Solar Financing Options

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Your ROI!

bcesohio-leasebcessolar-power-leasing-economics-11
That’s because you take a loan for the system, but you still get a 30% federal tax credit based on the entire cost. You’ll start out ahead, so your payments over 15 years will have less impact on you than plunking down a big pile of money up front. All you need is equity or great credit.
Lastly, take a look at the blue bars (if you can see them). They represent a solar lease or Power-Purchase Agreement (PPA), which are also called third-party ownership. With a lease or PPA, you put $0 down on a rooftop solar system and make monthly payments that are about exactly what you had been paying the utility company or their dirty energy. With a lease or PPA, you still accumulate savings, because the lease cost will rise by less than the electric company’s annual rate hikes. Leases and PPAs are an excellent option if you don’t have any equity or cash to put down, and they still save you money!

The numbers above show the financial breakdown of a solar lease for an average home in Ohio. The typical electric bill before solar power is super expensive, but with a solar lease, you’ll save enough on your bill to just about cover the lease cost, and you’ll be saving the planet while you do it! And the electric company will raise rates pretty much every year, but your lease payments are set, meaning you’ll start saving money in just a couple years.
Here’s how a solar lease saves you money:

bcesOH-PaybackHere’s how the numbers pencil out for a 5-kW rooftop solar system in Ohio:

Installing a typical 5-kW solar system should start at about $18,750. That’s cheaper than solar has ever been, but it still might seem like a big investment. Don’t worry, because after tax breaks and energy savings, your first-year costs will be considerably less than that.
The Feds calculate their incentive based on actual out of pocket costs, so take 30% of $18,750, for a tax credit of $5,625.
After the tax credit we subtract your first year’s energy savings, which we estimate to be $710. That reduces your cost after the first year to only $12,415.
But wait, there’s more! On top of the electric bill savings, you’ll earn special Solar Renewable Energy Credits (SRECs) for the first 5 years your system is running. You’ll get one each time your system produces a megawatt-hour (MWh) of electricity, and our example 5-kW will earn you about 5.5 SRECs each year. You can sell your SRECs to the utility company for $15 a piece, putting an estimated $82 in your pocket.
Your system will pay for itself with electric bill savings in 15 years, and you’ll see a total net profit of $14,991 before the end of your panels’ 25-year warranty. The internal rate of return for this investment is a solid 6.6%. Nearly as good and more reliable than the stock market!
And don’t forget… your home’s value just increased by more than $14,000, too (your expected electricity savings over 20 years).
In addition to all that cash (and home value), you’ve created some green for the earth as well by not using electricity from fossil fuels. It’s like planting 99 trees a year, every year your solar power system is humming.

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Compare the Return of Different Solar Investments in Ohio

The chart above shows the 25-year returns for an investment in solar whether you choose to purchase a system with cash or pay over time with a loan or lease. As you can see, the purchase option leads to the highest dollar-amount returns over time, but look a little closer. Taking a Home Equity Loan or Line of Credit (HELOC—the orange bars) and paying for the system over time means you’ll actually spend less of your own money over time, while reaping a big financial benefit in year 1.

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That’s because you take a loan for the system, but you still get a 30% federal tax credit based on the entire cost. You’ll start out ahead, so your payments over 15 years will have less impact on you than plunking down a big pile of money up front. All you need is equity or great credit.
Lastly, take a look at the blue bars (if you can see them). They represent a solar lease or Power-Purchase Agreement (PPA), which are also called third-party ownership. With a lease or PPA, you put $0 down on a rooftop solar system and make monthly payments that are about exactly what you had been paying the utility company or their dirty energy. With a lease or PPA, you still accumulate savings, because the lease cost will rise by less than the electric company’s annual rate hikes. Leases and PPAs are an excellent option if you don’t have any equity or cash to put down, and they still save you money!

Your ROI!

bcesohio-leasebcessolar-power-leasing-economics-11

Leasing is a great way to go solar if you haven’t got stacks of cash or oodles of equity in your home. With a lease, it’s possible to get solar panels for $0-down and see savings over 20 years!
As for leases in Ohio: we don’t see quite have the financial benefits of states with more sunshine or higher electricity prices—or both. For now, leasing a 5-kW solar system will save you $710 per year, but cost you $750 per year, which might not sound like a great deal, but as the utility company raises rates, you will start to see monthly savings. Over 20 years, our estimate shows a total savings of $914.
And don’t let those numbers get you down! Think of it like this: for less per month than the price of a candy bar, you can get solar panels on your house, which will mean you’re greatly reducing greenhouse gas emissions and helping the environment. The panels will be installed and maintained by professionals, and all you have to do is brag to the Smiths down the street about your green habits!
Here’s how a solar lease works:

Example Lease savings in Ohio
Annual Electric Bill Before Solar$1,908Annual Electric Bill After Solar$1,198Est. Annual Solar Payment$750Average Annual Savings-$40

The numbers above show the financial breakdown of a solar lease for an average home in Ohio. The typical electric bill before solar power is super expensive, but with a solar lease, you’ll save enough on your bill to just about cover the lease cost, and you’ll be saving the planet while you do it! And the electric company will raise rates pretty much every year, but your lease payments are set, meaning you’ll start saving money in just a couple years.
Here’s how a solar lease saves you money:

bcesOH-PaybackHere’s how the numbers pencil out for a 5-kW rooftop solar system in Ohio:

Installing a typical 5-kW solar system should start at about $18,750. That’s cheaper than solar has ever been, but it still might seem like a big investment. Don’t worry, because after tax breaks and energy savings, your first-year costs will be considerably less than that.
The Feds calculate their incentive based on actual out of pocket costs, so take 30% of $18,750, for a tax credit of $5,625.
After the tax credit we subtract your first year’s energy savings, which we estimate to be $710. That reduces your cost after the first year to only $12,415.
But wait, there’s more! On top of the electric bill savings, you’ll earn special Solar Renewable Energy Credits (SRECs) for the first 5 years your system is running. You’ll get one each time your system produces a megawatt-hour (MWh) of electricity, and our example 5-kW will earn you about 5.5 SRECs each year. You can sell your SRECs to the utility company for $15 a piece, putting an estimated $82 in your pocket.
Your system will pay for itself with electric bill savings in 15 years, and you’ll see a total net profit of $14,991 before the end of your panels’ 25-year warranty. The internal rate of return for this investment is a solid 6.6%. Nearly as good and more reliable than the stock market!
And don’t forget… your home’s value just increased by more than $14,000, too (your expected electricity savings over 20 years).
In addition to all that cash (and home value), you’ve created some green for the earth as well by not using electricity from fossil fuels. It’s like planting 99 trees a year, every year your solar power system is humming.

Download

Download article files