The big news in residential roof-top solar panel installation is the continuing drop in prices, allowing homeowners to achieve “monthly cash flow parity” for the first time. This means that the monthly cost of a solar loan payment will offset the old electric bill by that same amount. For example, a $75 solar loan payment will reduce the monthly electric bill by $75. This has literally just happened in the past four months.
When it comes to financing solar energy, homeowners need to know a few important details. While the advertised interest rates are quite low, from 2.9% to 4.9% typically, the upfront fees to contractors for financing range from 10% to 17% of the total amount financed, depending on the length of the loan and the customers credit score. The large upfront fees are not usually disclosed but merely rolled into the loan, allowing for “low interest rates” and “low monthly payments” when the loan term is long enough, say 12 to 20 years. In short, the financing companies make most of their money on the day you sign on the dotted line.
Obviously the most cost effective way to buy solar is to pay cash, a home equity loan or the City of Fort Collins “On-Bill Financing” whenever possible. Another option is to buy the system like a car, paying $200 – $300 a month for 3 to 5 years. The upfront fees and interest rates are much lower for these shorter term loans. This approach reduces the breakeven period for the system and allows the homeowner to enjoy free electricity for another 20 to 25 years after the system is paid off.
We are installing residential roof-top solar for about $3 a watt when homeowners pay cash and up to $3.50 a watt when the systems are financed. Our prices are about 15% – 25% less than the larger, more well known companies installing solar panels in the Fort Collins Utilities and PVREA service areas.
In addition, we employ no commission based sales people and all calculations for solar output and savings are done using the National Renewable Energy Lab’s precise methodologies. A quick review of Solar City Yelp in Denver reveals that many customers complain that “this system is not producing the savings the salesman said it would”. We prefer to give homeowners careful, accurate calculations and let them decide if the numbers add up for them.