Solar financing in Maine has opened the door for more homeowners to make the switch to solar. As a result, families who once thought solar was out of reach are now finding it affordable. While financing is the most common choice, it’s not the only one. Some Mainers prefer to pay cash up front, while others explore third-party options.
This guide outlines all three approaches — financing, cash, and third-party ownership — along with key contract terms you should understand before signing an agreement.
1. Solar Loans: A Flexible Alternative to Cash
Financing is the most common way Mainers pay for solar. Instead of paying up front, you spread the cost over time while still owning the system. In addition, loan payments are often close to what you already pay for electricity, which makes the transition easier on your budget.
For example, there are several loan types to choose from:
- Standard Solar Loans: Maine Solar Solutions offers various solar loan options, including no-money-down loans. Each loan option has a consumer-friendly process and a fixed interest rate, providing the opportunity to replace or reduce your monthly electric bill.
- Home Equity Line of Credit: This type of loan uses home equity for low-interest financing.
- Mortgage Refinancing and Cash Out: Many homeowners take advantage of lower mortgage rates to refinance their mortgages and pull cash out to purchase their solar array.
Solar loans may be right for you if:
- You don’t have the cash on hand to pay for solar up front
- You’d rather keep your savings invested than spend it all at once
- You want to enjoy solar’s financial and environmental benefits while staying on a budget
2. Third-Party Solar Ownership: Leases and PPAs
With leases and Power Purchase Agreements (PPAs), a third party owns the solar system. As the homeowner, you pay either:
- A fixed monthly lease, or
- An amount based on the electricity the system produces
As a result, these agreements can reduce your upfront costs and remove maintenance responsibilities. However, they also come with trade-offs. For instance, selling your home can become more complicated.
Third-party ownership may be right for you if:
- You want to minimize upfront costs
- You prefer not to worry about maintenance
- You understand that you may face challenges when reselling your property
3. Paying in Cash
The most straightforward way to pay for solar is with a direct cash purchase. By paying upfront, you own the system immediately and retain 100% of the energy it produces. Additionally, cash purchases yield the highest long-term return on investment.
With cash, you:
- Avoid paying interest
- Benefit from the lowest overall system cost
- Maximize incentives and long-term savings
Here’s another way to think about it: our solar panels come with 30-year warranties. When your system covers all your electricity needs, you’ve essentially prepaid for three decades of power. Over time, as utility rates rise, your return on investment only grows.
A cash purchase is ideal if you:
- Want the fastest payback (10–15 years in most cases)
- Prefer not to finance or pay interest
- Lock in solar’s financial and environmental benefits at the lowest lifetime cost
Paying for Solar in New Home Construction
While loans and cash are the most common ways to pay for solar, there are also unique situations where it makes sense to take a different approach. One of the best examples is new home construction.
The good news is that by bundling the cost of solar into your mortgage, you can replace rising electric bills with the predictable cost of your home loan. For many new homeowners choosing all-electric options — such as heat pumps and hybrid water heaters — adding solar could even eliminate utility bills for the lifetime of the home.
Why this is a smart move in new builds:
- Pair solar with efficient all-electric systems for maximum savings
- Roll solar costs into your mortgage at today’s rates
- Replace future electric bills with a fixed monthly payment
Key Contract Terms in Solar Financing
Before signing any solar financing agreement, it’s important to understand the language used in the contracts. A clear grasp of key terms will help you compare offers, avoid surprises, and feel confident about your decision.
Here are some of the most common terms and considerations:
Buyout Options:
Ability to pay off the remaining balance of the solar system before the end of the contract.
Considerations: It’s important to know under what circumstances you can purchase your solar array outright, how the buyout price is calculated, and whether any penalties or fees are associated with an early buyout.
Contract Term:
Duration of the solar financing agreement or lease.
Considerations: Assess the contract length, alignment with the system’s lifespan, and terms for end-of-contract scenarios.
Credit Requirements:
Credit score and financial criteria for solar financing qualification.
Considerations: Ensure compliance with the lender’s credit requirements, as lower scores may lead to higher interest rates or disqualification.
Dealer Fees:
The solar electric system dealer/installer charges for sale and installation-related services.
Considerations: Request a breakdown of fees, compare them with industry standards, and understand their necessity.
Down Payment Options:
Initial payment made at the start of a solar financing agreement.
Considerations: Evaluate the impact of down payment size on monthly payments and total cost. Buyers have the option to deposit an amount equal to the value of the tax credit, knowing they will reap that amount from the government to offset taxes.
Escalation Clauses:
Provisions for annual increases in payment under a solar lease or PPA.
Considerations: Understand the increasing rates and their impact over the contract term. While the initial benefit may be substantial, this is subject to change over time.
Financing Fees:
Costs associated with the financial arrangement for solar system purchase or lease.
Considerations: Review all financing-related fees; assess their impact on total cost; explore different financing options.
Home Ownership Transfer Provisions:
Terms for transferring the solar agreement upon selling the home.
Considerations: Check the ease of transfer to a new homeowner and any related fees or credit requirements.
Junk Fees:
Unnecessary or excessive charges in a solar financing agreement, often for vague services. Considerations: Be vigilant about vague fees; compare with other providers; question their legitimacy.
Kilowatt (kW):
Unit of power measurement (1,000 watts) for solar system capacity.
Considerations: Helps determine energy production capability and solar electric system size.
Minimum Production Guarantees:
Guarantees for specified electricity production levels from the solar system.
Considerations: Understand compensation for underperformance and related terms.
Net Metering Policies:
Rules for crediting excess electricity generated by solar electric systems back to the grid.
Considerations: Ensure clarity on the net metering agreement between the customer and utility company, credit rates for excess generation, and policy changes.
Operations and Maintenance Responsibilities:
Terms defining maintenance and repair responsibilities of the solar system.
Considerations: Third-party owners often handle this in leases or PPAs; otherwise, it’s the owner’s responsibility.
Power Purchase Agreement (PPA):
A Contract where a third party installs, owns, and operates a solar system on a homeowner’s property.
Considerations: Homeowners purchase generated power at a predetermined rate.
Pre-Payment Options:
Options to pay off part or all of the solar electric system costs in advance.
Considerations: Assess benefits, restrictions, and penalties of pre-paying.
Production Estimates:
Expected electricity output of a solar system.
Considerations: Ensure realistic estimates and understand the implications of underperformance or overproduction.
Secured Loan:
A Loan backed by collateral, typically the borrower’s home.
Considerations: Often have lower interest rates and risk of collateral seizure in case of non-payment.
Solar Lease:
Agreement to lease a solar system with fixed monthly payments.
Considerations: Understand lease terms, duration, and costs compared to utility bills.
Solar Photovoltaic (PV) System:
Technology converting sunlight directly into electricity.
Considerations: Clean, renewable energy source; system size measured in kW.
Solar Renewable Energy Certificates (SRECs):
Tradeable certificates representing the environmental value of solar-generated electricity.
Considerations: It can be an additional revenue stream for system owners.
Unsecured Loan:
Loan not protected by collateral, often with higher interest rates.
Considerations: This option is riskier for lenders and is an option for borrowers who do not want to use their home as collateral.
Getting Started with Solar Financing in Maine
Choosing the best way to pay for solar in Maine depends on your budget, preferences, and long-term goals. Each approach — whether it’s cash, a loan, or third-party ownership — offers unique benefits that fit different situations. Ultimately, the best choice is the one that matches your financial priorities and energy needs.
At Maine Solar Solutions, our solar consultants will walk you through your options and help you decide what works best for your home. Contact us today to schedule a free assessment and take the first step toward lower electric bills and long-term savings.
Disclaimer: Maine Solar Solutions, LLC does not provide financial, legal, or tax advice. Please consult a professional.
