It is no secret that high up-front costs are usually responsible for putting a halt on a homeowner’s solar dreams, despite local and federal incentives. But it is also a problem for solar companies who need to make money, utilities that need to meet their state’s renewable energy standards and an obstacle for the reversal of climate change and poor air quality. That is where solar financing comes in. Despite the high cost, every sector of the solar industry and governments agree that solar is largely a good investment. It reduces or erases a homeowner’s electricity costs and carbon footprint. Furthermore, while electricity costs go up, the terms of a solar financing loan remain the same, fixing the customer’s electricity rates for up to 25 years. So in the interest of promoting solar power, meeting climate change head on, and giving homeowners without a lot of up-front cash the chance to be energy independent, several states, municipalities, utilities, and solar firms have come up with solar financing options. Here are five examples:
In California, the city of Berkeley’s Financial Initiative for Renewable and Solar Technology (FIRST) is a landmark program. Right now you can’t discuss solar financing without discussing this initiative. Homeowners can apply for a municipal loan of up to $22,000 to install a solar power system. The loan is paid back through a voluntary increase in property taxes for 20 years.
Oregon State Loan Program
Oregon’s Small-Scale Energy Loan Program offers the state’s homeowners low-interest loans for just about any upgrade in energy efficiency, including passive solar, solar electric, and solar thermal projects. There is no maximum loan amount. So far nearly 800 loans have been administered, equaling over $420 million.
New York Energy Smart Loan Fund
New York is also taking a stab at a state loan program. Administered through the New York State Energy and Research Development Authority (NYSERDA), this program offers loans up to $20,000 for 1-4 family homes. Interest rates for these loans will be up to 4 percent below the lender rate for 10 years. In other words, you get an interest-rate discount; a unique approach.
If the states can do it so can the big dogs in the solar industry. SunPower has the advantage of being a world leader in solar electric systems with a lot of capital to fund a financing program. Their “Smart Financing” does not have set rates like most state programs. SunPower will match a financing program to your specific situation and terms may be up to 25 years, ostensibly fixing your electricity costs.
New Jersey and RECs
New Jersey has changed their approach to solar incentives from rebates to renewable energy credits (RECs). Homeowners who create their own energy can sell RECs to the highest bidder. Utilities in New Jersey, who have a strict RPS to meet, are more than interested in purchasing that power. All of this has led to some unique solar financing. Take for example Atlantic City Electric. The utility offers to finance a solar project through a long term contract to purchase the homeowner’s RECs at a fixed price achieved through a competitive bidding process. This program is new (recently filed with the NJ Board of Public Utilities) and will be in its pilot phase for three years. How it turns out may affect solar financing across the country.