Understanding the True Cost of Financing Solar Panels

Understanding the True Cost of Financing Solar Panels

A solar panel system is an investment whether you want to save money on energy costs or help lower carbon emissions. Learn about the different financing options to decide which is best for you. A solar break-even point is determined by subtracting the value of applied incentives from the total system cost plus installation, then dividing it by your annual electricity bill savings.

What is the True Cost of a Solar Panel?

The cost to finance solar panels depends on various factors, including your location and energy consumption. You can learn more about how much a solar panel costs in your area by entering your home address, monthly utility bill, and other information into our solar calculator. It will then estimate your home’s solar panels cost and predict how much you’ll save with a rooftop installation.

Solar incentives are also available to make going solar more affordable, which can lower your overall cost. The most important federal motivation is the 30% solar investment tax credit, which you can claim on your federal taxes. Additionally, many states offer solar incentives like rebates, property tax exemptions, and subsidized loans.

Another factor to consider is the price per watt of your solar system. This metric helps you compare apples-to-apples quotes, and the total system size calculates in watts divided by the number of solar panels installed.


There are loans for solar panels and the equipment needed to install them. They work like any other loan and have a principal amount, interest rate and payback period.

The most straightforward payment option is a cash purchase. This saves installation costs and eliminates potential interest charges, loan fees, or credit score impact. However, cash purchases are generally reserved for larger systems or homeowners who can afford to pay upfront and want to receive something other than solar incentive income or credits.

One of North America’s top commercial solar financing companies is CED Greentech. They offer fixed-rate solar loans and can help you find other forms of financing, such as PPAs and C-PACE. They also have one of the simplest financing processes and can help you with other energy-efficient upgrades, home improvement projects, etc. This makes them a great choice for homeowners seeking comprehensive solar financing services.


A solar lease, or power purchase agreement (PPA), is a great option for homeowners who don’t want to make the total upfront investment of a solar system. With a PPA, you’ll lease the equipment from the solar company and pay them flat monthly payments for your energy usage. The leasing company will oversee system maintenance, monitoring, and potential repairs. Typically, a lease can last up to 25 years, and you can choose from renewing, extending or purchasing the system at the end of your contract.

You can also transfer the PPA to your next home. However, if applicable, that can be costly and require your utility, local landmarks commission, or homeowner’s association approval. If you plan on selling your home before the lease ends, review the terms of your agreement, as some companies charge a buyout fee or have an escalator clause that will increase your payments.


The most attractive aspect of a solar PPA is that it allows homeowners to access solar energy without the high upfront cost. This is especially appealing for those who may not have enough savings to pay for the installation outright or are not eligible for a solar loan due to credit and income restrictions.

Additionally, homeowners don’t have to worry about maintenance as the PPA company will handle it. However, homeowners should weigh the benefit of a lower monthly payment with the potential long-term costs incurred by escalating utility rates.

While PPAs are highly profitable for solar companies and are easy to sell and train sales reps, homeowners have better options. Anecdotal reports from real estate professionals suggest that homes with solar leases or PPAs have less desirable resale values. In addition, most PPA contracts have a cost escalator that will increase the homeowner’s monthly payments throughout the contract.

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