Question 1

What is the best way to finance commercial solar?

Accepted Answer

If your business has tax appetite and capital available, cash purchase delivers the highest total return because you capture the 30% Federal ITC and full MACRS depreciation directly. If you prefer zero upfront cost while still owning the system, a solar loan lets you finance 100% of the cost while still claiming all tax benefits. Solar leases and PPAs are best for businesses without tax appetite or those who prefer zero risk and no equipment ownership.

Question 2

What is a solar Power Purchase Agreement (PPA)?

Accepted Answer

A solar PPA is a contract where a third-party developer installs and owns the solar system on your property. You agree to buy the electricity it produces at a fixed rate per kWh — typically 10-30% below your current utility rate. You pay nothing upfront, no maintenance costs, and the developer claims the tax benefits. PPAs are popular with nonprofits and businesses that don't want to manage equipment.

Question 3

How does a solar loan work for businesses?

Accepted Answer

A commercial solar loan finances 100% of the system cost (typically over 10-15 years at 6-8% APR). You own the system from day one, claim the full 30% Federal ITC and MACRS depreciation, and your monthly loan payment is usually less than your electricity savings — meaning positive cash flow from Year 1. After the loan is paid off, you keep all the savings for the remaining ~15 years of system life.

Question 4

What's the difference between a solar lease and a PPA?

Accepted Answer

Both are zero-down options where a third party owns the system. The key difference: with a lease, you pay a fixed monthly amount regardless of how much electricity the system produces. With a PPA, you pay per kWh produced (so if production is low, your bill is lower). PPAs typically offer slightly better economics, but leases offer more predictable monthly payments.

Question 5

Can I claim the 30% federal tax credit if I lease or PPA?

Accepted Answer

No. With both leases and PPAs, the third-party owner claims the ITC and depreciation benefits. They typically pass some of these savings on to you in the form of lower payments or cheaper per-kWh rates, but you cannot claim them on your taxes. This is why cash purchase or loan financing typically delivers higher total savings for businesses with tax appetite.

Question 6

How much do commercial solar loans typically cost?

Accepted Answer

Commercial solar loans typically range from 5.5%-9% APR depending on credit, term length, and loan amount. Common terms are 10, 15, or 20 years. For a $400,000 system at 6.5% APR over 15 years, monthly payments would be approximately $3,500. With $4,000-$5,000/month in electricity savings + tax benefits, businesses often see net-positive cash flow from Year 1.

Commercial Solar Financing

Side-by-Side Comparison

Cash Purchase

Solar Loan

Solar Lease

Power Purchase Agreement (PPA)

Frequently Asked Questions

See All 4 Options Side-by-Side