Financing Options For Your Solar PV System
Once your solar consultant has customized your solar PV system to fit your home’s electrical needs, the next step is to determine how your system will be paid for or financed. We’ll go over the different options that are available to help guide you based on your financial situation. These options can range from having the lowest total cost to owning your system to finding the lowest possible monthly payment today. If your home needs a new roof or electrical upgrades, these costs may be included in your overall system cost unless you choose to pay separately.
Cash of Finance?
We’ve all heard the saying that “cash is king,” and that also holds when purchasing your solar PV system outright. The total cost of your system is what’s presented – no added interest or fees – and the payment schedule is broken down into three parts. Initially, a $500 non-refundable retainer deposit is required after signing our installation agreement. Before installation, a payment of 50% of the total cost (less the retainer deposit) is needed, and the remaining balance will be invoiced and paid after the installation is complete. If you already have equity in your home, you may consider applying for a Home Equity Line of Credit (HELOC). Your lender determines interest rates and payment terms. When you draw funds from your HELOC to pay for your system, we consider that similar to paying with cash.
Alternatively, you can opt to apply for a solar loan to pay for your system through one of our approved lenders, which have competitive rates compared to a traditional loan. We currently work with a few local financial institutions, such as American Savings Bank, Honolulu Federal Credit Union (HOCU), and Hawaii State Federal Credit Union (HSFCU), as well as a national lender, Sungage Financial. A signed installation agreement will accompany your solar loan application, and your approval and interest rate are based on your creditworthiness. Your loan amount will be slightly higher than if you were paying by cash, since it also includes the loan interest and fees for financing. Some lenders may disburse funds into your checking account instead of paying your installer directly, so be sure to keep an eye out for the two milestone payment invoices before and after your installation date.
Whether you pay cash or finance, you are the system owner and make the decisions on the maintenance, servicing, or modifications to your system.
Lease and Prepaid Lease
Leases are an effective way for homeowners to pay for having a solar PV system to provide electricity for their home. The system is owned by a third-party company, but your monthly payments will generally be lower than the utility rates you’re currently paying. The financiers we currently work with for leasing are LightReach and GoodLeap. Leasing your system comes with a few general requirements:
1) The specific equipment used for your PV system must be from the financier’s approval vendor list. Our team will review your project and work on the necessary change orders to correct the equipment selections.
2) Your utility program and system must be set to Export, meaning any excess power generated and not stored will be sent to the grid. Once installed, do not change any settings in your monitoring app.
3) Any service requests must first be opened with your selected leasing financier. The financier is the system owner and is responsible for maintaining and servicing the system.
Since leased systems are owned by a third party, approval processes are followed from getting Notice To Proceed (NTP) until you receive Permission To Operate (PTO) from Hawaiian Electric to ensure we adhere to their guidelines. The total cost of the system and your monthly payments are based on the lease you choose, and may include an Escalator that accounts for inflation on utility rates in the future.
With consumer tax credits no longer being available, another leasing option is a Prepaid Lease through Participate Energy. Homeowners will prepay for 70% of the system’s value upfront – by cash, or financed through a loan (only available with HOCU). The remaining 30% is covered by Participate (they’ll claim the business tax credit), and will also be responsible for maintenance of the system. After 6 years, the homeowner may choose to take ownership of the system.
GEM$ On-Bill Program (Low-Moderate Income Families)
The Green Energy Money $aver (GEM$) On-Bill Program is offered exclusively by the Hawaii Green Initiative Authority (HGIA) for the underserved, or “low- to moderate-income households” as defined by the program. This program helps eligible customers reduce their electricity bills with the installation of approved energy improvements, which include rooftop solar PV systems. The cost for the system is repaid on the monthly electric bill.
HGIA also works with landlords for investment properties, so renters can reduce their utility bills with no money down and without long-term personal credit risk. The renter can initiate the process, but the landlord’s permission is required to move forward. Payment for the system is tied to the electrical meter, so once renters move out after closing their utility account, they have no further responsibility to pay.
For more information on the GEM$ Program, visit HECO’s website.
