SolarTown Working on Financing Solutions for Solar Energy Products

Financing of solar energy systems has been a major concern to us at SolarTown since we launched this store and community. The average cost of a typical solar installation is north of $30,000. This amount is substantially reduced with the federal tax credit and some state or local rebates thrown in. But you have to wait months, sometimes many months, to take advantage of the incentives. There are currently alternatives available, but none very appealing. SolarTown has been working on a solution to financing of solar energy systems and we hope to be able to announce the program shortly. 

Installer Financing Not Attractive to the Intallers

There are some installers who will defer collection of their charges for the installation. But installers are particularly ill-suited to become finance companies.  If an installer has even a modest book of projects, it can be stretched pretty thin.

Even a small installer, say one with just ten projects pending,  may be out of pocket a quarter of a million dollars just waiting for credits and rebates to come in. If these payments are delayed from the state, then there are going to be a lot of installers out of business.

Read our news article on what happened in New Jersey when funding for the state rebate program was “redirected.”  Installers understandably freaked, and you would too if your livelihood was at stake. Installers have called us, wanting to buy our solar energy products, but they want us to “float the rebates.”  Up until now, we have not been able to accommodate them.

Traditional Bank Financing Not Well-Suited for Solar Market

The homeowner can get a second mortgage on his or her house to finance the solar energy system. There are not many homeowners, even green mavens, who want to go through the hassle of a second mortgage to finance a solar energy system.  A secured line of credit is probably somewhat more attractive and suited to the solar market. You can tap your line of credit and then when you receive the tax credit or rebate, you can simply pay off the line of credit. The catch, of course, is that you have to have sufficient equity in your home for these options.

There are a courageous few who may finance their solar purchases through a credit card. You could purchase your solar energy system from SolarTown with a credit card and pay it off over time—at exorbitant credit card rates. We are pleased to report that we do not know of any of our customers who have followed this approach.

Less Traditional Financing Not Catching Fire

There are other solar financing programs available as the solar industry struggles to meet the needs of the solar public who do not have the hard cash around to purchase their systems. One promising solution has been the Property Assessed Clean Energy (PACE) programs, first innovated in Berkeley, California. If you have been reading our news articles about PACE, you know of the turmoil surrounding these programs as Freddie Mac and Fannie Mae have indicated that they do not want their homes encumbered by a potentially superior lien. We hope that the controversy will be resolved so that these excellent programs can go forward.

Solar leasing is also a promising solution to the financing conundrum for the solar industry. These programs, still in their infancy, allow homeowners to pay little money down and enjoy the benefits of solar energy on their roofs usually at a cost below prevailing electric utility rates.

We have talked with homeowners and installers from around the country and their view is uniform: financing looms as the major impediment to the growth of the solar market.  Options available to the homeowner who wants to go solar are not particularly. Sure, the solar modules will last for 25 or 30 years, but when you are reaching deep into your pockets, the short-term pain is severe even if you are the most devoted solar fan. We at SolarTown are working on a financing solution for at least the short-term as you wait to get your rebates and credits and we are hopeful that we will be able to announce our program later this month.