What Is the Best Way to Finance Your Solar Installation?

With instant utility bill savings and guaranteed returns, solar is an investment that pays for itself – many times over.

Although solar energy is a very wise investment, getting started isn’t necessarily free.  In a state like California, the average cost of a new solar PV system is roughly $10,000 (after all incentives and credits have been applied).

Solar panel prices keep coming down every year – and grid electricity rates keep going up.  And thus the benefits of going solar only improve with time.

But if you’re interested in going solar today, what is the best way to finance your solar installation?

In truth, there is no absolute “best” financing solution.  It really depends on your budget.  But below are 3 of the most common ways that people in San Diego pay for their photovoltaic (PV) systems.

1.  Finance Your Solar Installation with a Lease

With a solar lease, you receive a brand-new PV installation for free.  A third-party handles all of the financing, paperwork, and installation.  You simply “rent” the clean electricity that your leased solar panels produce.  It’s a simple and affordable way to go solar.

But as we always remind our clients again and again, solar leasing isn’t really a good strategy.  True, you enjoy instant utility bill savings.  And you also reduce your carbon footprint (which is great for the environment).


  • There is no payback period with a solar lease.  Every month for the next 10, 15, or 20 years, you’ll have to send regular payments to the lessor.
  • Installing solar usually improves the value of your home – often by a lot.  But with a solar lease, it might actually go down.  After all, solar leases create a liability (i.e. financial obligation) that future homebuyers must take over.
  • San Diego has a ton of great solar incentives to help make installing photovoltaic panels even cheaper.  But with a solar lease, most of these incentives go to the lessor – not you.

Solar leasing can work.  And we offer them at Sunline Energy.  But because you’ll never have truly free electricity, it isn’t really the “best” way to finance a PV installation.

2.  Using Cash to Finance Your Solar Installation

If you have the money, using cash is a terrific way to go solar.  Again, you enjoy instant utility bill savings and a smaller carbon footprint.   But you also benefit from the following:

  • All solar incentives come to you.  Although a new PV installation might cost $20,000, $30,000, or even $40,000 – the true price jumps down to roughly $10,000 after taking advantage of tax credits, rebates, and net metering.
  • True solar ownership delivers predictable payback periods (4 to 6 years) and a guaranteed ROI (9% or more).  In other words, what you spend upfront – you more than make back many, many, many times over the 25+ year lifetime of your solar PV installation.  In fact, many PV systems last 40 years or longer.
  • You enjoy decades of free electricity.  Imagine never having to send money to your local utility company again.  It’s liberating.

This is all well and good if you have $10,000 lying around.  But not everybody does.  What are your options then?

3.  Using Low Interest Loans to Finance Your Solar PV System

With a solar loan, you enjoy the best of both worlds:

  • Minimal upfront costs (like with a solar lease)
  • True solar PV ownership (like with cash)

The process works like this:

  • You take out a low interest loan from your bank (or any number of lending programs throughout San Diego).
  • Every month, you send regular payments to the lender.  These payments are less than what you used to pay to the local utility company.  So right off the bat, you enjoy instant electricity bill savings.
  • Each payment moves you steadily closer to true system ownership.  It takes an average of 5 or 6 years to completely pay off your solar loan.
  • Once the loan is fully paid for, you enjoy decades of free electricity for the remaining lifetime of your PV system.

In our expert opinion, using low interest solar loans is one of the smartest ways to go solar – especially if you have limited finances.

Which Financing Approach Makes the Most Sense for You?

As mentioned before, there is no absolute “best” financing strategy.  Every budget is different.  Every project is unique.  And no 2 solar customers have the same financial goals.

But as a general rule, we recommend using cash (if you have it) or loans to finance your PV system.  Leases have helped many people affordably go solar.  But they often end up spending more money than if they had simply financed their systems with low interest loans instead.

To learn more about financing your solar PV system, contact us today for a free, no-obligation consultation.  We’ll walk you through the ins and outs of each financing approach.  And we’ll help you decide on a strategy that meets your budget and goals.

To request your free solar quote today, click here.

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