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Solar Financing Options

There are many ways to finance solar. There is a wide range of solar financing options available for commercial solar projects, each with their own benefits and restrictions. The following analysis shows multiple ways to finance solar for a 100kW commercial project:

solar financing options for commercial customers
Option Cost Savings Risk

Do Nothing

Costs Nothing

Save Nothing

None except wasting money

Outright Purchase

$231,000 (after incentives)

$945,000 over lifetime. No monthly fee. 100% of the savings, minus maintenance.

All risks stay on you.

Solar Lease

Small upfront cost. $4,000 Fixed monthly payment.

$370,000 over lifetime. Does not include maintenance.

All risks stay on you.

Greenzu PPA


$300,000 over lifetime. Free maintenance, no hassle.

Risks shifted to Greenzu.

Solar Lease

Today, there are multiple solar lease options for building owners and managers to consider, with the three biggest categories being finance leases and operating leases.

Finance Lease:

This lease, also called a capital lease, is much like a bank loan. The lessee will purchase the solar system from the lessor for $1 at the end of the lease term. This option allows the lessee to take advantage of the federal solar tax credit, the accelerated depreciation, and keep the state rebate.

Operating Lease:

Also known as a True Tax Lease, this option means the lessor owns the solar system (both during and after the term completion) and rents it to the lessee for a monthly payment. As such, the lessor receives all tax incentives and rebates.

Drawbacks of Solar Lease: Higher payments because you keep the tax benefits. No savings for the first 10 years. Pay all the maintenance costs. Pay the same amount even if the solar system performance drops. S

Solar Loans

Another solar finance option is the solar loan. Some banks offer 5 and 10 year installation loans. Interest rates vary between 6-10% a year. The shorter term loan means the payments will exceed savings for the first 5 years, but after that you keep all the savings. You also keep all the solar tax incentives and rebates.

Drawback of Solar Loans: Adding debt to your balance sheet. Putting up your building as collateral. Covering all maintenance costs. Making loan payments even if the solar system performance degrades.

Solar Power Purchase Agreements

A Power Purchase Agreement (PPA) is a way to finance solar for a commercial property owner, at no cost. Over the course of a 20-year contract, a third party owns and maintains the solar equipment and the building owner pays for the electricity produced by the system at a discounted rate, with the option of term extension, buy-out of solar system, or cancellation of the agreement once the agreement expires.

Want to learn more about third-party ownership? NREL explores how PPAs have transformed Southern California’s Solar PV Market.

Drawbacks of Solar PPAs: You save money immediately, but your 20 year savings are less than a solar lease because you are splitting them between you and the solar PPA company. Also only buildings with roofs in good condition qualify for a PPA.