Solar financing is essential to installing a solar system for your home or business. While the cost of solar panels has significantly reduced in recent years, they still represent a significant investment for most people. Fortunately, several financing options are available to make solar energy accessible to more people. This blog post will explore some popular solar financing options and how they work.
Cash Purchase
The simplest way to finance a solar system is through cash purchases. This option allows you to pay for the solar system upfront, which means you own the system and all the energy it generates. While this option may require a significant upfront investment, it also offers the highest savings over the system’s life. With a cash purchase, you can avoid paying interest on loans or leases, saving you thousands of Shillings over the system’s life. In some instances, you can also apply for investment deductions against it.
Solar Loans
Solar loans are another popular financing option for solar projects. These loans work like any other loan, but the money is specifically designed to finance a solar system. Solar loans are typically unsecured and have lower interest rates than traditional personal loans. You can choose from a fixed or variable interest rate, and the loan can be repaid over time, usually between 5 and 20 years. Solar loans are a great option if you want to own your solar system but don’t have the cash to purchase it outright. At Plexus Energy Ltd, we have partnered with Equity Bank PLC for such loans. https://equitygroupholdings.com/ke/
Solar Leases
With a solar lease, you pay a fixed monthly fee to a solar company to use the solar system they install on your property. The company owns the system and is responsible for maintenance and repair. Solar leases typically have lower upfront costs, making them an attractive option for those who want to go solar without a significant financial commitment. However, since the solar company owns the system, they also reap most of the benefits of the energy produced, and you may not be able to take advantage of certain incentives and tax credits. We have partnered with Solarise Africa to offer solar leases to commercial and industrial customers with solar systems 70KW and above.
Power Purchase Agreements (PPAs)
A Power Purchase Agreement (PPA) is a contract between you and a solar company where the solar company installs and maintains the solar system on your property, and you agree to purchase the energy generated by the system at a fixed rate. PPAs are similar to solar leases, but you only pay for the energy you use rather than leasing the system. This option can save you money on energy bills, and the solar company takes care of all maintenance and repairs. However, like solar leases, you may be unable to take advantage of certain incentives and tax credits since the solar company owns the system.
Property Assessed Clean Energy (PACE) Financing
Property Assessed Clean Energy (PACE) financing is a government-backed program that allows homeowners to finance renewable energy and energy efficiency projects, such as solar installations, through their property tax bill. PACE financing offers low-interest, long-term loans secured by the property, which is repaid through property tax assessments. PACE financing is an excellent option for homeowners who may not qualify for traditional loans or want to spread their solar system’s cost over several years.
Conclusion.
Solar financing options have enabled more people to access solar energy and enjoy its benefits. Each financing option has its advantages and disadvantages, and it’s essential to carefully consider your options before making a decision. Whichever financing option you choose, remember that solar energy is a long-term investment that can help you save money on your energy bills and reduce your carbon footprint.
Talk to us at info@plexus-energy.co.ke to get more details on how we finance your solar needs.
Edward Kinyanjui
