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None

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Homeowner

2. May change, depending on economy and markets

2. May change, depending on economy and markets commercial properties—without a down payment. Payments will be made through a special tax on the participant's property tax bill. If the owner moves out of the house during the 20-year repayment period, the property tax assessment and the PV system remain with the property.

Energy-Efficiency Mortgages. Homeowners can take advantage of energy-efficiency mortgages (EEMs) to finance a variety of energy-efficiency measures, including solar electricity, in a new or existing home. The U.S. federal government supports these loans by insuring them through Federal Housing Authority or Veterans Affairs programs. This allows borrowers who might otherwise be denied loans to pursue energy-efficiency improvements, and it secures lenders against loan default. Rates and terms are similar to conforming first mortgages.

The federal Energy Star program has a partnership program for lenders whereby lenders who provide EEMs to borrowers may become Energy Star lender partners. Becoming a partner allows lenders to utilize the Energy Star brand to promote themselves.

Operating Lease. This method of financing, like PPAs, uses the tax incentives associated with the project to pay for the use of funds. Tax incentives include credits and depreciation expenses. Terms are typically seven to 20 years, and lease payments are matched at or below utility costs. Typically, this type of lease is not performance-based—the homeowner makes the lease payment regardless of system performance. At the end of the lease, the customer can renew the lease or purchase the equipment at fair market value.

The leader in residential PV leasing is SolarCity, which offers lease programs in locations in Oregon, California, and Arizona. They have modified the terms of their lease to guarantee that if your system isn't producing the amount of electricity it is supposed to, they will pay you the difference. They also require very little down payment and structure their lease so that your payments, combined with your net-metered balance of payment to the utility, are less than your average monthly utility bill. However, you'll need a FICO score of at least 720 to qualify. As with any form of financial contract, read the fine print before signing to ensure that you are comfortable with the lease terms, which may stipulate what happens if you sell your home, when your system needs maintenance, and what happens in the case of default.

Finding Financing That Fits

There are a number of choices available through which to finance your PV system and to realize your green dream. However, it goes without saying that, in today's volatile economy, you need to be comfortable with the payments and the terms. Read the fine print, and make sure you understand what the terms mean and how they impact your specific financial situation.

Generally, and within the context of your financial situation, evaluate financing your PV system in the following order:

1. Liquidate an underperforming asset. In many cases, beating the annual historical electricity tariff rate increase is justification enough for the investment. In California, the historical rate increase is about 7% per year. Not many secure investments can beat that rate in today's market.

2. Use a mortgage or home equity instrument. They offer low interest rates that are tax deductible.

3. If you live where there is property-tax-based financing, this is a very low-risk way to go.

4. If you are looking to minimize your monthly payments and are not interested in assuming the operational risk, then entertain a PPA or a lease.

5. If you are interested in PV ownership and do not have home equity, check out New Resource Bank, ShoreBank, or any other bank that offers financing specifically for PV systems. Also check to see if your state offers low-interest loans.

6. Unsecured loans from any source should be the last resort, since interest rates are higher and the interest usually is not tax-deductible.

access

Mo Rousso ([email protected]) engineered and installed his first solar energy project in 1975. In 2001, he founded HelioPower, a leading solar power integration firm based in California. Mo is currently CEO of Helio mU, a PV finance company, that will be rolling out its residential program in spring of 2009. He holds a master of business administration with an emphasis in finance, and a bachelor of science degree in mechanical engineering.

Power Purchase Agreements:

SunRun • www.sunrunhome.com

Helio mU • www.heliomu.com Bank Loans:

New Resource Bank • www.newresourcebank.com ShoreBank • www.shorebankcorp.com Vendor Financing:

SunPower • www.sunpowercorp.com/For-Homes/How-To-Buy/ Smart-Financing.aspx

Sharp Solar • 866-667-4916 • www.solar.sharpusa.com

Conergy • www.conergy.us/desktopdefault.aspx/tabid-2013//732_ read-5120/

Association Financing:

EGIA/GEOsmart • www.egia.com

Leases:

SolarCity • www.solarcity.com

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