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  • Northeast Wisconsin
  • March 2018
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Financing a solar electric system

The value of a solar electric system is in the eye of the buyer. Some buyers are most interested in the environmental benefits of solar. Others place the highest value on the energy security of solar. Certainly, both of these bring value to the solar electric system owner. But in many cases, the homeowner will place the financial benefits at a par, or above the former. As with other purchases, a cash purchase will perform better financially than a transaction that is financed. However, there can be a lot to be said for smart financing. It all depends on your financial situation and your values.

In the solar financing market, there are more creative opportunities for commercial installations. Here are just a couple examples.


Property Assessed Clean Energy (PACE)

PACE is an innovative program that enables commercial property owners to obtain low-cost, long-term loans for energy efficiency, renewable (solar) energy and water conservation improvements. Projects financed using PACE can generate positive cash flow upon completion with no up-front, out-of-pocket cost to property owners. The term of a PACE Financing for solar may extend up to 30 years.

PACE Financing allows the commercial property owner to take advantage of the 30 percent Federal Investment Tax Credit (ITC), Accelerated Depreciation (MACRS), as well as any available Focus on Energy grants.

As of 2/1/18, there are 27 Wisconsin Counties that have approved PACE Financing, including Outagamie, Winnebago, Brown, Waupaca and Portage. For more information, go to

Tax equity financing

For businesses that are unable to realize the 30 percent ITC or MACRS (such as tax-exempt organizations, nonprofit organizations or businesses that have little or unpredictable tax liability) there is another financing tool that brings much of that value back to the organization. It is frequently referred to as tax equity financing. Here in Wisconsin, Legacy Solar Cooperative of Madison is one of several organizations that works with tax equity financing.

A typical model is comprised of “special purpose LLC,” which is made up of a tax sponsor, a system host and a financier. The tax sponsor is a person or organization with ample tax liability to be able to take advantage of all the tax benefits of the solar project and puts up 40 percent of the project cost. The host is the owner of the facility that the solar system is connected to and realizes the value of the solar generated electricity. The 60 percent balance is financed and repaid over a six-year period. See for more.


It seems like everyone knows that in California, leasing solar electric systems is very popular. However, in Wisconsin, the leasing of solar is technically not allowed under current regulatory statute.

So in Wisconsin, home equity lines of credit (HELOC) have been the best way to finance solar systems on homes. There are other “un-secured” financing options, but for those with available home equity, this is the most popular way to finance. Here is the financial performance on a HELOC for a $15,000 solar electric system, assuming:

  • Solar generated energy: de-rated by .5 percent/year
  • WeEnergies electric rate: 13.11¢/kWh, includes a 3 percent annual escalation
  • 10-year HELOC is at 6.09 percent
  • Focus On Energy Incentive: 12 percent installed cost, $2,000 cap
  • Federal 30 percent tax credit: 30 percent Installed cost less Focus Incentive


    Solar Generated Energy (kWh)

    WeEnergies Electric Rate ($/kWh)

    Annual Solar Energy Value

    10-year HELOC annual payment

    Focus on Energy Incentive

    30 percent Federal Tax Credit

    Cumulative Cash Flow

















































































Over the 120-month loan, this investment costs $3,218 or $26.82/month. Would you pay an additional $26.82/month for a solar electric system?

While cash is king, financing solar can be a wise path to a cleaner and more secure energy future. Yes, solar can be a wise investment, even when you borrow capital.

Rob Peck

Rob Peck is a Solar Design Consultant and a Member-Owner with North Wind Renewable Energy Cooperative of Stevens Point. For the past eight years, Rob has worked with families and businesses to design solar electric systems that make sense for their budget and their energy goals. Rob can be reached at 715-630-1232 or [email protected]



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