As many people turn towards renewable energy sources and are actively opting for solar solutions, one thing that is commonly seen is the dilemma that they go through. It is said that the easiest part of switching to solar energy is making up your mind and deciding that you will shift to solar-based solutions. The tricky part is to realize how you will pay for it.
There are many ways to go about it. One can pay upfront or go for a loan power the project. This article will look at four different ways to finance your power transformation to solar-based products.
In the case of a cash purchase, the user will indeed have to pay a hefty amount upfront before actually reaping the benefits of solar energy. However, whosoever can afford it. They must defiantly go for the one-time payment as it will save them the most in the longer run. Users will no longer have to pay costly interest or escalator fees on their loans, and the overall cost of the system they install will be the smallest in case of a cash purchase. This means that future savings will outlast the initial investment most quickly for the cash purchased solutions.
Lately, many governments and financial organizations have devised policies to encourage the use of solar energy and help the investors in the best way possible. Many banking institutes and federal companies offer loans that can help you make the transformation to solar energy smoothly. Solar loans are the next best option after cash purchases.
Solar loans come with their fair share of increased prices, including dealer fees and interest payments. Many companies offer zero fees, but the interest rate can vary wildly. Therefore, be careful to pull out the best deal.
Much like solar financing where banks can provide you loans, many solar companies are also offering lease-based solutions. They allow a user to buy, install, and start using their product without paying upfront. Instead, they are charged monthly fees, and it does include interests and other payments. Many companies have an escalator rate in their solar contracts, so the overall price of the total solution gets a little expensive as compared to the original base price. Other than that, solar companies also offer incentive-based programs for their customers. For example, referral bonus schemes are commonly seen in the solar service sector.
Solar Power Purchase Agreement
A recent development in the solar service industry has been the introduction of power purchase agreements. They are different from solar leasing because you do not have to pay fixed monthly installments, but pay according to the energy produced by the solar power system. An entity finances the whole project by leasing you the solar panels. In return, the user pays according to the kWh of the energy produced by the solar panels. Usually, Solar PPAs are extended over 20 years.