With some estimates as high as 75% of new solar installs financed through 3rd party ownership, it has become clear that the solar lease is quickly becoming the most popular way to pay for a solar installation. The obvious advantage of the solar lease is the fact that you don’t have to put any money down to go solar. That said, in return for minimizing your upfront costs, you give up control of the equipment on your roof and lose any benefit from the potential appreciation of your home that comes with having its own energy source. Fortunately, as leases proliferate, alternatives are emerging.
Here are a few alternatives:
- HUD & FHA: Up to $25k for energy-related home improvements. These include the Step Down Loans offered by Admirals Bank under Title 1.
- Fannie Mae: Up to $15k in low interest, unsecured consumer loans under the Energy EfficiencyImprovements loan program.
- Freddie Mac: Up to $240k for Energy Efficient Mortgages (EEMs).
- Veterans Affairs: Up to $203k available for solar and energy efficiency.
- EPA: Energy Star financing program for buyers of Energy Star rated homes allows homebuyers to purchase homes with mortgages at 10%-24% above what they would have qualified for without the rating.
As we pointed out earlier in “How do solar leasing companies make money,” the primary reason why solar leasing is such an attractive alternative is that the leasing firms can take advantage of incentives that individuals cannot. The 30% Investment Tax Credit will be around until 2016 which will continue to help 3rd party financing firms. After 2016, the playing field may be a bit more even, but companies will still be able to take advantage of depreciation in a way that homeowners cannot.
That said, as alternative options like the Step Down loan from Admirals Bank proliferate, customers will get to choose from a better set of choices. This should in turn lead to better deal terms from solar leasing companies. The more competition, the better!