OUTDATED: Today our Own Your Power loan (2.99% over 12 years) is our preferred loan product for financing solar.

Joe Maisonave Solar Home ProjectEfficiency Maine has announced changes to their PACE and PowerSaver loans that make it much easier to use these programs to finance solar. Previously, you needed an energy audit, and a model for solar to show your loan project would help reduce your home’s energy use by a minimum of 20%.

Under the new rules, to qualify for one of these loans, your solar project must simply:

  • Be accompanied with a $600 air sealing service ($400 of which is paid by Efficiency Maine) OR
  • Be accompanied with an air source heat pump (eligible for a $500 cash rebate)

This is a big step for solar, as under the PACE/PowerSaver loan program, solar projects are nearly always ‘cash flow positive.’ Meaning – you save money on day one by switching from CMP or Bangor Hydro to solar.

How This Works

Let’s look at a 5kw solar electric array, a system which will provide enough electricity to cover the needs of most single-family homes. For straightforward rooftop projects, we can install this system for around $17,500. It’s eligible for a 26% tax credit, making the final project cost around $12,250. It will provide around $1,000 in annual electricity savings.

Now let’s look at financing that system under the PowerSaver terms.

PowerSaver offers a fixed 4.99% rate, no closing costs and no money down required. You’ll incur $200 in air sealing costs, but those should be quickly paid for in energy savings. If you can cover the $5,250 from your personal finances (the amount that will be recovered when your federal tax credit arrives), and finance $12,250 over 20 years, you will have a loan payment of around $80 a month. That’s less than the cost of paying the utility today, and significantly less than it will be in the future as electric rates rise.

Solar Loan Payment vs. Cost of Paying utility

If you want to pay off the system more quickly – say 10 years – you’ll have a loan payment of $130/mo. That’s still only $45 more than your current electric bill, and less than the cost of cable! And unlike cable, after 10 years you will own the source of your electricity, help reduce carbon pollution and be protected from future hikes in electric rates.

Cutting into Oil

The scenario above models a straight solar electric array, but what if you want to get rid of oil in addition to going solar? A great way to do this is to integrate an air source heat pump, an extremely efficient heating unit that provides 2-3 units of heat energy for each unit of electricity it consumes.

The exact performance of a heat pump will vary based on the layout of your home and usage patterns, but in this example we’ll say a heat pump will save you 300 gallons of home heating oil by consuming 3,000 kWh of electricity instead. That 300 gallons of oil is worth $1,080. If you install the same 5kw solar electric array, you will cover the needs of the new heat pump and still have 3,125 kWh in ‘plug load’ electric savings, worth roughly $500. So the heat pump and the electric together are saving you $1,580 a year. By leveraging electric heat to reduce oil use, you’re in essence making the solar array 50% more productive.

In this case, the total project budget is $22,100 which includes a $4,600 installation cost for the heat pump. The heat pump is eligible for a $500 rebate from Efficiency Maine and again you have the 26% federal solar credit. In the end, you’ll finance around $16,350. Financed over 20 years that’s around $108 a month in loan payments, or almost $300 less annually than paying for oil and electricity today. However, since oil rates increase much faster than electricity (on average 5.5% annually over the last 10 years), then the savings per month adds up dramatically over 20 years.

Solar Heat Pump Financing Economics vs. paying for oil

Solar as an Investment

While leasing products are driving the growth of solar nationally, we strongly prefer the option of homeowner financing over leasing. To us, a powerful attraction to solar energy is the opportunity for the individual household to have some control and ownership over their source of energy. Financing a system helps make solar available for those who want to make solar happen but struggle with the upfront investment, without ceding the benefits of ownership.

If you live in New Hampshire, the loan programs available are a bit different, but the numbers are even more attractive thanks to the availability of state rebate programs. NH solar projects are eligible for up to $3,750 as a state rebate, and heat pumps are eligible for $450-$900.

Contact us for more information about the financing programs available for energy efficiency projects, or if you’d like more information on your home!