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Understanding Your Solar Panels Cost vs Benefit

lady computing solar san diego cost vs benefit

“How much can solar save me?” That is one of the first and most common questions we get asked by consumers as they delve into the fascinating (and rewarding) world of solar energy and solar financing. Here’s the good news: the majority of homeowners find that, regardless of how they pay for their system, they can reduce their electric bill and remove their dependency on their utility company by installing solar panels on their property.

Solar panels cost factors

So just how much money can solar save you? The cost of installing solar panels depends on a number of factors. Generally, these include your monthly energy usage, the size of the system you install, and how you plan on paying for it—cash purchase, leasing or financing. (By the way,  Baker Electric Home Energy offers all of these options—and we never pressure or try to influence which option you go with.)

While other factors may come into play when determining your monthly energy savings with a residential solar system, Baker can give you a basic idea of how much money solar can potentially save you. Generally, we tell prospective solar customers that if their electric bill is anywhere at or above $100 per month, chances are we can save them money with a solar installation.

Now let’s look at the various solar panel financing options one by one:

Cash purchase

Pros: lowest cost per kilowatt hour; potential tax deductibility  
Cons: highest upfront costs

With a cash purchase, you buy and own the system, along with all the energy it produces. A cash purchase requires the highest upfront costs of all the options, but will generally pay for itself in five years, and provides you with the lowest cost per kilowatt hour.

A cash purchase also makes you the full beneficiary of any solar tax credits, state and local solar incentives, along with product warranties on the system which generally span 20+ years.


Pros: same as a cash purchase  
Cons: small interest rate on the loan

Many consumers find that financing their solar system makes the best sense because it offers many of the same benefits of a cash purchase, but without the upfront costs.

When you pay for the cost of installing solar panels through a loan from your solar provider, you own the system just as you would with a cash purchase. You also get to take full advantage of any solar tax credits along with state and local solar incentives.

Loans can span anywhere from 5 to 20 years; you can generally pay off your loan at any time without penalty.

You may find that a home equity loan is the best way to pay for the cost of solar panels, and that loan may be tax-deductible. The PACE Program (Property Assessed Clean Energy) financing is a voluntary program in which a homeowner receives financing from the local government to cover the up-front cost of going solar, and in exchange, repays the up-front cost through a special assessment on their property tax over a period of years or decades. The financing is secured with a lien on the property.


Pros:  zero upfront costs  
Cons: you forego any solar tax credits along with state and local incentives

Leasing is an attractive way for homeowners to pay for the cost of solar panels because it requires no money up front. With a leasing option, you don’t own your solar system, but basically pay a monthly “rent” on it to your solar provider. System performance is typically guaranteed for the life of the system, and your solar provider is obligated to incur the time and cost of maintaining it.

Should you decide to move, many lease agreements allow you to reassign the lease to the new homeowner.

Financial incentives, tax credits, and utility rebates

As you consider the three main types of solar financing options, keep in mind that there are many financial incentives, tax credits and utility rebates available depending on where you live. Typically, you can only make use of these incentives if you purchase or take out a loan for your solar system.

The NC Clean Energy Technology Center provides a Database of State Incentives for Renewables & Efficiency® that lets you quickly and easily determine the incentives available in your part of the country.

Baker can help with solar financing options

Solar panel financing might seem daunting at first. But each option is designed to address the specific needs of individual homeowners. Each has its pros and cons; yet they all offer a way to reduce your electric bill, help the environment by using renewable energy, and gain long-­term energy independence.

Whether you lease a residential solar system with either a prepaid or monthly payment option, get financing to purchase it, or pay cash to buy it outright, Baker Electric Home Energy can match you with the option that best fits your needs and your goals.

Don’t hesitate to call one of our expert consultants at (760) 546-­6091 if you have additional questions. Or visit BakerHomeEnergy.com/residential/request-pricing.

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