FINANCIAL
IN MANY CASES, THE NET LOAN PAYMENT
WILL BE LESS THAN THE SAVINGS THE
SOLAR SYSTEM WILL GENERATE.
See the online chart at solartoday.org/doesitpay for a state-by-state analysis of return-on-investment for new solar installations.
within a few years. The cash-flow calculation compares the
estimated savings on the electric bill to the cost of the loan.
Monthly loan cost is the principal plus interest payment
required to pay off the loan, less any tax savings.
Home equity loans are often excellent sources of funds
because the payment terms can be long, the interest rates
on real estate-secured loans are relatively low and the interest is usually tax-deductible, so the net monthly payments
are often quite low. As stated, in many cases, the net loan
payment will be less than the savings the solar system will
generate. See solartoday.org/doesitpay for example cases
from around the United States and their returns, cash
flows and projected resale values.
Over time, electric rates usually rise, so the savings
increase, but the loan cost generally stays relatively constant,
so the situation gets better and better for the system owner,
even as the savings from the system are paying off the loan.
Once the loan is paid off, all the savings go to the owner.
Those who don’t have equity available can explore other
options. Two rapidly growing options for homeowners
are commercial financial products applied to residential
situations. These are solar power purchase agreements
(PPA) and solar leases. In both cases, a “third party”
(someone other than the consumer or the installer)
owns the system placed on a consumer’s roof. The system
and its benefits are provided at little or no up-front cost
to the homeowner, reducing the homeowner’s invest-
ment, risk and need to find financing or cash.
