solar panels generates them credits in the form of cash. For consumers who utilize larger solar energy systems, they can receive a five-year payback program from their local electric company.

2. Solar Leasing

Solar leasing chart
Solar leasing chart

This is a system which allows a consumer to use and take advantage of solar electricity without paying for the installation expenses. This will make a customer’s overall consumption of electricity much lower. A third party instead will cover the cost of the solar panel installation. Another great thing about this option is that the electricity rates using solar leasing are fixed for a certain period of time, so consumers won’t be charged beyond that fixed rate by the utility company even if the latter increases its electricity prices.

The major drawback for solar leasing, though, is that customers don’t receive any incentives that the outright ownership offers. Instead, those incentives will go to the third party who installs the solar panels. At the end of the certain period of using the solar power system, end customers don’t actually get to own the system at all, because they’re merely “borrowing” or renting it.

With the general view of these two popular solar panel payment options, it’s up to you to decide on which of them best suits you and your budget.

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