Solar Financing Options
There are three choices: pay by cash, get a loan or sign a lease for a discounted long term rate.
The system will pay for itself in 4-5 years or less. The rate of return is much higher than almost all conventional investments. It is grossly higher than your savings received at the bank. The investment is in your home and you can watch it grow every day.
There are many loan choices.
HELOC: Your first consideration may be a Home Equity Line of Credit (HELOC) which is interest only. The interest only payment amount will be substantially less than the avoided cost savings. You'll initially borrow the money, but will end up making money!
Regular Loans: There are also loans not tied to real estate. As you pay principal and interest, the cash flow is less than the interest only HELOC. Look for an amortization period of at least 10 years.
Special Financing: Solar Wave is a participating contractor with special financing available through American Savings Bank.
To learn more about what ASB offers as part of their Clean Energy Loan Financing, please visit: https://www.asbhawaii.com/clean-energy-financing
We also offer options with local institutions like Pearl Harbor FCU, Hawaii State FCU and more. There may also be additional financing options available via your own personal financial institution.
It is better to buy than lease, as a general proposition, because your payments are applied to owning it. If you have little Federal and/or Hawaii tax liability, a lease may be a good option since you cannot use the tax incentives. However, you could also consider having a relative, who can use the tax incentives, own the system. With a lease there is an investor and most times a bank involved.
There are two common forms of leases: one pay and long term.
One Pay: The homeowner pays 55-60% of the “price” and enjoys all avoided cost savings. The “price” is higher than what you could buy it for. The 55-60% is geared towards the tax credit amounts and therefore the more credits, the more the investor is attracted to the project.
The investor mainly benefits by the depreciation deductions.
Long Term Lease: This is the standard lease which is most common.
The general proposition is you will save immediately with no out of pocket costs spent for the system. The leasing company pays for everything. The leasing company maintains the system for the full term of the lease.
Pricing depends on many factors such as: 20 or 25 year term, starting rate, escalation rate, what extra cost there is to install the system at your house (such as electrical upgrades), your credit score, sun zone, and the cost of the equipment to be installed. Generally a higher starting rate and no escalator will be the best for you. If you want immediate larger savings, go for a low starting rate, but that will come with a higher annual rate escalator such as 3%.
We offer several lease program options. We also have an in-house program that may be more viable for you depending on your circumstances. Please contact us for more specific information about our in-house lease or to discuss various cost options.
On the Horizon
On June 27, 2013, Gov. Neil Abercrombie signed into law Act 211, which establishes a green infrastructure financing program. Named GEMS, or Green Energy Market Securitization, the innovative financing model is designed to make clean energy improvements, such as photovoltaic panels, affordable and accessible to underserved community members, including low- and moderate-income homeowners, renters and nonprofits. It addresses the financial challenges many Hawaii residents face when attempting to purchase and install energy saving devices.
For information on the GEMS program please visit http://energy.hawaii.gov/