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Homeowner basics of financing solar power for residential real estate

With the rise in energy costs and the growing popularity of renewable energy incentives and tax breaks, more homeowners are considering installing a home solar system. In 2022, residential solar projects experienced a remarkable growth rate of 40%, reaching nearly six gigawatts in the United States, according to the Solar Energy Industries Association. This surge was driven by a record number of 700,000 homeowners who embraced solar power. However, navigating the solar market can be complex due to various factors, including political debates, foreign sourcing of solar components, changes in net metering policies, and tighter lending conditions.

Financing solar projects is a crucial consideration for homeowners looking to upgrade their home energy systems. The national average cost of a 10 kilowatt solar panel installation in 2023 is approximately $20,000 after factoring in the 30% federal solar tax credit, as reported by EnergySage, a platform connecting consumers with energy companies. As low and zero-interest rate offers diminish, loans have become a popular option for financing solar projects. In 2022, loans accounted for approximately 70% of residential solar projects, according to energy consulting firm Wood Mackenzie.

To make informed financial decisions regarding solar power, homeowners should start with the basics. In this article, we will explore key considerations for financing residential solar projects, including researching state-by-state solar costs, exploring local energy financing programs, obtaining multiple loan quotes, evaluating offers from solar installation companies, and understanding the solar finance market landscape. By understanding these aspects, homeowners can navigate the financing process confidently and make informed decisions.

Researching State-by-State Solar Costs

Before delving into financing options, it’s important for homeowners to have a clear understanding of the potential costs associated with their solar project. Joel Rosenberg, a member of the special projects team at Rewiring America, suggests utilizing EnergySage, a platform that provides competing solar quotes based on real-life factors such as system size. This enables homeowners to obtain more accurate cost estimates beyond nationwide averages. Researching state-by-state solar costs helps homeowners assess the financial feasibility of their solar project before exploring financing options.

Exploring Local Energy Financing Programs

Once homeowners are ready to delve deeper into financing options, they should consider looking into their state’s energy office and local electric utility for potential solar financing programs. Although these entities may not directly provide financing, they can often provide valuable information on relevant programs worth exploring. For instance, some states offer reduced-rate solar loans in collaboration with specific lenders. By engaging with state programs and local utilities, homeowners can access valuable resources and potentially discover tailored financing opportunities.

Obtaining Multiple Loan Quotes

To make informed decisions, homeowners should seek quotes from multiple lenders when considering solar loans. Vikram Aggarwal, CEO of EnergySage, recommends obtaining quotes from three to five sources and paying careful attention to the terms and conditions. Homeowners can approach various institutions for potential loans, including local banks, credit unions, national banks, or specialized green banks that focus on financing environmentally friendly projects. Green banks, in particular, may offer more comprehensive financing options. A simple Google search for “green bank” in the homeowner’s state can yield viable options. Industry sources like the Green Bank Network or the Coalition for Green Capital can also provide useful information for finding potential lenders.

Evaluating Solar Installation Company Offers

Solar installation companies, such as Sunrun and Sunnova, not only provide installation services but also offer loans to homeowners. When considering loan options from solar installers, it’s important to carefully evaluate the terms and conditions. While installers typically offer loans with durations of 15, 20, or 25 years, banks may provide shorter-term loans with lower interest rates and fees.