Which Solar Financing Option is Best for Your Business?
Solar can be a great option for your business, providing a multitude of benefits ranging from lower electric bills to reduced environmental impact. As commercial solar installations become increasingly popular, it is critical to consider all of the financing options. A solar installation can be paid for in three ways: cash, solar loans, or PPAs (power purchase agreements).
Making a cash purchase is the best way to maximize your savings and return on investment. If your system is designed to produce 100% of your electricity and you buy it outright, that means you have paid for the equivalent of 25 years of electricity all at once. Additionally, you will no longer have to be concerned with rising electricity costs, and will be eligible for financial rebates and incentives from going solar. However, solar is not cheap, with the average cost for a commercial solar system being around two to four dollars per watt, so it may be difficult to come up with the money to pay for your system all at once.
Solar loans can also be a great option, as you do not have to put any money down at the time of installation. Additionally, the loans are often at a lower cost than what you would typically be paying for your electricity bill. Similar to cash purchases, you are still eligible for solar rebates and incentives, as you are the owner of your solar system.
With a PPA, a third-party developer installs, owns, and operates a solar system on your property. You will then purchase the system’s electric output for a certain period of time. This way, you can get low-cost electricity with no upfront costs and still be eligible to receive tax credits. Typically, you pay a static rate for the next 25 years that is between 10 and 30 percent lower than what you are currently paying for electricity. One of the biggest upsides to choosing a PPA is that you are not responsible for the monitoring or maintenance of your system. On the other hand though, you will not be eligible for incentives or rebates, since you do not own the system.
It is important to carefully consider the benefits and drawbacks of each solar financing option so you can make an informed decision as to which is best for your business.