The Solar Energy Loan

The Need for a Solar Energy Loan

More homeowners look favorably on investing in Energy Home Improvements, Solar Thermal and photovoltaic electricity generation. The driving forces for this trend are:

  • Increased prices for residential energy
  • The expected electricity price hikes in the next 5-20 years
  • The awareness to global warming and clean environment
  • The federal government clean energy incentives

One difficulty many homeowners face is raising the upfront money to buy and install the solar package. Even after they calculate in the energy tax credit the balance might be $10,000 to $20,000. This is comparable to the cost of buying a new car. One solution is to shop for a Solar Energy Loan. Car loans and car lease programs are well known, energy loans programs are going through an evolution and are becoming more affordable.

Residential Energy Financing

The financing resources in the residential energy sector are from the solar suppliers (similar to the car makers financing), from specialized finance organization and in some states (e.g. California, New York, Oregon) there are state funded loan programs.

Energy Loans are long range, 10 to 30 years, similar in nature to a mortgage loan. After the investment the appreciation of the home will be higher. The finance institute will compare the new loan (or the refinancing program) with the value of the house in the market. Some of them will appreciate the house based on recent “similar house sales” in the neighborhood (this might be an issue for off grid solar systems investments located in a small community). The rules for long term loans have become tougher after the finance debacle of 2008. With all this in mind, many people manage to get their energy financing approved (it should be a lot easier for a new home)

When you run the cash flow calculations and your ability to pay back the new loan, remember that you can use the saving on energy bills to pay back the monthly payments on the loan

Homeowners in Arizona, California and Oregon can apply through Solar City (SolarCity 888-765-2489) for solar loans or for SolarLease leasing program

Other Financing Options

If you are connected to the grid, you can spread the investment over few years and use your own money. Start with home improvements (view my saving energy page), then invest in solar hot water and then invest gradually (20-25% of the final capacity every year) in residential solar power system

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