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Solar energy has been a hot topic of debate all across the US, particularly in the states which receive plenty of sunlight. With the growing awareness about environment friendliness and reducing the carbon footprint, people are being attracted towards the renewable and clean solar energy. Moreover, energy form the Sun besides being environment friendly also cuts down the electricity bills. But, the initial cost of installing solar panels in residential properties is usually very high and this is the prime cause why many people choose to stay away from it. To promote solar energy and increase the energy reliance of the nation, the Government is offering monetary benefits to the people in form of federal investment tax credits, which can at times cover around 30% of the installation costs. In California, government is offering several other leasing options for promoting people in cities like Las Angeles and San Diego to install solar power systems. Some such financing options are as follow:- Lease financing: The greatest advantage of lease financing is that you don't have to make any initial investment, but the finance company buys the solar power system installed on your premises and leases it back to you. This is much like automobile leases and lasts up to 5 to 12 years, with an option to buy the system all together, at a fair price. Such prices can cost up to 10% to 20% of total installation costs. The finance company in the meantime secures any tax incentive or benefits from the Government. Capital solar lease financing: If you operate a profitable business that generates taxable income, you may opt for such leases. This will allow you to realize your dream of constructing solar power project without investing a large capital, but instead through long structured capital leases. The duration of such type of lease is usually 5 to 10 years and is similar to home mortgage. The financing company secures all the tax benefits, and you can buy the system at the end of lease. Municipal lease financing: It is most suitable for Government or non-profit organizations who want to avail the benefits of solar energy. The duration of such leases is usually 10 to 25 years and has the lowest interest rates. Moreover, similar to other leases, you are also free to buy the solar power system at the end of the lease period. Power Purchase Agreement: In such an agreement the financing company sells you the solar energy from the solar power system installed at your residence, on a contracted basis. The duration of such PPAs can vary from 20 to 25 years. Here, also you have the option of buying the system on the expiry of your lease.
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