Solar panels are a good investment for most commercial and industrial businesses. But the way you finance your solar panels is key. With the right financing plan, you can avoid unnecessary costs and make money off your investment in commercial solar.
We Find the Best Offer for Your Project
Most solar companies offer financing, but they’re usually blanket options with little customization. NJ Solar Power finds the best option for you. We’ll solicit multiple offers from our trusted financial partners and negotiate the best deal on your behalf. Our team doesn’t settle and will fight for a fair deal that makes sense for your project.
Commercial Solar Financing Options
The most common ways to finance a commercial or industrial solar project are with cash, a loan, or a power purchase agreement (PPA). They all have their pros and cons, and we don’t push one as the best option for all commercial solar installations. It depends on the specifics of your project, budget, and goals.
Cash Purchase
Paying cash is fairly straightforward, so we won’t spend too much time talking about it. It’s not feasible for every business, but if you can afford a cash payment, you should consider it. You’ll own your system outright, which means you can benefit from tax incentives, and you won’t have to deal with interest or fees.
Loan
Solar loans are fairly standard and a good path toward solar ownership for many businesses, depending on the type of loan and terms you qualify for. The primary benefit is that you own your system, which means the tax benefits go to you, without having to pay for the entire installation upfront.
There are several loan options available. If your business has good credit and you can get a low interest rate, an unsecured loan might be the best choice. If not, you may want to consider a secured loan, which can help you get a better rate, if you’re willing to use your assets as collateral. We will lay out all your options and help you decide which will yield the highest financial return and the lowest risk.
Power Purchase Agreement
Power Purchase Agreements are one of the most popular financing options for commercial and industrial solar installations. Under the terms of a PPA, you do not pay for your solar installation but agree to buy the electricity it produces from the system’s owner at an agreed-upon rate over a set number of years. The rate is, ideally, lower than what you currently pay the utility company, resulting in savings.
PPAs are popular because they allow you to go solar without a large investment. They can also be easier to manage because the system’s owner is responsible for maintaining the system, taking that burden off your plate. The downside is that you don’t own the system and therefore won’t benefit from the tax incentives it qualifies for—the system’s owner will claim those. PPAs are also usually structured with an escalator, which means your payments will likely increase over time. They can be hugely beneficial and result in a strong financial return, but it’s important to weigh your options carefully before signing a PPA.
For a long time, PPAs were the best option for non-profits and other tax-exempt entities because they couldn’t take advantage of tax incentives anyway and a PPA made solar financially feasible. But recent adjustments to the federal solar tax credit have changed things. Certain tax-exempt entities can now claim a 30% direct payment in place of the 30% solar tax credit, making solar ownership a more viable option.
Get Personalized Financing Recommendations for Your Project
NJ Solar Power has over 20 years of experience installing solar energy systems in New Jersey. We have long-term relationships with top financial institutions and will help you secure the best financing to maximize your return on investment. But financing is personal and the best fit is different for every project. We provide the information you need to make the best decision for your business.