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  • Financing Solar

    Financing a Home Solar System - More Details for the Curious

    A number of excellent reports on financing solar are now available and are listed here.  The RUCO Consumer Guide to Rooftop Solar Photovoltaic is specific to Arizona, and the others have financing options available in Tucson and throughout Arizona that are similar to those in other states.  Power Purchase Agreements are NOT available in Arizona although they are widely used in Arizona commercial and governmental projects and are sometimes called Solar Service Agreements.  So for most residential solar consumers, the choices are buy, loan or lease.

    The 2015 Arizona Legislature passed SB 1465, which has a long list of disclosures that must now be made in any solar lease or purchase document and requires that solar customers be given a five day right to rescind any solar contract.  This new law should limit or eliminate unscrupulous solar vendors who still appear to exist in Arizona, despite some recent prosecutions of the most outrageous solar profiteers.

    Be sure to get several quotes and references and verify the validity of the contractor licenses of any solar installer you deal with.  Likewise, be sure to research the background of any solar financing entity you are referred to or deal with to ensure they are legitimate and will be around to assist you if any problems arise.

    Here is an annotated list of reports on financing solar, in order of usefulness to Arizona consumers:
    1. A Homeowners Guide to Solar Financing:  Leases, Loans, and PPA's, published by the Clean Energy States Alliance (CESA).  This guide covers all forms of financing solar projects.  It includes a checklist of the most important items, but it does not fully cover negatives of lease escalation clauses or potential issues with sales of homes with solar leases.
    2. Solar Power for Your Home:  A Consumer's Guide, by LSU Ag Center.  If you want additional details, this is your guide.  It includes a 60 question checklist for all potential solar buyers/lessees, a full section comparing buying versus leasing and a focus on "predicted savings," often the key to anticipated return on investment.
    3. Homeowner's Guide to Leasing a Solar Electric System by the National Renewable Energy Laboratory (NREL).  It is a short but helpful guide to leases with terms defined. 
    4. RUCO Consumer Guide to Rooftop Solar Photovoltaic.   It is an Arizona-specific guide to solar including financing, such as lease related considerations and picking the right installer.

    Price Premiums on U.S. Homes with Solar

    2015 study led by the U.S. Department of Energy's Lawrence Berkeley Lab, in partnership with Sandia National Laboratories found that home buyers consistently have been willing to pay more for homes with host-owned solar photovoltaic (PV) energy systems.  The price premium equals approximately $15,000 for a typical PV system.

    Property Taxes on Leased Solar

    In 2013, the Arizona Department of Revenue proposed to tax all leased solar panels. Solar leasing companies filed suit. In a 2015,  Superior Court decision found that the DOR policy was illegal but individual counties could choose to tax these leased panels. Presumably, any such taxes would be passed through to the homeowners with the leased panels. Such a charge would likely greatly reduce any savings from the panels, since the tax is estimated to be approximately $150 per year for the average solar installation.

    Financing a Commercial Solar System

    Much like the residential solar market, financing solar projects in the business world can take any one of several pats.  These are primarily buying outright with cash, financing with a loan, signing a lease, or entering into a PPA/SSA (Power Purchase Agreement/Solar Services Agreement).  Arranging for solar financing is now not much different than purchasing or leasing other business equipment, with many financial institutions available for such projects, including banks and credit unions.

    Solar installers and their suppliers are frequently the most likely source for financing commercial solar.

    There are some new developments in solar finance especially for non-profits, including crowdfunding, which became somewhat easier with new regulations pursuant to JOBS Act of 2012. 

    In many states, PACE (Property Assessed Clean Energy) allows solar (and other projects like energy efficiency or water savings) to be financed and repaid along with taxes.  Arizona may in the future pass such legislation to allow businesses to finance solar through an addition to property taxes, but such legislation has been stalled or defeated for the last few years.  State legislation is necessary to allow cities or counties to begin a PACE program.

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