Massachusetts Solar Financing Options

When it comes to paying for your rooftop solar panels, there are a number of Massachusetts solar financing options for you to choose from. Before I get into them, though, I do want to clear up a common misconception about solar financing.

Most people think that the first decision they have to make when thinking about going solar is how they’re going to pay for the panels. It’s actually one of the last decisions. 

You can have an idea of whether you prefer to lease or buy, or whether a solar loan or power purchase agreement is a better way to go. But until we’ve gathered all the information necessary to make an informed decision, it’s not wise to lock yourself into one Massachusetts solar financing option or another.

We simply don’t know enough about the project to make a final decision.

In this article, I’ll introduce you to the various solar financing options that are available to Massachusetts homeowners, explain the pros and cons to each, and provide links to elsewhere in the site where you can discover more about each one.

We’ll also touch on some of the incentives that are available for Massachusetts that soften the cost of going solar and may encourage you to choose one financing option over another.

Finally, we’ll look at some of the other financial implications of owning solar panels, such as warranties, home insurance and whether solar panels improves or lessens your ability to sell your home.

Four Ways to Pay For Solar Panels

Broadly speaking, there are four options you can choose from when considering how to pay for your solar panels. First, you can either buy the panels outright, which involves either paying cash out of pocket or taking out a solar loan. Or you can choose a third party owned (TPO) arrangement, which would involve either a lease or a power purchase agreement.

Let’s take a look at each of the four in turn:

Paying Cash for Your Solar Panels

Cash is the cleanest, least complicated way to pay for your solar panels. It allows you to take advantage of certain tax credits and incentives, can eliminate a large portion, or maybe even all of your electricity bill and will likely increase the value of your home.

Paying for Your Panels With a Solar Loan

Solar loans are ideal for people who really like the idea of owning their system but who don’t want to say out the upfront cost of purchasing the system. If interest rates are low and dealer fees not too expensive, it can be a great way to take advantage of immediate benefits while spreading the cost out over time.

Leasing Your Solar Panels

Leasing your solar panel is just like leasing a car. You won’t ever own the panels, you’ll just rent them for a specified period of time and swap your electric bill (or some portion of it) for a monthly leasing fee.

Signing a Power Purchase Agreement (PPA)

Many people use the terms lease and PPA interchangeably, and that ‘s understandable because they are similar. The key difference is that, with a lease you are renting the equipment, with a PPA, you are signing an agreement to purchase the electricity that equipment generates for a specified rate and a specified period of time.

Some of the larger solar companies (most notably Sunrun) offer a prepaid PPA option, which can give you many of the benefits of a cash purchase, without you having to deal with the hassle of claiming the tax credits. They’re great for retirees who have the means to pay cash for their solar panels but may not have enough taxable income to be able to claim the tax credits.

Financial Incentives for Going Solar

The good news for Cape Cod homeowners is that Massachusetts has some of the most generous incentives out there for going solar. Between the Massachusetts Net Metering credits, the SMART Program and state tax credits, there may be no state in the country that offers more encouragement for its homeowners to go solar.

Couple those with the 30% federal tax credit that some homeowners may also be eligible for and it makes for a pretty compelling package of incentives. 

No, going solar isn’t free in Massachusetts, despite what some misleading online ads might tell you, but it’s certainly a lot less expensive than most people think and thousands of Cape Codders have been able to make the switch with zero upfront cost.

Other Financial Considerations of Going Solar

Going solar is a big financial decision and the implications spread far beyond how you choose to pay for them. So let’s take a look at some of the other financial considerations of installing rooftop solar.

Home Upgrades

Before you can install panels, the solar company will perform a site survey to make sure it is ready. If it is deemed that home upgrades are necessary, they will have to be carried out before installation. Exactly how these how upgrades will be paid for may determine which Massachusetts solar financing option you choose.

Power purchase agreements tend to come into their own if home upgrades are needed as they can sometimes offer a creative way to finance a rood replacement or electrical upgrade.

Warranties

There are two issues when it comes to warranties. One is the warranties on the solar panels themselves and the other is the warranties that you have on your roof. One question we get all the time is whether installing solar panels will void a roof warranty. It won’t.

As for the panels themselves, how you choose to finance your panels will have a big impact.

Homeowners Insurance

Installing panels can have an effect on your homeowners insurance. Again, just what effect will be determined by the way you choose to finance them. Broadly speaking, if you choose to own the system, you’ll have to think about homeowners insurance, if you choose TPO, you probably won’t.

Selling Your Home With Solar Panels

A common concern we meet is whether a homeowner will be able to sell their home after installing solar panels. My personal opinion is that the opposite is more likely true. In the coming years, I suspect that homes that do not have solar panels (and a whole host of other home electrification upgrades) will be harder to sell, not easier.

But it’s complicated. There are no hard and fast rules as to whether your home will sell more easily if it has solar, but it is likely that the financing option you choose when you do the initial installation will have some impact.

Final Thoughts on Massachusetts Solar Financing Options

Which Massachusetts solar financing option you choose to pay for your solar panels will have implications that stretch way beyond the purchase itself so you shouldn’t lock yourself into a particular way of paying for your system until you’ve gathered enough information to make an informed decision.

Whether you ultimately opt for a ash purchase, a solar loan, a lease or a PPA, remember that there is no right or wrong way to go solar, just what’s right or wrong for you.

If you would like help deciding which Massachusetts solar financing option is right for you, feel free to contact us and set up a time to chat. We’ll walk you through the various options in an educational no pressure way.

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