Solar Power

Energy Assets vs Liabilities: A Look At Solar Financing

When discussing solar financing, one very important thing has to be pointed out: solar PV systems are assets. They produce an essential commodity. The generated electricity has a value and can be sold or used to offset your own consumption. Therefore, it constitutes revenue for the owner in cash terms. A car loan payment is a liability (unless you are a professional driver). It only generates costs. A credit card payment is definitely a liability. You are financing purchases that don’t generate income, only costs. They are cash negative.

Installing a solar system is cash positive. After making the loan or lease payments, there is money left from savings from your utility bill or from selling the excess generated energy. The solar systems pay itself off and generates extra cash.

Energy generating assets in a distributed generation model are secure investments with no market risk because you are investing in your own assets. The demand for energy is always there and installing a PV system means there is no middle man (a utility company) who can disrupt your delivery of energy.

In short, financing solar PV is financing assets, not liabilities. Therefore, the operation is cash positive for the borrower. Better cash flow means lower risk, secure repayment, and an opportunity to reinvest. Solar financing is the solution that can provide a boost for the economy, on a local and the global scale.

The above excerpt is from “How to choose the best solar system and financing offer for you,” a solar energy book by Michał Bacia

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Categories: Solar Power

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