Someone just reminded me to tell you a little bit about financing options.

Generally, the most cost effective way to go solar over the long term is going to be getting a home equity loan and buying the system. You get to take advantage of the 30% Federal tax credit and LADWP rebate. You also save the most money over time, and the up front costs consist of the second mortgage or home equity line of credit costs, perhaps a grand or less.

However, there are other financing options that may make more sense for some people, depending on their tax situation. The two most popular are Solar Leases and Solar PPAs (Power Purchase Agreements). Right now PPAs aren’t offered in LADWP territory, but I talk about them on SolarPowerRocks.com.

Leases are offered by two companies here in L.A.: Solar City and SunRun. The are advantages of a solar lease:

No home equity needed. You pay little or no money down, and you pay a set price for your solar that’s calculated to be maybe 10% less than your current electric bill. They also work in the Federal Tax credit and local rebate into the price, plus take care of the maintenance of the system. The lease payment does go up every year by a set rate (called an escalator). Could be around 3% or so. But that’s typically less than your electric bill is going to rise, so again, good for you and for solar.

So what’s not to love? Well, first of all, even if you don’t have home equity left, you need to have great credit. Second, you’re locked into this agreement for 15 to 20 years with an option to buy at the end. If you move, you can transfer the agreement to the new owners, but if they don’t want to take it over for some reason, you’re still obligated for the rest of the contract. You don’t get to take full advantage of the 30% tax credit or the LADWP rebate because you don’t technically own the panels. Solar City or SunRun does.

The down side of buying is that you need to finance a fair chunk of change, perhaps 10 to 20 grand, depending on how much solar you need. You’ll also have to wait until you file your taxes to use that 30% tax credit. (Think of a tax credit like an IRS gift card. You buy solar, and you get a gift card of 5 grand to use toward paying your taxes. But if you owe say, $3000 on April 15th, they won’t give you a tax refund of 2 grand, but you can use that left over $2,000 for next year’s tax bill.) On the other hand, your loan is usually less than your old electric bill and your solar can get paid off in around 10 years, maybe less, as in the example above. Solar lasts 25 to 30 years, so when you buy, you basically get free electricity for 10 to 15 years, except for replacing something called “the inverter” around year 15.

So should you lease or buy? I’d check out both. Quotes are free, so sign up with us and then check out the other leasing companies too. Compare all three plans and then make a decision.

Lots more easy to read, geeky solar stuff ab out this and other solar financing options on http://www.solarpowerrocks.com.

Thanks.