Solar energy systems offer a lot of benefits to those who invest in them. For example, they power buildings with clean, renewable energy, and they have low maintenance costs compared to traditional energy systems. If you are considering a solar energy system for your business’s building or campus, there are many financing options available to you. But how can you know which solar financing option will best fit your business best? You will need to consider whether your business has the resources to own the system outright, or if you need to partner with a solar financing company to access the capital you need to build it.
Solar Panel Financing Options
The financing options you can choose from include the following:
- Cash Purchase: This is the most straightforward financing option. This option will fit your business if you have the funds and aren’t relocating in the near future. A cash purchase also has fewer requirements than a financing agreement.
- Solar Loan: You will need to have good credit to use this financing option. If you do have good credit, you can access a loan through your bank, or another reputable lender if your bank doesn’t underwrite solar projects.
- Power Purchase Agreement (PPA): This financing option is similar to a business’s or homeowner’s purchase agreement with their local utility company. With a PPA, an investor owns and maintains the solar system. Then, the solar consumer, or offtaker, pays the investor to use the system. At Verogy, we offer our customers PPAs where we build the solar project on your property. Once we finish building the project, we own the equipment and the tax credits on it. The value of the tax credits and equipment lowers your monthly payments. Solar power purchase agreements are popular financing options because the risk stays with the investor.
- Solar Lease: A solar lease is similar to a PPA, but it offers you flat, fixed monthly payments. When we offer our customers a solar lease, we build the system and allow you to rent it for that flat, regular payment. The lease covers a specific period of time, and when that period is over, you can renew the lease or purchase the system from us. This option allows you to access the system and eventually buy it without using upfront capital to do so.
When you consider these options, you should think about your own financial resources. Do you have enough cash to purchase a solar system outright? Do you have good enough credit to access a loan? Your business’s financial position will help you determine which option is right for you.
Choosing the Right Financing Partner
You can also choose to partner with a solar financier to access capital for your project. If you decide to work with a financier as you develop your solar project, make sure you work with an established one. If you partner with an inexperienced financier, they may not be able to complete your project. When you begin seeking a financing partner, you could receive multiple offers from commercial solar financing companies. Once you receive these offers, you’ll need to distinguish between the inexperienced investors and the experienced ones. Here are some topics you can inquire about to separate the pros from the amateurs:
Where Does Their Capital Come From?
Do your research and find out how long this financier has been around. Then, if you decide to continue the conversation, ask them about who supplies their capital. A more established financing company can give you a detailed answer to this question. They should be able to explain how they will finance each stage of the project.
How Many Previous Solar Projects Have They Developed and Financed?
This question is an important determining factor when you select a financier. An established financing company can provide proof of dozens or even hundreds of solar panel systems that they’ve financed. An inexperienced financing company will sidestep this question and show you all of the projects that they have in their pipeline. When they show you a pipeline, they’re showing you projects that they have signed on, but might not be able to complete because they lack the capital to do so.
Solar Financing Options Your Business Can Use
Verogy offers both commercial and residential solar financing options that give our customers access to solar energy at affordable rates. We can help you identify which option will fit your business best, so contact us if you are interested in finding out which one will work for you.