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How to Walk Customers Through Solar Financing Options

Posted by AllEarth Renewables on September 29, 2015 in Dealers

solar-financing-optionsMaking solar accessible to your clients is one of the most integral aspects of your job as a solar salesperson. Given the high initial investment, many are unsure as to whether a solar-energy system would be an affordable option. In educating yourself about the various financing opportunities that exist, you're also enabling yourself to serve as a true solar advisor and help your customers make an informed decision.

Introducing your customers to the variables of solar financing options

Economics and choosing the right system

As we outlined in a previous post, studies have confirmed that solar electricity is less expensive than the grid average in some European, South American, and North American countries, including many U.S. states. But in addition to the decrease in month-to-month power bills, solar power saves your customers money over time. This is especially true when you choose the right system for a given property. In many cases, for example, choosing a pole-mounted dual-axis tracker instead of a fixed ground-mount or roof-mounted system can quickly earn back the initial investment and then some.

Financing mechanisms

Choosing the right financing mechanism can be the deciding factor in whether your customer can make the solar investment, even if he or she is totally sold on the benefits. Cash purchases clearly have the best return on investment as they do not require financing agreements with interest, but the high upfront price tag makes this option unfeasible for many customers, especially residential ones.

If purchasing a solar system upfront is not possible for your customer, they still have options. Similar to the process of purchasing a house or car, local banks and credit unions offer loan options for residential and commercial buyers. Some establishments can even integrate a solar installation into existing mortgages or commercial equity loans, as solar is a purchase that adds value. You may also consider offering your customers power purchase agreements, where you install a system on a customer's property for little cost and sell the power produced to the user at a fixed rate. Given the structure of a PPA, however, it's important to inform your customers that it provides much less of an ROI—similar to leasing a car vs. buying one.

Tax breaks

The Solar Energy Industries Association—a national trade association that represents more than 1,000 member companies that promote, manufacture, install and support the development of solar energy—states that "[t]he solar Investment Tax Credit (ITC) is one of the most important federal policy mechanisms to support the deployment of solar energy in the United States." Currently set to remain in effect through at least 2016, it is a 30-percent federal tax credit for solar systems on residential and commercial properties. It has already gone through one extension since its implementation in 2006, and it has given the entire industry the market certainty to drive competition and innovation, thus lowering costs for consumers. However, since to date the ITC has not been extended, it can be a convincing selling point to encourage your customers to invest sooner rather than later.

There are also tax breaks available at the state level for many U.S. citizens. Per the SEIA, there are currently 38 states that offer property tax exemptions for renewable energy and 29 states that offer sales tax exemptions. You can access the information for your customers' locations through the Database of State Incentives for Renewables & Efficiency.

Even if your customers think they understand all the benefits of going solar, being able to speak knowledgeably about financing options is a great way to set yourself apart as a solar advisor. Helping your customers to understand the long-term benefits beyond the immediate results of installing solar will ensure that they are more comfortable in their decision, and might even result in a quicker sale for you.

For more details on crunching the numbers, download our complimentary data sheet on solar math.

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