In an Effort to Make Sense of the Residential Solar PV Financing Puzzle, Ambassador Energy Launches an Educational Campaign for Homeowners

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Just a few years ago, solar financing was an easy discussion, with choices limited to paying cash or borrowing from traditional lending institutions. Today, homeowners may choose from a variety of options, including, Power Purchase Agreements, solar leases, solar loans, and the government-sponsored program called PACE.

Kelly Smith, President of Ambassador Energy at a residential ground-mounted solar system

we are committed to educating the public, providing accurate data and letting homeowners decide for themselves how to buy their solar

“In general, choices are a very good thing,” said Kelly Smith, president of Ambassador Energy in Murrieta, CA. “However, in today’s solar arena, multiple choices are really confusing the public. My concern is that customers are not being presented the full menu and are falling prey to some solar companies’ one-size-fits-all approach. For these reasons, Ambassador Energy is launching an educational campaign this summer to help homeowners make sense of the growing number of ways they can pay for solar for their homes.”

So, what are the finance options which are currently available?

The most elusive is the Power Purchase Agreement or PPA. In this scenario, homeowners simply negotiate a price for which they will buy their power from a third-party finance company, which installs and owns the solar system. The idea is that the homeowner will pay the third party less than what he/she would pay the electric company. The homeowner must qualify for the program, based on credit score.
PROs: Typically no money is needed upfront. Homeowner saves money.
CONs: Homeowner never owns the solar system. Monthly costs are variable. “True up” penalties may exist. The term is typically a 20-year contract. Transfer of the property may be clouded. Homeowner cannot capitalize on the 30% federal tax credit.

Leases are similar, in that a third party owns the system. In this case, like leasing a car, a payment schedule is arranged, based on the cost of the system. In many cases, there is a buy-out opportunity before the term is completed, so ownership may be possible.
PROs: Zero money down is typical. Homeowner saves money.
CONs: Transfer of the property may be clouded, as the home buyer must qualify, based on credit score, to take over the lease. Homeowner forfeits the 30% federal tax credit.

Solar loans are more easily understood, as they are just like borrowing money to buy a car or home. The homeowner must qualify, based on credit score and other variables, and a payment schedule is arranged. Down payment and terms may vary.
PROs: Homeowner saves money and owns the system. Homeowner capitalizes on the 30% federal tax credit.
CONs: In order to save on monthly expenses, a down payment may be necessary.

Property Assessed Clean Energy (PACE) is a government-sponsored program, offering homeowners the opportunity to purchase solar with no money out of pocket and no credit score requirements. Homeowners need 10% equity in their properties to qualify and are billed on their property tax invoice twice per year. In California, the PACE program is called HERO.
PROs: Zero down-payment is available. Interest on payments is tax deductible. No credit score qualifier. The financing typically transfers to the new owner if home is sold. Homeowner gets the 30% federal tax credit.
CONs: Homeowner must budget for the increase on property tax bill. Pre-tax, the cost of money is relatively high.

“So, as you can see, there are some fantastic, but confusing choices out there,” Smith continued. “For this reason, we are committed to educating the public, providing accurate data and letting homeowners decide for themselves how to buy their solar.”

Multiple finance options exist for commercial entities, as well.

About Ambassador Energy
Ambassador Energy [AE] has a three-pronged business model, which includes Ambassador Energy College Solar Training, the Ambassador Energy Agency Program and the installation arm, Ambassador Energy EPC. On staff are NABCEP Certified PV Installers, NABCEP Certified PV Technical Sales professionals [Fulgham/Kelso] and multiple NABCEP EL graduates. AE holds California licenses General Contractor B, C10 Electrician and C46 Renewable Energy. Ambassador Energy College is IREC/ISPQ accredited. AE Agencies are nationwide. Ambassador Energy EPC installs PV systems throughout California and the US.

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