A growing number of homeowners across America are experiencing the benefits of generating power from solar. Like any other home improvement, installing solar panels is a big investment. Luckily there are a number of options available that can allow most South Carolinians to take advantage of the savings delivered by solar energy.
Financial Options For Going Solar In South Carolina
The ownership options for going solar are pretty similar to the ones available for getting a new car. Below we explore the 3 most popular scenarios: Cash purchase to own, Finance purchase to own, and Leasing.
2 Main Options For Owning A Solar Power System
Option 1: Pay for your solar power system with cash
Buying your solar power system means you own both the physical system (the panels, the racking, the inverter, etc.) and the power produced by the system. You essentially become a small power company, and you own the solar power plant that is installed on your roof (or in your yard).
As the system owner, you also get to take advantage of the tax credits, rebates, and incentives that are available which can lower the cost by as much as 50%.
As the saying goes, “Cash is king.” Buying a solar power system outright with cash is the lowest cost option for going solar. You will also pay the lowest cost per kWh over time when you own your system. But, in order to get the best deal you must have adequate funds or savings in the bank (or stashed under your mattress).
Option 2: Finance your solar power system over time
If you don’t have the savings (or if you are planning on spending your savings on something else) you can still own a solar power system through financing. When you finance solar you make monthly payments over time equal to the cost of the system + a one-time finance charge + interest.
When you finance your solar power system you can also take advantage of available tax credits, rebates, and incentives. You pick the length of time you want to finance your solar purchase, generally for 5, 10, 15, 20 or more years. The longer period of time you finance, the lower your monthly payment will be, but you will pay more in total interest.
For many homeowners who do not have the savings but do have good credit, financing is the best option for going solar. Plus, you may be able to take advantage of $0 Down financing arrangements which allow you to own solar and get a 1-month head-start on energy savings before your first finance payment is due.
Leasing A Solar Power System
Leasing a solar panel system is very similar to leasing a car – You are not the owner but you get to take advantage of the benefits of using the product. Under a traditional solar lease, a third party owns the system and rents it to you so that you can benefit from the electricity it produces.
Think of a solar lease as a trade where you rent out your roof space in exchange for electricity. The homeowner agrees to buy the solar power produced by the system, hopefully at a rate that is lower than what they are currently paying. But, be careful to read the fine print and see if this rate gets more expensive over time.
Most leases are 20 year terms, and like a car lease, once your solar lease has finished the owner will typically offer an option for you to buy the system or to renew/extend your payments. If you decide you do not want either of these scenarios, the lease agreement will end and they will remove the solar system from your property (and then you’ll have to buy power from the local utility again).
The biggest trade off with a solar lease is that the leasing company (or their investors) have access to the 30% tax credit the homeowner would be eligible for if he or she owned the system.
Which solar option is best for you?
It really depends on your financial situation and the long-term goals you want to achieve by going solar. A cash purchase will have the lowest total cost, but you’ll need adequate funding or savings. You can also own a solar system by paying for it over time with financing, and the better your credit score is, the better interest rate you will receive from the financial lender. And if you cannot qualify for financing, a lease could be the last option you have to go solar on your home.
Regardless of which option you pursue, here are some key questions to ask before signing an agreement to go solar:
For all solar systems:
- What is the total cost of the solar system?
- What is the timeline for this investment?
- How much do I pay up front, and how much over time, for how long?
- What is the system size?
- How much electricity will the system generate each year?
- Do system output calculations consider actual installation details of the system?
- Can I expect to save money with this system? If so, how much? Based on what assumptions?
- Is the installation company licensed and insured?
- What will the system look like once installed? Will I receive a system design for my review and approval before installation?
- Will I be required to make any changes to my home (e.g., roofing upgrades)?
- Are there separate warranties for parts and labor?
- What do the warranties cover and what are their durations?
- What type of maintenance or cleaning is required? Are any maintenance services included?
- Who should I contact if I have a question about the system following the installation?
- In many states, laws prevent homeowner associations (HOAs) from restricting rights to install a solar system. What are the rules in my state and can you help me work with my HOA?
For solar leases:
- What is the length of the lease?
- Who receives solar tax incentives and how are they factored into the cost?
- Will my payments increase over time? How does the rate of increase compare to the expected/historic utility rate increases?
- What happens if I wish to end the lease early?
- Can I purchase the system, either during the agreement or once it ends?
- What are my options when I sell my home?
- Am I free to sell my home or do I need the system owner’s permission?
- Are there fees to transfer the lease agreement to the new homeowner?
- Do I have to pay off the lease when my home is sold?
- Who is responsible for repairs and maintenance on the system?
Learn more about solar power in South Carolina
Learn more about solar by viewing solar panel installations near you, reading about available solar rebates & incentives, or contacting Southern Current to schedule a free solar consultation at your home our business.