Solar energy installations are typically financed in one of following ways:

Up-front Purchase. When paying the entire cost of a solar energy system upon installation. The home or building owner has essentially “pre-paid” for all the energy that system will produce in its lifespan.

Unsecured loan. For lower-cost solar energy systems, such as residential pool and hot water, financing may be secured without using the home or building as leverage. These can be quick to process, but may come at a slightly higher interest rate than secured or equity-based financing.

Secured or equity-based loan or line-of-credit. When leveraging the value of the home or building to invest in renewable energy, the system adds resale value immediately and spreads the cost of the system over the period the benefits are to be gained. Because of tax advantages, this can be one of the lowest-cost, maximum value ways to fund a solar energy system.

Third-party system ownership. A “PPA” or Power Purchase Agreement is a financing structure where a third-party funding entity pays for the equipment and installation on the customer’s building. The PPA entity owns the equipment and is then paid by the building owner for all the energy that the system produces at an agreed-upon rate and term. By using the real estate on your roof for a solar “power plant,” the PPA provider—not the building owner— is responsible for the maintenance and performance of the system. So if the system requires service or repair, the PPA provider who owns the equipment will ensure it is done in a timely manner to minimize downtime. This structure allows building owners to get into solar without large up-front costs or debt financing. A PPA allows the building owner to hedge against future energy rate hikes, while being environmentally responsible.  Many PPAs are structured for the service life of the system with a back-end buyout. PPAs can be used for any organization, but can be most attractive to not-for-profit entities, such as hospitals and churches as they are not eligible for renewable energy tax credits under the IRS tax code. Also, federal, state and local government agencies, (including school boards) can also greatly benefit from PPAs because no capital budget expenditure is necessary, effectively making it budget-neutral in its first few years in operation, then realize budget savings later as energy prices rise.

By working with a solarenergy.com dealer, you will have access to various firms who specialize in commercial renewable energy PPAs to seamlessly coordinate both installation and funding.