In 2011 the U.S. Energy Information Agency (EIA) reported that the average American household spends $110.14 on their electricity and that amount will increase 6% every year. The growing costs of electricity have caused the everyday consumer to seek an alternative form of energy, solar energy.
Environmentally friendly, efficient and clean, solar energy works by tapping the largest source of power we have available, the sun. All natural sun light is absorbed by solar panels which converts the sun’s energy into electricity for the home.
According to the National Renewable Energy Laboratory (NREL), homeowners and businesses who have made the switch to solar power reported their electricity bill reduced by 40 to 90%.
So with all the advantages to solar energy why haven’t more people made the switch?
When first introduced on the market the initial cost for installation and equipment detracted many consumers. However in recent years as the demand for affordable electricity grew so has the options for solar financing.
Here are some of the most popular solar financing options available:
- Solar PPAs [Power Purchase Agreements]: The most popular solar financing option, PPAs work as an agreement between a third party and the customer. The third party installs and owns the solar panels. While the customer only pays for the energy at a flat rate lower than their current utility bill.
- Leasing Solar: Unlike the PPA option, the customer does not lease the power, but leases the equipment. One of the advantages to solar leasing is the little to no money down involved. Monthly payments can be fixed, escalating or deescalating. Leasing solar equipment is a great option if the monthly payments are less than your current utility payments.
- Same-as-Cash: Same-as-Cash programs give qualified customer 12 months of no interest and no money down free electricity. During this time months the customer will collect the utility rebates/incentives and the 30% federal government tax credit as part of the American Recovery and Reinvestment Act (ARRA). After the 12 month period is complete the customer can refinance their agreement at a lower rate through an HELOC [Home Equity Line of Credit] or Home Improvement Loan.
When it comes to rebates and incentives from the federal and state governments there are two that solar energy homes can expect to receive:
- Upfront Rebate: Customers are sent a rebate check to cover part of the initial solar panel cost.
- REC Credit/FIT: The REC [Renewable Energy Certificate] Credit awards the customer 8 to 16 cents for each unit of power produced each month. The amount is typically awarded through the local utility company.
Other advantages to investing in solar energy now:
- Free Site Consolation: Many solar energy companies now offer free consultation services that will analyze your current utility bills and potential savings.
- Free Engineering & Design: Not every home is built the same and neither are solar panel packages. Along with free consultation, many companies will also offer to design custom solar energy systems for homes.
- Free Warranty: Included in home solar power packages are free lifetime or short term warranties which will cover materials and workmanship.
Whether you are ready to convert to a solar powered home or still weighing the advantages and disadvantages of solar energy, be sure to take into consideration the long term value and savings for your family.