Solar energy has gained popularity as a clean, renewable power source — and for good reason. It helps reduce electricity bills, decreases carbon emissions, and adds value to your property. But despite these benefits, one major concern for many homeowners and businesses is the upfront cost of installing solar panels.
The good news? You don’t have to pay the full amount out of pocket. There are several solar energy financing options that make going solar more affordable than ever. In this blog, we’ll explore these options to help you decide which is best for your needs and budget.
1. Solar Loans
A solar loan allows you to finance the purchase of your solar panel system over time, much like an auto or home loan. You own the system, which means you can benefit from tax incentives and energy savings right away.
Types of Solar Loans:
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Secured Loans: Backed by your home (like a home equity loan); often offer lower interest rates.
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Unsecured Loans: No collateral required; slightly higher interest rates.
Benefits:
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Ownership of the system
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Eligible for the federal solar tax credit (ITC) and local incentives
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Long-term energy savings
Best For: Homeowners who want to own their system and can afford monthly payments.
2. Solar Leases
With a solar lease, you don’t buy the solar panels — you lease them from a provider. You pay a fixed monthly fee and get to use the energy the panels produce.
Benefits:
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Low or no upfront costs
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Maintenance and repairs are usually covered
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Simple and predictable monthly payments
Drawbacks:
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You don’t own the system
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Not eligible for tax incentives
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Less long-term savings compared to ownership
Best For: Homeowners who want the benefits of solar without the responsibility of ownership.
3. Power Purchase Agreements (PPAs)
A Power Purchase Agreement (PPA) is similar to a lease, but instead of paying a flat monthly fee, you pay only for the electricity the system produces — usually at a lower rate than your utility.
Benefits:
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No upfront cost
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Lower energy bills from day one
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Maintenance handled by the provider
Drawbacks:
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No system ownership
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Not eligible for tax credits
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Long-term contracts may include escalator clauses (increasing rates over time)
Best For: Homeowners who want immediate savings and no maintenance responsibilities.
4. Property Assessed Clean Energy (PACE) Financing
PACE programs allow property owners to finance solar systems through property tax assessments. Payments are made over time (often 10–20 years) via your property tax bill.
Benefits:
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No money down
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Transferable with property if you sell
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Long repayment terms
Drawbacks:
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Not available in all areas
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Increases your property tax bill
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May affect your ability to refinance or sell your home
Best For: Homeowners in states or municipalities that offer PACE programs.
5. Incentives, Rebates, and Tax Credits
Before choosing a financing option, it’s crucial to consider available solar incentives:
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Federal Investment Tax Credit (ITC): Offers a 30% tax credit on the cost of solar systems for residential and commercial properties (as of 2025).
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State and Local Incentives: Many states offer additional tax credits, rebates, or performance-based incentives.
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Utility Programs: Some utility companies offer rebates or net metering programs to help offset installation costs.
These incentives can significantly reduce your upfront and long-term costs — especially if you choose to purchase your system.
