Solar Financing for Dummies, or How to Pay for Your Clean Energy

Face it. Purchasing solar equipment is very, very expensive. Sure, you want to go green, but can you afford it?

To be honest, most homeowners cannot. A solar system can cost upwards of $30,000 and that's not pocket change. Historically, homeowners didn't have many other options to go solar other than to buy their own system - costing them an arm and a leg, and mounds of debt or a refinanced mortgage to boot.

But, solar is different now. As the need for clean, renewable energy becomes ever more clear, the number of options for financing a home solar system are growing.  It's easy to get started with home solar.  Welcome to the world of home solar financing.

There are various ways to finance your home solar system. They're not all created equal. Some can leave you in debt, others can become quite tedious.

• Home equity loan - take out a loan using your home's equity as collateral. These are often used to help finance major home repairs, college tuition, or other bills. An HEL creates a LIEN against your home and reduces your actual home equity.
• Energy efficiency loans - Fannie Mae and the EPA offer home loans through its Energy Star program. Fannie Mae offers loans for up to $15K for 10-years; the EPA will offer loans as long as the home will exceed energy efficiency (EE) standards by at least thirty percent.
• Local city programs - Some cities and states have public solar financing programs - the city loans you the money to purchase the system (upwards of $30K, once again) and you pay the money back through increased property taxes, over the next 20 or so years.
• Solar Financing via Leases & Power Purchase Agreements - Power Purchase Agreements are common in the world of solar, specifically for large commercial solar installations. But, what about for your smaller, noncommercial home? In 2007, Lynn Jurich and Edward Fenster created the first residential solar power purchase agreement and started SunRun. SunRun is now the nation's leading home solar financing company with over 4,000 customers across 5 states.

How Leases & PPAs work - The company purchases and owns the solar system for the homeowner, managing all the paperwork, rebates, incentives, etc. The homeowner simply pays for the solar electricity. SunRun also deals with all the paperwork and maintains, monitors, and repairs the system for you for the lifetime of the agreement (usually 18 to 20 years). They're invested in making sure your system performs up to snuff since they own the system.