Once you’ve selected your technology and have chosen your installer, next comes the big question: “How am I going to pay for all this?”

There are many options available for financing your solar installation. We’ll go over the most common ones: outright purchasing the panels, getting a loan, and establishing a power purchase agreement and leasing.

Best for: Those with larger budgets and are looking to maximize profits quickly 

If your main goal is the financial return you can achieve with a solar panel system, buying is probably your best option.

Benefits of Purchasing Solar Outright:

  • Purchasing your solar installation upfront gives you the quickest payback with the highest return.  
  • Because you own the system, you won’t be tied to any leases with third parties.  
  • Studies also show that the installation of solar panels increases the value of your building.  

Best for: Those with limited capital, but still want to own their system 

Simple loans are becoming all the rage in solar, and they are generally pretty easy to come by through your local installer.  Sometimes a loan can even be offered no money down. You own the system and can lock in a consistent rate to pay down the loan, giving you more control.  

Benefits of Getting a Loan: 

  • Makes going solar feasible if you have a low startup budget. 
  • You’ll own the solar installation after the loan is paid off. You won’t be tied to any leases with third parties.  
  • Studies also show that the installation of solar panels increases the value of your building.

Best For: Those with limited capital and smaller budgets or those who have limited roof space 

Leasing and power purchase agreements are great options for someone who wants an easy, low up-front cost, maintenance-free option. For a lease, you pay little or no-money-up-front and instead pay a fixed monthly fee to a third-party solar company for the solar panel system. A PPA is where you would pay a fixed fee per kilowatt-hour of energy generated by the solar system. (A quick note: a kilowatt-hour, or kWh, is the unit of energy you purchase from the utility or energy your solar panels produces.) 

Benefits of Power Purchase Agreements and Leases: 

  • A third party offers the system to you at little, or no, upfront cost in exchange for a fixed monthly fee or a price per kWh that is typically lower than what you are paying the electric company. 
  • Someone else takes care of the repairs and maintenance. Although this is typically minimal throughout the lifetime of a solar installation, this may be a benefit to those who do not want to worry about any potential issues.  

There are various options for federal and state level solar incentives and rebates. On the federal level, there’s currently the 30 percent federal investment tax credit (ITC) that is expiring at the end of the 2019. This tax credit allows you to deduct 30 percent of the total cost your solar energy system from your taxes, that’s’ some decent savings.

On the state level, options will vary so check to see what your state is currently offering. Your installer will also know all about the various incentives being offered near you, so fear not, Solarhood has you covered.  

In addition to federal incentives, your business may be eligible for additional depreciation savings through the Modified Accelerated Cost Recovery System (MACRS). Depreciation can be deducted from your taxable income, thus reducing the cost of your solar installation. This can mean big savings for you and your company. Refer to your trusted tax professional to verify eligibility for your business’s specific case.