What are the Available Solar Panel Financing Options in Los Angeles?
By now, you’re probably thinking of installing solar panels in your Los Angeles home or business but still wondering how to finance this solar energy installation. Well, there are multiple financing options and rebates that solar customers in LA can look into. They include:
If you can pay outright for your solar panels Los Angeles, you stand the chance of yielding the highest financial returns. This may seem expensive but it gives you the chance of taking advantage of all the investment tax credits from the federal government.
Going through commercial lenders to finance your solar energy system is another great way of taking advantage of the Californian sun. If you have a good credit score, you can look for a suitable home equity loan to finance your solar energy system. While many solar contractors in Los Angeles have partnerships with existing lenders, it’s always advisable to look for a lender that suits your needs.
In most cases, you can fully pay these loans in 12 to 15 years and still get to enjoy clean and free solar energy for the next two or three decades. And because you still own the solar panels and system, you’ll also be eligible for tax credits and other available incentives.
Leasing a solar system means that you can still enjoy the benefits of having a solar system without necessarily worrying about capital costs. In other words, you only rent the solar system from the solar company and pay monthly rates, which are still lower than traditional utility bills.
If you’re tired of rising utility bills in Los Angeles and cannot afford to purchase solar panels or secure loans for the same, leasing a solar system can be a great option. Unfortunately, you won’t enjoy the benefits of tax credits, performance payments or long-term financial benefits of owning a solar system. You can consider leasing a solar system if you’re planning to use the property for less than five years.
Power Purchase Agreements (PPA)
Under this arrangement, the solar system is owned and maintained by a third party who sells the kilowatt-hours to you or the customer. So if you opt for PPA, it means that you do not have to rent the solar system. Instead, you only pay for the energy that you use. PPAs can be perfect if you have a low income but still want to enjoy the benefits of a solar system.
Property Assessed Clean Energy (PACE)
If you want solar panels Los Angeles, you can also have the option to finance your solar system through Los Angeles local governments. Well, some local governments in LA have created property tax finance districts that can issue loans for clean and renewable energy such as solar panel systems.
PACE essentially allows local governments to offer affordable 20-year loan options to eligible property owners in Los Angeles. In most cases, the loan is permanently fixed on the property and can be passed to subsequent buyers of the property.
California Solar Incentives
Given that solar rebates have been extensively exhausted and are currently unavailable for Californians, you can still take advantage of other solar incentives such as property tax exemptions and federal tax credit.
Property Tax Exemptions
Although the state of California doesn’t offer sales tax exemptions for solar panels, you can still take advantage of 100% property tax exemption on solar panel installations. In normal cases, installing solar panels on your home increases the value of your property, which, in turn, increases the property tax. Fortunately, you’ll be exempted from this tax increase and your solar energy system won’t be subjected to any property tax until after 2024.
Federal Tax Credits
Although the state of California doesn’t offer solar tax credits, you can take advantage of the federal tax credit if you buy the solar panels with cash or finance it with a loan. Generally, the federal tax credit covers 30% of the total solar panel installation costs.
Performance-Based Incentive (PBI)
Under this incentive, homeowners get paid based on the actual kWh that they produce over five years. To enjoy PBI in Los Angeles, it’s important to take advantage of net metering (explained below) since it doesn’t have any limitations.
Solar Policy Information
Here are some policies that you need to know if you’re going to enjoy solar panels in Los Angeles.
Net metering is essentially putting the extra energy that you do not need back into the grid so that it can be used by others who need it but of course through a utility company. The credit is given to you based on the utility grid that your solar panels generate. According to Net Energy Metering (NEM) 2.0, which is currently under use in LA and the rest of the state, homeowners get their solar systems connected to the grid at a cost ranging from $75 to $150 so that they can earn credit.
The kWh used is netted on a monthly or annual basis. You won’t be required to pay or receive anything extra if the amount of energy produced from your panels equals the energy that you’ve used in your home. If you, however, produce excess energy, the utility company will pay you for the extra energy at a cost ranging from $0.03 to $0.04 per kWh.
Renewable Portfolio Standard (RPS)
According to the energy policies in place, California requires that 100% of electricity in the state must come from renewable energy by 2045. You’re, therefore, moving in the right direction if you’re looking to install solar panels, Los Angeles.