Financing a Solar System
Deciding to install a new solar energy system is a great initiative because it reduces your power bills, reduces carbon emissions and provides you with some energy independence at your location.
Systems consist of a substantial amount of hi tech equipment so the cost will not be negligible. So one of the main steps in the process to a solar installation is how the system will be financed. In general there are 3 methods to finance a new system but before we look at those, those of you interested in a new system should also be aware of Small scale technology Certificates (STCs) available throughout Australia and feed in tariffs from energy companies. These will both reduce the impact of the investment you make. Read more about them here.
As mentioned above, a new solar energy system can broadly be financed in 3 ways:
- Up front payment – you use cash savings, personal loan, extend your mortgage, use credit card, etc to pay the full price for the system when it is installed. This option is best for small to medium systems for homes or commercial premises where the up front cost is affordable and a prudent investment
- Lease arrangement – similar to a car, you make periodic payments towards the system cost and you do this until you have paid off the system. It is then yours. Unlike a car, a leasing company cannot remove the solar system from your roof so the arrangements are set up so that you can budget the periodic payments and avoid the large upfront. Cost. This option is best for larger systems, perhaps at commercial premises, where the ongoing power savings can offset the periodic payment.
- Power Purchase Agreements, or PPAs – often used with large systems, the installation of the system may be paid for by the power company, for example, and then the customer pays a price per kilowatt for their power which reflects the cost of the electricity used plus an amount that pays off the cost of the system over time. This option suits larger systems where the consumption is consistent as PPAs often require a minimum wattage to be paid for and for customers who want to avoid the cash outlay required for a large system.
First Sun Solar have experience with all finance options, including different models where customers can invest in solar energy but the panels may be installed on someone else’s roof. We enjoy the challenge of guiding the best finance solution for our customers and working with the STC rebate and feed in tariff numbers to provide some certainty around the level of investment required for each of our customer’s individual systems and scenarios.
Let us know if you would like some more information on the best ways to invest in and finance soar energy for your location.
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