Against my better judgment, I gave the solar sales guy at Home Depot my contact info. I’m glad I did, because it eventually led to me finding a deal from another company that will cut my electric bill in half.

I can’t claim victory because I haven’t signed the deal, let alone seen the end result, but I want to share what I have learned because the window of opportunity may be closing.

Here we go again

Last time I looked into solar, high interest rates made financing too expensive, and most of the projected savings were lost. Then, Trump’s tax bill killed the incredibly helpful 25D credit, which was effectively 30% cash back on a solar panel system.

Yet, it looks like the dream is still alive, and that is because of how much grid electricity prices have spiked and because—for now—there is still a way to get a 30% discount. If you contract with a solar business to install panels they own on your house and either rent them to your or sell the electricity to you, that business is eligible for a 30% 48E credit on the price of the system. This is called third-party ownership (TPO). Many TPOs keep the savings for themselves. The best ones pass on as much as possible to their customers.

Unfortunately, the 48E is set to expire at the end of 2026, and qualifying projects must start construction before July 4, 202.

Home Depot guy…not the best

Predictably, the deal that came through Home Depot sales guy was less than ideal. It would save us some money, for sure, but it turns out, I could do much better.

Before meeting with that first sales rep, I told Claude the scenario and asked for a prep doc in research mode. This was really helpful to come in with some prior knowledge and the right questions to ask. In the meeting, I let the guy do most of the talking. I asked clarifying questions and took notes.

Afterwards, I sent me the full proposal. I put that and all my notes from the sales meeting into Claude and asked for an analysis.

Claude told me that the deal would save money, but it also raised a bunch of flags and told me I should shop around. The analysis was extremely helpful, and for the first of many times, I realized I would need to adjust my understanding and assumptions.

As I started shopping around, things started to get unwieldy in Claude and I started loading all my notes into Notion and relying more on the Notion agent to do the analysis. The two systems have been extremely helpful for navigating this process.

What I have learned

Rather than explain the rest of the story and how many hours I spent hours on phone calls navigating the solar landscape and financing options, I want to skip to the nuts and bolts of the situation.

How to think about the opportunity

Let’s start with a naive analysis, taking into account the cost of a solar project and the incentives available.

• At current rates, our electric bill is averaged $384/mo for the past year and we consumed 17,500kWh.
• Based on where we can put panels on our house, we need a 19.3kW system to match our usage.
• I’m seeing pricing of about $2.34/W to $2.50/W solar project that covers my family’s annual energy consumption costs. The quotes are generally around $46,000, installed.
• It is more complicated to get a 30% discount on the price of solar panels, but let’s factor it in.
• New Jersey also gives SREC credits to the owner of solar projects, which can be sold. For my house, this would be worth about $20000
• Napkin math: if the federal discount and SRECs are accounted for, the effective cost of solar is $46,000 – 30% off = $32,200 – $20,000 = $12,200. That is to cover our current electrical needs for about 25 years. If I could spread that out over a monthly payment with no interest, that would be like a $41/mo electric bill.

Now let’s throw in financing:

• In reality, financing isn’t free. I can borrow the money to cover the purchase price of $32,200, and rates for are about 8.5% APR for me (variable rate). That loan would have a $259.28 monthly payment, if paid over 25 years. The total amount of interest paid is $45,584.94, which is more than the system! That’s “cost of capital” for you.
• If I spread the SREC revenue over 25 years, that would be like a $66/mo rebate. So the net financed cost of solar with the federal tax credit, SREC revenue, and loan payment would be expected to be around $193/mo.

So, $193/mo is the target for what a good deal should look like, assuming the price per watt for installation.

Options for ownership and financing

There are 3 basic ways to “do solar”:

• Own my own panels — I have to pay for them, but all the electricity is mine.
• Lease the panels — I pay rent to a solar company, who owns the panels. The rent is fixed and independent of the power produced.
• Buy the electricity (power purchasing agreement or PPA) — I buy the electricity the panels produce from the solar company that owns the panels. I pay a rate per kWh, but I am contracted to .

The 2nd and 3rd option are third-party ownership (TPO) arrangements, and they qualify for a 30% tax credit to the business under 48E. For TPO arrangements, there are financing schemes that allow me to pay a lump sum upfront, instead of paying on a monthly basis. Generally, this prepaid option is designed so that I would take over ownership of the panels after year 6. This is because the 48E tax credit requires them to own the panels for 5 years. These prepaid options are a workaround to imitate what was possible with 25D, where a homeowner could directly get the 30% discount.

If I go with ownership or prepaid lease/PPA, I can use a loan to finance the upfront cost. The solar companies partner with banks to offer these loans, or I can get my own financing through a HELOC or home equity loan. This is the situation modeled out above.

Obviously, this is all very complicated. It is in these TPO and financing arrangements where the salespeople can capture a lot of the savings for solar from themselves, instead of passing it on to me. Many PPAs build inflation into their rates (known as an “escalator”), which eats away at savings in the long term. PPA’s have a bad reputation, for this reason.

The verdict is…

Much to my surprise, it looks like my preferred option is a straight-up PPA from a company called Exact Solar. This is surprising to me because PPAs are often thought of as the black sheep of solar. The $0 upfront cost makes them easy to sell to unsophisticated homeowners, so there are many dealers who sell PPAs that siphon off all the savings to middlemen.

They are offering to sell me electricity at $0.12/kWh for 25 years, with no inflation/escalator. The simplicity of this deal is very appealing:

• No financing required, because there is no upfront cost.
• No need to deal with selling SRECs, because the TPO keeps them, and their revenue from this is built in to their pricing.
• Low risk of underproduction, as the TPO reimburses me if production is below 90% of their projections.
• No worries about maintenance and insurance, as this is on the TPO.
• Don’t need to buy out the system on year 6, and no need to worry about the uncertainty around the buyout price, because this deal is designed to last 25 years.
• I’m not exposed to interest rates going up.
• My home equity remains untapped.

Every PPA generally has these benefits, but this offer is rare in that it offers pricing that stable and attractive.

The alternative

Based on my analysis of other offers I have looked into, I may be able to improve my net cost by about 10% over the previous scenario, but that comes with a bunch of “ifs”. In the best-case scenario, if our home appraised for a high amount, we could get a HELOC at a 7.2% variable rate and use it to pay the upfront cost of a prepaid lease. Our lender offers the ability to lock the interest rate on a balance for $200 and a bump up in rate, so I could do that to eliminate my exposure to rising interest rates, while preserving the ability to refinance if rates dropped.

But this would be a more complex deal.

The risks

There are some risks of any solar project:

• Installation could damage the roof. Warranties and insurance should cover this, but roof damage is a pain.
• If grid power became much, much cheaper sometime in the future (maybe NJ builds a lot of nuclear power), the cost sunk into solar could end up being more more expensive than sticking with the grid.
• If our electricity consumption goes down, we could be overproducing, which is a waste of money. I’m 100% sure we could be more energy efficient.
• The solar industry is tough. Companies regularly go out of business and whatever company snatches up your contract could turn out to be a bad partner. When 25D expires, the industry will take a huge hit, and unless grid rates continue to rise, new solar projects could become uneconomical for homeowners.

Where we’re at

I still have some more conversations coming up, and everything needs to get through various approvals, so this is all subject to change. I don’t feel comfortable making public recommendations of companies until I see the end result.

By the time my project is online and producing power, it will be too late for new projects to take advantage of 25D, so I felt it was important to share these learnings while they can still help other people.