Financing Solar Panels

Paying for panels without the sticker shock

Solar panels provide renewable electricity that emits no climate-change-causing emissions. This is reason enough for people of faith to consider installing solar, but of course there are financial realities that houses of worship (HOW) face. The good news is that the cost of solar photovoltaic systems (the panels that produce electricity) has dropped 60% in the past 10 years, making it quite common that the $60,000 - $80,000 cost of a system for a typical house of worship will pay for itself in 8 years or less. In the past, financing options have been the most popular, but direct purchase has become more feasible due to the “direct pay” provision of the Inflation Reduction Act enacted in August 2022. This EES Brief compares these options based on the example HOW and system described.

Baseline: Buying electricity from the utility will cost $200,000 or more

Since 2022 and the start of the Ukraine war, energy prices have spiked and remain quite volatile. Perhaps the war will end and prices will moderate, but this volatility is another reason to consider solar panels, since the “fuel” for solar panels (sunshine!) is free and the price doesn’t change. If the example HOW continues buying electricity from its utility over the next 20 years, depending on assumptions about the future price of electricity, it can expect to spend from $200,000 (if prices moderate and annual rate increases are modest) to $320,000 (if current prices remain and rate increases continue at the average annual rate of 5.7% seen since 2014). Since solar panels will last at least 20 years, anyone considering installing them should compare the economics of solar to this business-as-usual case.

There are three financial benefits to consider in evaluating the financial aspect of solar panels.