How Does Solar Financing Work?

At A.M. Sun Solar, we understand that installing solar is a big investment. But it’s worth it in the long run because it will help you save on ever-increasing energy costs. 

Once you make the decision to go solar, one of the next steps is to decide how to pay for it. You can buy a system, lease a system, or purchase the power from a system. 

A typical solar system will cost between $15,000 and $25,000. Of course, it all depends on the size of your solar system, the location, the size of your electric bill, and other factors.


Paying cash is a good move if you have money in the bank and plan to stay in your house for years to come. There’s a high return on your investment, a quick payback period, solar increases the value of your property without increasing property taxes, you own the equipment and the energy it produces, and you will likely receive a hefty federal tax credit and other possible rebates. Read more about how paying cash for solar can create big savings here.


Another popular option is to finance your solar system with a loan. They work like a home improvement loan or a car loan. Solar loans offer better savings than leases or PPAs. With a loan, your panels will be installed right away with little to no money out of pocket, you will own the panels so you can take advantage of the tax incentives, including the 30% Federal Tax Credit, and you will usually see instant savings paying less than your electricity bill. You will pay off the loan over time—for the next 20 to 25 years. Interest rates will vary. A.M. Sun Solar has a variety of loans from different sources to select from. 

ESA – Energy Service Agreement

Pay less for your power with no out of pocket expense, by choosing a ESA, which stands for Energy Service Agreement. With an ESA, you buy power produced by solar equipment owned by a third party for 25 years. You’ll still be connected to PG&E, but you’ll purchase electricity at the lower ESA rate by installing solar panels and batteries. With this program you no longer have to worry about utility price increases or blackouts. Another benefit is that the system will be warranted and maintained by that third party. So if there are any issues they will take care of it for you and they will even change out the batteries when they no longer hold as much power as they are supposed to. Also, since the other party owns the solar system, you do not have to worry about federal tax credit. 

Want to go more in depth about the differences between loans and leases? Click here.

Installing solar requires a good amount of research. But, the friendly solar experts at A.M. Sun Solar will help you make sense (and cents!) of all the financing options. We help customers every day weigh the pros and cons to make the right decision for them. Click here for a more extensive guide to financing options for going solar. 

When you’re ready to make the switch to solar or if you’re thinking about adding panels or storage, A.M. Sun Solar offers free consultations! We are no-pressure, local people with outstanding customer service. We will come out and explain all of this to you in relation to your unique needs, for free!

Our team is waiting to talk to you about the best energy solution for your needs. Fill out the form below to schedule your FREE solar consultation!

More About A.M. Sun Solar

A.M. Sun Solar is the local leader in custom solar solutions and installations on the Central Coast. For over two decades, A.M. Sun Solar has provided high quality, cost efficient solar energy to residences and small businesses in San Luis Obispo, Monterey, and Santa Barbara counties. With a wide variety of financing solutions available, affordable pricing, custom solutions and complete installations from permit to interconnection, A.M. Sun Solar is the go-to local solar company on the Central Coast.

Connect with us today at, (805) 772-6786, or fill out the form below to get a FREE on-site consultation with one of our friendly solar experts.