Saturday, December 26, 2009

Solar Power Financing for Consumers: PACE, PPA, Lease

Putting a solar power system on your roof can get expensive. You're usually talking five figures at least.

But solar companies and governments have devised a number of financing options for rooftop solar systems that require little or no upfront payment and may cost you less per month than your electric bill. Here are outlines of 3 programs for consumers:


PACE, or Property Assessed Clean Energy, is a program that allows a homeowner to pay for solar power installations through their property tax. The cost of the solar system is amortized over 20 years at a reduced interest rate and tacked on to the tax bill.

The property tax attaches to the house, not the homeowner. If the owner sells the house, the buyer inherits the solar power system and the higher property tax.

For more on how PACE works, click here.


In a PPA, or Power Purchase Agreement, a solar power company installs solar panels on a house's roof, usually at little or no cost to the property owner. The company holds title to the panels. The property owner simply pays the company for the solar electricity, usually at a fixed rate lower than that of the utility.

Most solar providers offer PPAs only to commercial building owners. A commercial building typically belongs to the same landlord for several decades, which makes it good candidate for long-term agreements. For a guide to PPAs for organizations, click here (pdf).

At least one company, San Francisco-based SunRun, offers homeowners PPAs with a "small installation fee" upfront. There may be others — check in your area.


Just as you lease a car, you can lease the solar panels on your roof. A California company called SolarCity now markets solar system leases.

The concept is simple: Instead of getting all your electricity from the grid, you get some of it from your leased panels. Which means your utility bill shrinks. And if your monthly lease payment and lower electric bill are less than the amount you paid the utility when you got all your power from them, then leasing has saved you money.

At the end of the lease, you can return the panels, upgrade them or renew the lease — just like with your car lease.

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