A rooftop solar system is an expensive up-front investment. The typical 5 kW system costs about $20,000 – or $14,000 after the 30 percent investment tax credit (which expires on Dec. 31, 2016). Solar leases and loans have made it possible for hundreds of thousands of homeowners to go solar without any initial up-front investment. Now there is a new solar financing product called PACE that makes it easy for just about any homeowner to qualify for a low interest solar loan.
PACE stands for Property Assessed Clean Energy. A PACE loan is repaid as part of a homeowner’s annual property tax assessments, and is automatically transferred to the new owner as part of the property. For example, a $20,000 rooftop system could be repaid in 15 annual tax bill payments of about $1,500. If the home were sold after ten years, the new owner would simply take over the remaining five years of principal and interest payments. Interest rates and terms on PACE loans are about the same as standard bank loans. Since the loan is secured, interest payments (and sometimes principal) are tax deductible. What’s the hitch? PACE loans are not yet available everywhere. But as they proliferate, PACE loans will become another popular way to finance rooftop solar. Read more.