22 May Going Solar, Day 8
We enjoyed a quiet weekend with no sounds of banging and slamming over our heads, but it’s Day 8, and we were ready for the noise and the progress that comes with it. Today is mostly about shingles, shingles, and more shingles. The goal is to at least finish the area with solar panels because tomorrow, Sullivan Solar Power is coming to install the solar system. All the installation work for both the roof and the solar system should be complete tomorrow!
Financing and Incentives
Today’s topic is about how to finance your investment. Always start this research by looking for tax incentives and rebates from the government (federal, state, and local), your local utility company, and the manufacturer of the equipment you select. The most important incentive right now is the Solar Investment Tax Credit. According to the Solar Energy Industries Association website, the tax credit “… is a dollar-for-dollar reduction in the income taxes that a person or company claiming the credit would otherwise pay the federal government.” Generally, the credit is equal to up to 30% of the cost of your solar system project. The website provides a wealth of information to help you or your tax professional evaluate if you qualify for this tax credit. (Some solar companies will present the tax credit as a 30% discount in the cost of the solar system, without the caveat that you need to determine your qualifications first. Be sure you actually qualify for this tax credit before figuring it into your financing.)
A great feature of this tax credit is the option it provides to include other infrastructure work necessary to the solar installation work. Our home needed significant preparatory work to be solar ready, including a new roof and a new electrical panel. Being able to offset these costs with the tax credit was key to making our project affordable.
After you have lined up all the discounts you qualify for, the next question is how to finance the system. Many companies will offer a lease program. In my opinion, leasing a system is appropriate to a fairly narrow demographic. The Energy Sage website has a nicely unbiased article about the pros and cons of owning vs. leasing your system. If you want to further explore this question, start with this article.
We quickly dismissed the leasing option and began exploring the different methods of financing the purchase of the system. There are many sources for solar loans, such as:
- PACE (Property Assessed Clean Energy) loans
- Home Equity Line of Credit
- Refinancing your mortgage
- Solar panel manufacturers
- Credit unions
Of course, your best option will vary depending on your home’s value, credit score, income, income tax situation, etc. PACE loans have many attractive features, but we ultimately decided that there were less expensive options through more traditional loans. Decreasing the costs of any financing is important for getting the most financial benefit out of your solar investment.
Tomorrow is the very exciting Day 9.