KEY POINTS
- Green loans will often have the best loan terms available, but come with more eligibility requirements in exchange.
- With a personal loan, you could potentially get a discount for paying the full cost of your solar installation in cash.
- While government solar loans are harder to find than in the past, there is a range of solar rebates that could make your installation more affordable.
Solar panels are an expensive investment. Fortunately, there are plenty of ways to pay for solar without breaking the bank.
A Canstar Blue survey found that from March to September 2024, the average cost of a solar system was $5,111. However, between the cost of installation and solar battery storage, you could expect to pay upwards of $10,000 in many cases. While some people can afford to pay for solar upfront, many will look to solar financing as a solution. In this article, Canstar Blue looks at some of the best ways to finance your solar panels.
On this page:
Six ways to finance your solar panels:
1. Green loans
Green loans are unsecured personal loans offered by certain institutions to customers purchasing environmentally friendly products like solar panels, batteries and hot water systems. Green loans generally have lower interest rates and fewer fees compared to personal loans.
If you can’t afford to pay cash upfront, green loans are widely considered the next best option. If there is a downside to green loans, it’s that there are usually some pretty stringent eligibility requirements. Some institutions will only finance approved solar products or only approve loans to applicants with a good credit score.
Institutions offering green loans include:
- Plenti
- HandyPay
- Bendigo Bank
- Commonwealth Bank
- Regional Australia Bank
- Community First Credit Union
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Most ideal for: Anyone with a good credit score.
You can check your credit score for free here
2. Interest-free solar loans
Interest-free solar loans often sound too good to be true, and that’s because they usually are. While they might not include interest, the supplier or installer will typically increase the quoted system price by around 15%-25% to cover their expenses. So while you’re not paying interest, interest–free loans will often result in customers paying considerably more.
Interest-free solar financers tend to have much higher approval ratings compared to average lenders. If you have poor credit, you may be ineligible for a low-cost green or personal loan and an interest-free loan could be your only option.
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Most ideal for: Interest-free solar loans should generally be avoided unless you have poor credit and can afford the higher monthly repayments.
3. Personal loans
Personal loans are a safe, middle-of-the-road option for solar financing. If you shop around, you’re likely to find a reasonable personal loan rate and some lenders may even factor in the purpose of your loan to give you a better deal. It’s also easier to receive approval for a personal loan compared to a green loan.
Unlike some green loans which require you to have sourced a solar system before the loan is paid out, personal loans are pre-approved, meaning you have the cash in hand to negotiate a better price when you buy the solar panels.
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Most ideal for: Financially savvy customers with reasonable credit scores willing to search for a good value personal loan. They could also be a great option for those dealing with solar suppliers who will negotiate for upfront payment.
To compare personal loans, visit Canstar.com.au
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4. Add solar to your mortgage
When mortgage rates are low, borrowing more against your home could be a sensible way to finance solar panels. Mortgages obviously take a long time to pay off, however, and adding more debt could leave you paying a lot more over the life of the mortgage.
Financing solar this way can be risky, so you shouldn’t do it unless you have a comfortable understanding of your finances or you’ve received independent financial advice.
| Pros | Cons |
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Most ideal for: Homeowners with sound financial knowledge and discipline to repay the mortgage as quickly as possible.
Manage your home loan with Canstar’s mortgage calculator
5. Solar leasing
Solar leasing – sometimes called ‘rent-to-own solar’ – is an agreement whereby your solar system is supplied and installed with no upfront costs. It is then paid off in fixed monthly repayments. The key difference between this and a loan is that when you lease your solar panels, you don’t actually own them until they’re fully paid off.
Solar leasing is often marketed as having low monthly repayments which are less than the savings you’d make with solar. It’s an appealing proposition, but customers should be wary of the interest rates that apply. Solar leases sometimes have comparably high interest rates which can hurt your hip-pocket long term. You should also be aware that you’ll be responsible for paying the outstanding balance of your solar panels should you move house.
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Most ideal for: Large, commercial solar systems where the savings will easily outweigh the interest over the life of the system.
6. Solar power purchase arrangements
Under a solar power purchase arrangement (solar PPA), an operator installs panels on your roof for free. In return, the operator retains ownership of the panels and you agree to buy the solar power produced from these panels at a rate less than what you’d pay from the grid.
Solar PPA’s generated a lot of excitement when they first popped up, however several critical issues with this setup have been found since then. The biggest issue is that PPAs work best when you can use or store all the solar power generated by the panels in a solar battery.
If solar power is not used immediately then it’s fed into the electricity grid in exchange for a feed-in-tariff. If you’ve paid 18c/kWh for that solar power, but receive a lower feed-in tariff, say 10c/kWh, then you’re essentially 8c/kWh out of pocket for nothing.
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Most ideal for: Large, commercial solar systems where the savings will easily outweigh the accrued interest costs over the life of the system.
Solar plans and prices
If you are on a solar plan and haven’t compared with others on the market recently, it’s a good idea to see what’s currently available. You might be able to get a higher FiT or lower rates by comparing your plan with those in the table below:
Here are some of the cheapest solar-specific deals from the retailers on our database. These costs are based on the Ausgrid network in Sydney but prices will vary depending on your circumstances. We show one product per retailer, listed in order of lowest price first. Annual price estimates assume general energy usage of 3900kWh/year for a residential customer on a single rate tariff. Price estimates exclude solar feed-in tariff credits. These are products from referral partners†. Our database may not cover all deals in your area, and please check retailer websites for up to date information.
Here are some of the cheapest solar-specific deals from the retailers on our database. These costs are based on the Citipower network in Melbourne but prices will vary depending on your circumstances. We show one product per retailer, listed in order of lowest price first. Annual price estimates assume general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Price estimates exclude solar feed-in tariff credits. These are products from referral partners†. Our database may not cover all deals in your area, and please check retailer websites for up to date information.
Here are some of the cheapest solar-specific deals from the retailers on our database. These costs are based on the Energex network in Brisbane but prices will vary depending on your circumstances. We show one product per retailer, listed in order of lowest price first. Annual price estimates assume general energy usage of 4600kWh/year for a residential customer on a single rate tariff. Price estimates exclude solar feed-in tariff credits. These are products from referral partners†. Our database may not cover all deals in your area, and please check retailer websites for up to date information.
Here are some of the cheapest solar-specific deals from the retailers on our database. These costs are based on SA Power network in Adelaide but prices will vary depending on your circumstances. We show one product per retailer, listed in order of lowest price first. Annual price estimates assume general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Price estimates exclude solar feed-in tariff credits. These are products from referral partners†. Our database may not cover all deals in your area, and please check retailer websites for up to date information.
Government solar loans
The Australian Government’s no-interest Green Loan program was closed to new applicants back in 2010. While there are still some solar rebates available, there are very few government solar loans for residential and small business customers.
As power prices begin to rise, some state governments have considered introducing their own Green Loans program. For example, the ACT government has the Sustainable Household Scheme, which includes a zero-interest $2,000 – $15,000 loan for homes looking to purchase energy-efficient products such as rooftop solar.
What’s the best way to finance solar?
The best way to finance solar will depend on your personal situation and it’s ultimately up to you to decide what’s best for your needs. Personal loans are a safe bet, but a low-interest green loan could be better if you’re eligible.
While solar can be a great investment, its savings aren’t guaranteed. If you have a poor credit score, it might not be worth risking a bad deal to get solar. For more information on solar, including Canstar Blue’s solar company satisfaction ratings, check out the link below.
Original reporting by Simon Downes
Image Source: AlyoshinE/Shutterstock.com
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