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Understanding Solar Financing – Part 2

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For the next part of our series, we will be reviewing one of the universally misunderstood elements of Solar Financing, both for the homeowner and many of the less experienced sales/design representatives. Of all the complaints online after installation, the expectation of what life and finances will be like after solar are among the highest. While Energy Offset is far too deep of a topic to jump fully into now, we can take one of the most critical elements of it in relation to the dollar and cents.  

Energy Offset – During a build, the strong majority of solar installers use some type of projection software that forecasts the amount of energy to be produced, thereby anticipating the amount of reduction that should be realized in your utility power purchase. Now, assuming that these numbers were put together by a professional that understands solar production and that this person did not intentionally manipulate the projections, a percentage number is created to help simplify the realized value of the system. For example, a 75% offset means that the system is designed to produce 75% of the power that you currently generate.

As I mentioned before, I will expand further on these numbers in a future post because there is a lot of nuance around how those numbers are accurately portrayed, the role your utility company plays in their reality, etc, but for now let’s focus on the 75%. Well, if you are producing 75% of your energy, then you are still going to be responsible for 25% out of pocket, along with other fees including meter fees and other local jurisdiction costs. In addition, due to the energy fluctuations of the seasons, that 75% wouldn’t necessarily be experienced consistently every month, but rather a higher percentage in the months with longer days and less HVAC use, and a lower percentage in months with shorter days and more HVAC use. This is why most finance companies offer some type of promotional period where your payments are deferred for 6 months to 1 year so that you can gain some insight of your costs with solar, and better prepare for the months ahead. Sometimes we hear that if we can’t deliver a 100% bill reduction, then the value of solar isn’t worth the hassle. However, the reality is that having ownership of any percentage of your power, even 50% or less of it, will more than pay for itself over the lifetime of a system. Gaining control of at least part of a home’s energy costs would have protected many homeowners from the energy inflation we have experienced these last few years, and will protect them from the continuous increases for years to come.

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