Installing a solar energy system saves you money and helps the environment too. By avoiding future utility bills, the system will pay for itself in a few years, but the up-front costs may be more than you have in available cash. Luckily, in the United States there are many financing options available to residential owners.
Solar panels are only 34 percent of the overall cost of installing a solar power system. The cost of the components are as follows:
| Solar Panels | 34% |
| Solar Inverter | 10% |
| Racking and Mounting | 3% |
| Additional System Components (cables, switches, etc.) | 3% |
| Installation Cost | 15% |
| Sales and Lead Generation Costs | 11% |
| Financing Costs | 10% |
| Permits and Inspection Fees | 2% |
| Installer Pre-Tax Margin | 12% |
The cost of professional installation is a substantial part of the cost of a solar power system. It is possible to install a system yourself, but before you consider a DIY solution, check the rules for tax credits and local rebates.
Given the 30% federal solar tax credit about 90% of homeowners decide that a full-service solar installation, where the solar company takes care of all permitting, inspections and approvals is a better option than trying to learn all this to do a DIY solar project.
How many solar panels do I need to make it worth the cost?
You need the right number of solar panels to generate the amount of electricity necessary to zero out your monthly utility bill. If you are looking for an average number, we’ve created a chart showing the number of solar modules needed for the average household by state.
What is the average amount of electricity used in an American home in 2018?
| State | Monthly electricity usage in each state kWh (sourcewww.eia.gov) | Annual Average Electricity Usage (kWh) | Annual Production from 1kw of solar panels (kWh) | Required solar system capacity to run the average household in each state(kW) | Number of 60 cell 275-290 watt solar panels required to power the average house in each state | Number of 72 cell 350 watt solar panels required to run the average house in each state |
|---|---|---|---|---|---|---|
| Arizona | 1 030 | 12 360 | 1 752 | 7.05 | 25 | 20 |
| California | 547 | 6 546 | 1 550 | 4.23 | 15 | 12 |
| Connecticut | 711 | 8 532 | 1 150 | 7.4 | 27 | 21 |
| Florida | 1 123 | 13 476 | 1 351 | 9.98 | 36 | 28 |
| Massachusetts | 599 | 7 188 | 1 150 | 6.25 | 23 | 18 |
| New York | 595 | 7 140 | 1 230 | 5.8 | 21 | 17 |
| South Carolina | 1 156 | 13 380 | 1 350 | 9.91 | 36 | 28 |
| Texas | 1 156 | 13 872 | 1 360 | 10.2 | 37 | 29 |
| Utah | 750 | 9 000 | 1 570 | 5.7 | 21 | 16 |
What are ways I can finance a solar installation in 2018-2019?
There are two primary ways to finance the installation of a residential solar energy system: procuring a solar loan or signing a solar lease.
A secured or unsecured loan is the best option if you want to own your solar system.
The other option, a solar lease or power purchase agreement (PPA) allows you to rent the solar system so that you save money on utility bills without the responsibilities of ownership.
Consider the pros and cons of each financing option to find the one that best fits your needs.
Generally buying your panels, whether by paying cash, a solar loan, or a whole home refinance, will save you more than a lease or PPA.
What companies offer solar finance in my state?
We’ve put together a comprehensive list of banks, credit unions, and government programs that offer to finance solar systems in the table below.
| Loan Originator | States Served |
|---|---|
| Admirals Bank | All |
| Alternative Energy Revolving Loan Program | MT |
| Alternatives Federal Credit Union | NY |
| AmeriFirst | All |
| Bank Five | MA, RI |
| Bank of Colorado | CO, NM |
| BlueWave Solar | L, MA, NC, NY, RI, SC |
| Celtic Bank | AZ, CA, CO, CT, HI, MA, NJ, NY, OR, UT, WA |
| Center for Energy and The Environment | MN |
| City and County of Honolulu | HI |
| City of Milwaukee | WI |
| City of Plano, TX | TX |
| City of Richland, Washington | WA |
| City of Tallahassee Utilities | FL |
| Clark Public Utilities | WA |
| Clinton Savings Bank | MA |
| CT Green Bank | CT |
| Dividend Solar | AZ, CA, CO, CT, DE, FL, GA, HI, IL, MA, MD, MI, MO, NC, NH, NJ, NM, NY, OR, RI, SC, TX, UT, VA |
| Eagle Community Credit Union | CA |
| Educational Employees Credit Union | CA |
| Elevations Credit Union | CO |
| EnerBank USA | All |
| Energy Finance Solutions | HI, MD, MI, NJ, NY |
| Energy Loan Network | CA |
| First Citizens’ Federal Credit Union | MA |
| First Green Bank | FL |
| First New York Federal Credit Union | NY |
| Fort Collins Utilities | CO |
| Franklin First Federal Credit Union | MA |
| Green Sky Credit | All |
| GreenBiz Financial | CA |
| Greenworks Lending | CT, DC, MD |
| Hamilton County, Ohio | OH |
| Idaho Governor’s OER State Energy Loan Program | ID |
| Investors Bank | NJ, NY |
| Iowa Energy Center | IA |
| Mass Solar Loan Program | MA |
| Matadors Community Credit Union | CA |
| Medallion Bank | All |
| Michigan Saves | MI |
| Mosaic | All |
| National Bank of Arizona | AZ |
| Naveo Credit Union | MA |
| Nebraska Energy Office | NE |
| North Brookfield Savings Bank | MA |
| Oregon Department of Energy | OR |
| Piedmont Electric Membership Corporation | NC |
| Provident Credit Union | CA |
| Puget Sound Cooperative Credit Union | WA |
| Redwood Credit Union | CA |
| Renew Financial | CA |
| San Antonio Credit Union | CA |
| San Diego Metropolitan Credit Union | CA |
| Santee Cooper | SC |
| SF Fire Credit Union | CA |
| Shrewsbury Federal Credit Union | MA |
| St. Lucie County Florida | FL |
| State Treasurer of Ohio | OH |
| Stoughton Co-operative Bank | MA |
| SunPower Corporation | All |
| SunLender Corporation | AZ, CA |
| UmassFive College Federal Credit Union | MA |
| Umpqua Bank | NV, OR |
| University of Virginia Credit Union | VA |
| Weymouth Bank | MA |
Will I need good credit to finance a solar system?
A higher credit rating will open more financing options, but plenty of banks will finance solar systems for the full spectrum of credit ratings.
Five years ago, it was difficult for those without an excellent credit rating to secure a loan, but new solar loan platforms like Dividend Solar, Mosaic, and Greensky have enabled most local solar installation companies to offer zero down financing to their clients.
If financing is a challenge, another option to participate in a solar community project where you can be a subscriber rather than an owner.
What incentives and discounts will help bring the cost of a solar system down?
The federal solar tax credit is the most publicized, but there are many incentives and discounts available at your state and local level.
Net metering, solar carve-outs, and solar feed-in tariffs can also help bring the cost of a solar system down. Your state may also offer Solar Renewable Energy Certificate (SREC) that requires power retailers to purchase a certain amount of energy from renewable sources including residential solar systems.
You can check to see if your state has an SREC here.
UNITED STATES RENEWABLE INCENTIVES AND ALL LAWS SORTED BY TYPE AND STATE
Are there state-run loan programs?
Many states already offer special loan programs to residents, and we expect more to do so shortly.
The Florida Public Service Commission (PSC) recently opened the door for zero-down financing in the Sunshine State. “Sunrun is delighted to now be able to offer Floridians the opportunity to lease a solar system, enabling them to have clean, reliable, affordable solar power for their homes,” said Lynn Jurich, Chief Executive Officer and Co-Founder of Sunrun.
How long does it take to pay off a solar system?
Most solar customers pay off the financing for a solar system within 4-10 years. It depends on how much you finance, the amount of energy your system produces, and any incentives or bonuses you apply to the balance.
Like any loan, you can always make extra payments on the principal to it off faster.
How long before I get my ROI?
The return on investment (ROI) of a solar energy system varies based on the size of your solar energy system and the amount of your pre-solar electric bill.
Summary
Banks and investment companies are increasing their investments in residential solar loans. As an end user/ consumer, you have many options to finance the installation of a residential solar energy system in the United States.
A combination of lower prices for solar panels and generous incentives make this a perfect time to harness the sun’s energy and decrease your utility bills.