Financing Options

Financing Options for Solar Electric Systems in Maine

More Mainers are going solar, and for good reason. The cost of solar has dropped significantly over the last decade, making it more affordable and attainable than ever.

If you’ve decided that solar is right for your home, your next question might be How do I pay for it?

This guide covers three main ways to pay for solar in Maine: paying upfront, taking out a loan, and third-party ownership. We’ve also included some key contractual terms to know before you sign any paperwork.

Solar loans: A flexible alternative to cash

Financing your system with a solar loan lets you own it while spreading out the cost. Common options include:

Standard loans through Maine Solar Solutions
We offer fixed-rate loans with no money down and a consumer-friendly process.
Home Equity Line of Credit (HELOC)
You can leverage your home’s equity for low-interest financing.
Mortgage refinancing and cash out
You might consider refinancing your mortgage at a lower rate and use extra funds to pay for a solar installation.

This option is best if:

You want to enjoy solar’s financial and environmental benefits on a budget.
You can’t pay the full cost of a solar array upfront
You hope to invest your cash on hand to earn a lower interest rate

2. Third-party solar ownership

In this model, a third party owns the system. You pay a fixed monthly lease or an amount based on electricity produced, known as a Power Purchase Agreement (PPA). You won’t be eligible for the federal tax credit, and transferring ownership during home sales can be tricky.

Note: Maine Solar Solutions does not offer third-party ownership options.

This option is best if:

You want low upfront costs
You don’t want to deal with maintenance

Still, be aware of the drawbacks. Third-party ownership offers no tax credit benefits for the homeowner and could cause potential issues during property resale.

3. Paying in cash

Paying for your system in cash gives you the best long-term savings and shortest return on your investment (ROI). You’ll avoid interest and fees, and you’ll own your solar electric system outright from day one.

Think of it this way: if your system meets 100% of your needs and has our 30-year warranty, you’ve essentially pre-paid for 30 years of electricity—and you’ll be protected from future rate hikes.

This option is best if:

You want full ownership from the start
You want to maximize your savings and minimize your ROI
You don’t want to deal with loans or interest

Adding solar to new construction

If you’re building a new home, that’s a great time to add solar. By bundling the cost of a solar system in the construction of your new home, you’ll roll future electric bills into the fixed monthly cost of your mortgage and future-proof yourself against rate hikes. If you’re building an all-electric home with heat pumps and hybrid water heaters, adding solar could offset your utility bill for the lifetime of your home!

Understanding solar financing terms

Before signing a solar financing agreement, it’s important to understand the fine print. Here’s a detailed overview of key terms and considerations you’ll encounter. Remember that this list is not necessarily comprehensive, so always have a trusted party help you read over any agreement.

Definition: 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.

Definition: Duration of the solar financing agreement or lease.
Considerations: Assess contract length, alignment with system lifespan, and terms for end-of-contract scenarios.

Definition: Credit score and financial criteria for solar financing qualification.
Considerations: Ensure compliance with lender’s credit requirements, as lower scores may lead to higher interest rates or disqualification.

Definition: The solar electric system dealer/installer charges for sale and installation-related services.
Considerations: Request a breakdown of fees; compare with industry standards; understand their necessity.

Definition: 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.

Definition: Provisions for annual increases in payment under a solar lease or PPA.
Considerations: Understand increase rates and their impact over the contract term. While the initial benefit may be substantial, this is subject to change over time.

Definition: 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.

Definition: 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.

Definition: Federal tax credit allowing homeowners to deduct a portion of solar system costs.
Considerations: Currently at 26%, it significantly reduces the overall solar system installation cost.

Definition: 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.

Definition: Unit of power measurement (1,000 watts) for solar system capacity.
Considerations: Helps determine energy production capability and solar electric system size.

Definition: Guarantees for specified electricity production levels from the solar system.
Considerations: Understand compensation for underperformance and related terms.

Definition: 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.

Definition: 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.

Definition: 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.

Definition: Options to pay off part or all of the solar electric system costs in advance.
Considerations: Assess benefits, restrictions, and penalties of pre-paying.

Definition: Expected electricity output of a solar system.
Considerations: Ensure realistic estimates and understand the implications of underperformance or overproduction.

Definition: 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.

Definition: Agreement to lease a solar system with fixed monthly payments.
Considerations: Understand lease terms, duration, and costs compared to utility bills.

Definition: Technology converting sunlight directly into electricity.
Considerations: Clean, renewable energy source; system size measured in kW.

Definition: Tradable certificates representing the environmental value of solar-generated electricity.
Considerations: It can be an additional revenue stream for system owners.

Definition: 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

The right financing option depends on your goals, budget, and preferences. Whether you purchase solar panels directly, finance with a loan, or explore other options, Maine Solar Solutions is here to help. Our expert consultants can walk you through your options and answer your questions. Contact us today, and let’s find the financing plan that works best for you.

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Maine Solar Solutions, LLC does not provide financial, legal, or tax advice. Always consult a qualified professional before making financing decisions.