Thinking about going solar but not sure how to pay for it? With so many financing options available, figuring out how to pay for your solar system can feel overwhelming. Should you buy your system outright? Take out a loan? Or opt for a Power Purchase Agreement (PPA)?
In this guide, we’ll walk you through the different ways to pay for solar, so you can choose the option that makes the most sense for your goals and your budget.
Have you noticed companies advertising "free solar panels" with no upfront costs? While these offers sound appealing, they typically refer to solar leases or PPAs where you don't own the system. There's nothing truly "free" about these arrangements—you're still paying for electricity, just to a solar provider instead of your utility company. While these options make solar more accessible, it's important to understand the details before signing a contract.
At Citadel Roofing & Solar, we believe in complete transparency. We'll help you understand all your options and find a solution that truly meets your needs, whether that's ownership through a loan, a cash purchase, or a well-structured PPA that fits your needs.
There are three primary ways to pay for a solar panel system: paying in cash, taking out a solar loan, or entering a Power Purchase Agreement (PPA) or lease. Here's how they each work:
Paying for your solar system upfront eliminates monthly payments and maximizes long-term savings. Homeowners who pay in cash can typically take full advantage of available tax credits, rebates (if applicable), and energy cost reductions. Since there are no financing charges, all savings go directly to the homeowner. And for many homeowners, a cash purchase is seen as a long-term investment that delivers consistent, predictable savings over time. Additionally, an owned solar system can increase a home’s market value and appeal to potential buyers.
Best for: Homeowners who have the cash available, pay income tax, and plan to stay in their home long-term.
Solar loans provide a way to install solar without large upfront costs. Homeowners pay for their system over time, similar to a mortgage or car loan. Loan payments are often structured so that they are equal to or less than a typical monthly electricity bill, meaning homeowners can start saving on energy costs immediately. Because the homeowner owns the system, they are eligible for the available tax incentives, assuming they pay income tax.
Best for: Homeowners who want to own their system but prefer to spread payments over time.
One important caveat to understand about solar loans is dealer fees. Occasionally, additional costs are added to your loan by the financing provider and aren’t always clearly disclosed by some solar companies. For example, a $20,000 solar system could become a $30,000 loan, with $10,000 going to the financier. At Citadel, we have a different approach. We've established relationships with multiple lending institutions that offer more favorable terms and lower fees than many major solar lenders. This means more of your money goes toward your actual solar system rather than financing charges.
With a PPA or lease, a third-party provider installs, owns, and maintains the solar system on your property. These options have become increasingly popular for homeowners who want to enjoy the benefits of solar energy without the responsibilities of ownership or upfront costs.
Many PPAs offer fixed pricing, similar to leases, which gives homeowners predictable monthly costs. With a lease, you pay a set amount each month to rent the equipment, while with a PPA, you pay for the electricity the system generates. Both options require no upfront investment and include maintenance and system repairs, usually for up to 25 years. One of the greatest advantages of PPAs and leases is their simplicity. There's no need to worry about system performance or maintenance issues—the provider handles everything. This "hands-off" approach makes solar accessible to more homeowners, including those who might not qualify for loans or prefer not to take on debt.
Best for: Homeowners who want reduced energy costs with a simple solution that doesn’t require high upfront costs or new debt and want someone else to handle the maintenance.
There is a solution for everyone and each option has its place depending on your financial situation, how long you plan to stay in your home, and your preferences for system ownership and maintenance responsibility. At Citadel, we’ll help you evaluate all three approaches to find the best fit for you.
Homeowners who purchase a solar system can claim a 30% federal tax credit on the total system cost. This incentive significantly reduces the out-of-pocket cost of going solar by lowering what you owe in federal taxes. If you don’t owe enough taxes this year to use the full credit, you can roll over the remaining amount to future years. In addition to the federal tax credit, there are also local incentives that you may be eligible for. The Self-Generation Incentive Program (SGIP) offers rebates for adding battery storage, helping you keep the lights on during outages. The California Property Tax Exemption ensures your property taxes won’t go up, even though solar can increase your home’s value.
If you finance your system through a loan, you can still take advantage of this tax credit, but if you opt for a lease or PPA, the credit goes to the solar provider instead.
In most cases, yes! If you own your solar system, it is a valuable investment for your home. Studies show that solar-equipped homes tend to sell for more, attracting buyers who appreciate lower energy costs. While leased systems don’t typically increase home value in the same way as owned systems, they provide an accessible and low-maintenance way to enjoy solar energy savings without upfront costs or the need for system upkeep.
Some homeowners might be holding off on investing in a solar system, hoping rates will drop. While it’s always good to explore your options, waiting could mean missing out on savings. Unfortunately, electricity rates keep rising, which means every month without solar is a month of expensive utility bills you’ll never get back. If rates do drop in the future, you can lock in low electricity rates now and refinance your loan later on. Rather than focusing on interest rates, it’s helpful to consider the bigger picture—how much you could save by switching to solar sooner rather than later.
Before deciding on a solar financing option, ask yourself these questions to help determine what might work best for your situation:
At Citadel Roofing & Solar, we know that solar financing is not one-size-fits-all. We’re here to help you understand your options and help you evaluate which approach will be the best fit for your financial situation and energy goals. Our team can analyze your energy usage, tax situation, and long-term plans and provide practical recommendations tailored to your needs. Whether a cash purchase, loan, PPA or lease makes the most sense for you, we can help you make sense of it all.