Is Solar Power Just for Rich People? Should I Finance Solar Power?
Your Questions about Paying for Solar Energy Answered – for the Typical Homeowner
Many homeowners who consider installing solar power in Savannah, or anywhere else, end up brushing it off because they think it’s probably too expensive to be worth the financial hit. How much does solar cost, anyway?
They figure it’s mostly for the wealthier class, who presumably get solar to complement their electric cars so they can feel better about using their private jets. Or, perhaps it’s mostly for big corporations and businesses trying to make a good impression on the public.
The surprising truth about paying for solar power is that just about any homeowner can probably afford it.
And in today’s crazy coronavirus climate with the stock market once again plunging to new depths of despair, wiping out a huge percentage of the growth since the last crash in 2008, homeowners like you might want to give a fresh look at solar. Believe it or not, solar power can deliver a higher rate of return on investment than the stock market. See more on solar beating the stock market.
Here are 6 reasons you don’t have to be rich to afford solar power.
1. Yes! You Can Finance It
You do not have to pay cash for your entire solar energy system all up front. Instead, you can finance your solar power. You can put some money down if you want, or even get zero-down solar loans with one of Coastal Solar’s banking partners, but you do not have to pay for it all at once.
With a predictable and manageable monthly payment, you’ll be able to afford solar while also reaping big savings on your utility bills.
2. Financing Solar Is Comparable to Buying a Car
A typical home solar energy system runs anywhere in size from 4-10kW. Within that range, your system will most likely cost less than $30,000, possibly under $20,000 – and that’s before all the tax credits and incentives kick in.
The federal tax credit sits at 26% this year. So whatever you pay up front, if you get solar power this year you will get about a quarter of it back in your tax return next year. You can then plow that money into the principal of the solar loan and refinance it at a lower monthly payment.
The point is – even if there were no tax credits at all for solar – a typical homeowner’s overall costs will be comparable to buying a car. Rich people aren’t the only people who buy cars, right?
Is a solar lease the same as a solar loan?
No. A solar lease is very different from a solar loan. A lease is a bad deal. With solar financing, you own your system, and you get the tax credits. With a lease, you do not own the system, and you don’t get the tax credits. But the monthly payments will be similar. There is almost no good reason to get a solar lease.
3. Home Equity Makes Solar Financing Even Easier
If you have enough equity in your home, you can most likely finance the entire system by getting a home equity line of credit. If you take this approach to financing your solar power, it may not require any money out of your pocket.
Plus, solar power increases the value of your home. So as you repay the equity loan, you will also be increasing your eventual profits from the sale of the home.
4. Monthly Power Bill Savings Offset Your Solar Loan Payments
This is a major factor to consider. Hypothetically, let’s say your solar loan ends up costing $150 per month, for ten years. Depending on the size of your solar system, you could very well end up saving $150 per month on your power bills, on average. Now, it will fluctuate based on the time of year, but most solar power homeowners save $1000-$2000 per year on their bills. Sometimes a lot more.
If your power bill savings are fairly close to your monthly solar payment, you are essentially breaking even during the life of the loan. And once the loan is paid off, you’ll reap huge savings every month.
An additional factor here is inflation. Solar is inflation-proof power.
A solar energy system that produces 1000kWh per month saves you however much money you’re paying per kWh times 1000. Let’s say you’re paying 15 cents/kWh this year. That’s $150 per month you would save.
But ten years from now, how much will your utility charge you for that same 1000kWh?
They typically raise rates every year, right? In ten years, a conservative estimate would predict you’d be paying at least 20 cents/kWh, most likely much more. So ten years from now, that same 1000kWh produced by your solar system will save you $200 – not $150 – every month, under these assumptions.
See how that works? Your savings increase every year, because power costs keep rising.
5. Savings Outstrip the Interest Costs
You may also be concerned about the cost of the interest on the loan. If your loan is for $20k, the interest might add a few thousand dollars to that over a ten year loan period. That’s certainly nothing to ignore.
So the question is, how much will you save from your solar power, and is it more than the cost of the interest on your solar loan?
The answer is, it’s not even close.
Your solar panels, from Coastal Solar, come with a 25-year warranty. Assuming you save $1500 per year on average, which is probably low for most system sizes and will increase every year because of inflation, you would save $37,500 over 25 years.
On a $20,000 loan, even with an extra $4k from interest, you’re still coming out way ahead.
And, all these savings accelerate if you pay additional money on the principle. Pay off the loan in seven years instead of ten, and your savings magnify that much more by reducing the total interest paid. Suppose your employer gives you a big bonus one year. Throw a chunk of that at your solar loan, and you will slash the amount of interest you’ll pay over the life of the loan.
Again – considering how unreliable the stock market has been – that surefire savings on interest costs would probably be a better investment.
Plus, you can refinance the loan when your big tax refund shows up next year, which will save you even more on interest.
Bonus: This is still true if you add a solar power battery!
6. Savings Start Immediately
One of the best things about solar energy is, it starts producing power and savings the instant the installers turn it on. There is no waiting period.
And back to the car comparison, this is one reason solar is actually better than a car, financially speaking.
As the old adage goes, a new car loses value the second you drive it off the lot. But your solar starts making money the instant you install it. Your car is always losing money. Your solar is making money. And their initial costs are comparable.
7. Solar Never Calls in Sick
Solar power takes no holidays. It never calls in sick. It keeps working on weekends. Solar produces power and savings every day, for the life of the system, which is warrantied for 25 years when you buy from Coastal Solar.
It works in all seasons, and generates power rain or shine.
So yes, if you own a home, you can probably afford solar. If you have any decent amount of equity, you almost certainly can. Your savings start immediately; they outstrip inflation, and they far exceed the costs of the interest you’ll pay on the loan.
Financing is one way to pay for solar power, and it makes solar affordable for just about any homeowner.
Going solar in Savannah or anywhere else? If you want us to visit your home and give you a free solar assessment and quote, click the button below and let us know!