How Does Solar Financing Work in Delaware?

How Does Solar Financing Work in Delaware

Solar financing gives Delaware homeowners and businesses the opportunity to install solar panels without paying the entire cost upfront. Instead of purchasing a system outright, you can finance it through flexible options such as a solar loan, solar lease, or third-party ownership (TPO) arrangement like a power purchase agreement (PPA).

When you buy a system with cash, you own it from day one and immediately qualify for all available solar incentives, including the 30 % federal tax credit and Delaware’s Green Energy Program rebates. This approach provides the highest long-term savings but requires substantial upfront capital.

By contrast, solar financing spreads payments over time or allows a third party to own and maintain the equipment. Financing reduces or eliminates upfront cost, though total lifetime savings may be lower because of interest or contractual payments. For most Delaware homeowners, the best choice depends on available cash, credit profile, and long-term property plans.

Ownership and Payment Comparison

Delaware’s Green Energy Program offers rebates up to $6,000 for eligible customers, while the Low-to-Moderate-Income Solar Pilot Program provides free solar or discounted systems to qualified residents. These programs make financing and ownership more affordable and shorten the payback period for homeowners across the state.

Solar Financing Options in Delaware

Delaware residents can choose among several solar financing paths based on budget, ownership goals, and credit. The three main approaches are cash purchase, solar loan, and third-party financing through a solar lease or PPA.

A solar loan allows you to own the system while paying for it over time. You receive the federal tax credit, state rebates, and SREC revenue. Monthly loan payments are typically offset by energy savings, and once the loan is repaid, you benefit from decades of free power.

Solar leases and PPAs, both forms of TPO, let a company install and own the panels on your property. You either pay a flat monthly fee (lease) or buy the power generated (PPA). These models remove upfront cost and maintenance responsibilities, making them appealing to households unable or unwilling to secure loans. The trade-off is lower long-term savings since you do not own the equipment or receive incentives.

Historically, most Delaware homeowners relied on leases or PPAs. However, with low-interest solar loans now widely available, ownership has become more attractive. Buying through financing provides greater equity and stronger resale value while preserving access to incentives.

Types of Solar Loans in Delaware

Solar loans are the most popular ownership-based financing option in Delaware. They enable homeowners to finance a system while retaining full ownership rights and incentive eligibility.

The Delaware Sustainable Energy Utility, through the Energize Delaware program, offers fixed-rate residential and commercial solar loans. Homeowners can typically borrow between $5,000 and $30,000 for up to 10 years at competitive interest rates. Businesses and nonprofits can access loans up to $2 million for larger projects.

Solar loans are categorized as secured or unsecured:

• Secured solar loans use your property or the system itself as collateral. These loans offer lower rates and longer repayment terms but carry the risk of collateral loss if you default
• Unsecured solar loans rely on your credit history without requiring collateral. They are easier to obtain but come with higher interest rates and shorter repayment periods

Both types of loans are available through Delaware banks, credit unions, and installer-partner financing programs. For homeowners with strong credit or home equity, secured loans provide the most affordable path to ownership.

How to Find the Best Solar Loans in Delaware

Selecting the best solar loan involves comparing interest rates, repayment terms, and eligibility criteria. A strong loan structure ensures your solar investment generates immediate and long-term financial returns.

In Delaware, ideal solar loan rates typically range from 4% to 6% with repayment periods of 10 to 15 years. State-backed programs may offer rates below 4% for qualified applicants, while private lenders generally fall within the mid-single-digit range.

Key factors to consider include:

• The monthly payment should be lower than the expected monthly energy savings
• The loan should have no prepayment penalties and allow early payoff without fees
• You should retain ownership of all solar incentives and SRECs
• The loan term should align with or be shorter than the system’s 25-year lifespan

Typical Solar Loan Features

A low-interest, fixed-rate solar loan with a manageable monthly payment and no prepayment penalties generally represents the best solar loan structure for Delaware homeowners.

Can I Get Free Solar Panels in Delaware

Yes. Some Delaware homeowners can access free solar or no-cost installation options through specific programs and third-party ownership models.

Under a solar lease, a company installs and owns the system while you pay a fixed monthly rate for the electricity it generates. With a power purchase agreement (PPA), you pay for the power produced at a set per-kilowatt-hour price that is usually below your utility’s rate. Both arrangements fall under TPO, meaning the company owns the system and claims all available solar incentives, while you benefit from lower utility bills and predictable costs.

Delaware’s Low-to-Moderate-Income Solar Pilot Program (LMI) takes the concept further by providing free or heavily subsidized systems for eligible households. Low-income homeowners may receive a fully funded 4 kW system, while moderate-income families can receive up to a 70% subsidy.

These options make solar accessible to more residents but involve trade-offs. You do not own the system, cannot claim incentives, and may face contract terms that include annual cost escalations. If you can qualify for a low-interest solar loan, ownership typically delivers higher long-term savings than a lease or PPA.

How to Get Solar Financing in Delaware

The process for obtaining solar financing in Delaware depends on your chosen option, but the general steps are similar.

For a solar loan, begin by gathering multiple quotes from certified installers. Compare system sizes, pricing, and estimated production. Once you select a proposal, apply for financing through the Energize Delaware program or a private lender. Approval depends on your credit score, debt-to-income ratio, and property details. After approval, installation proceeds, and loan repayment begins once the system is operational. As the system owner, you can claim all solar incentives and net-metering benefits.

If you prefer a solar lease or PPA, the solar provider handles installation and ownership. You simply sign an agreement outlining your payment terms, either a fixed monthly lease or a per-kilowatt-hour rate for produced energy. Contracts usually last 20 to 25 years and may include an option to purchase the system later or transfer the agreement if you sell your home. Credit checks are typically required but less strict than for loans.

For the LMI solar program, apply through an approved installer or state agency. Once accepted, installation proceeds at little or no cost, depending on your income level. Program terms define ownership and maintenance responsibilities.

Credit and Loan Considerations

Your credit score strongly influences eligibility and rates for solar financing. Higher scores unlock lower interest rates and longer terms. Solar loans appear on your credit report, and consistent on-time payments can improve your credit profile. Lease and PPA contracts generally involve only soft credit checks and may not directly affect your score, though missed payments could. Regardless of financing type, ensure your homeowner’s insurance covers the solar system or verify coverage through the provider.

Summary Table: Delaware Solar Financing Paths