As one of the most potentially lucrative financial incentives yet offered in the solar industry, it sounds tough to beat — loans from a power company that can pay for a whopping 40 percent to 60 percent of the cost of the installation of a solar panel. What makes these loans even more attractive is that the electricity the panels produce can be used to pay them off.
Public Service Gas & Electric (PSE&G) recently got approval from the New Jersey Board of Public Utilities to provide approximately $105 million toward the financing of solar installations in New Jersey over the next two years through its Solar Loan program. PSE&G wants to generate 30 megawatts of power through the pilot program. One megawatt is enough to power about 800 homes.
PSE&G would provide loans to developers or customers to cover approximately 40 percent to 60 percent of the cost of a solar installation project, depending on the projected output of the solar energy system and the cost of the system. The borrower would repay the principal, plus interest, over 10 years for residential customers and over 15 years for all other borrowers, a considerably longer investment timeframe than traditional lenders are willing to provide for solar installations. The remaining project cost would be funded by the owner of the solar installation.
Owners of solar energy systems can repay loans with Solar Renewable Energy Certificates (SRECs), which are created every time the system generates solar electricity. It takes one megawatt-hour of solar generation to create one SREC, which is a tradable commodity in the marketplace. Owners may also be eligible for a federal investment tax credit.
For more information on PSE&G’s Solar Loan program, check out www.pseg.com/solarloan.