Solar financing options for your home

Help the environment and your wallet with a solar panel system.

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Tim Falk

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Bria Horne

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Key takeaways

  • Solar power systems harness clean energy from the sun to power your home, which makes installing solar panels an easy way to help the environment.
  • While the purchase of solar panels can be expensive, it is an investment that can save you a serious amount of money on your power bills over time.
  • Green personal loans, interest-free finance or solar lease agreements can help you cover the cost of solar power installation.

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Note: Solar service not available in the Northern Territory, Tasmania and Western Australia.

What are my options for solar panel finance?

There are several options available to help you finance solar panels, but the best one for you will depend on your personal financial situation. You can choose from the following finance arrangements.

Green personal loan

Features and benefits
  • 14 labelled "green loans" have emerged in Australia since 2018
  • Specifically designed to fund the purchase of energy-efficient products such as electric or hybrid cars, energy-efficient air conditioning, solar panels, etc.
  • Secured or unsecured
  • Terms ranging from 6 months to 7 years
  • Flexible borrowing limits based on the items you want to purchase
  • Allows you to make early repayments without penalty (in many cases)
  • Often cheaper than other forms of personal loan
What to watch out for
  • These loans have stringent eligibility criteria, so can be difficult for some applicants to qualify for
Suitable for
  • Applicants who have a good credit score
Offered by

Interest-free solar loan

Features and benefits
  • Interest-free
  • Unsecured
  • Covers the cost of buying home energy systems, such as solar panels, or completing home improvements
  • Usually have terms of up to 1 year
  • Allows you to make early repayments without penalty
What to watch out for
  • Tends to have higher fees than other "green" options
  • Many finance companies that offer interest-free solar finance also receive a fee, usually between 15% and 25% of the purchase price, from the solar installer – which means you'll typically have to pay a higher retail price to get the system installed
Suitable for
  • People with poor credit who can afford to make the larger repayments needed to pay off their debt over a shorter period
Offered by

Mortgage redraw

Features and benefits
  • Added to your existing home loan via a redraw facility
  • Substantially lower interest rates than you would get through other options
  • Avoid a range of additional fees that come with setting up a new loan
What to watch out for
  • Not suitable for borrowers who are not home owners or who do not have existing home loans
  • If you're the type of borrower who only ever makes the minimum mortgage repayment, the total cost of your solar system when paid off over the length of your home loan term could almost double
Suitable for
  • Borrowers with outstanding home loans
  • Borrowers who are committed to paying off their home loan as quickly as possible
Offered by
  • This will be specific to your existing home loan lender. For more information, visit our green home loans page

Solar lease agreement

Features and benefits
  • "Rent to own" solar agreements
  • Under this arrangement, the leasing company retains ownership of the solar system until you have paid it off in full under the terms of the lease
  • You'll rely on fixed monthly repayments (including interest) to pay off your debt
  • Solar leasing means you don't have to worry about the maintenance and upkeep of the system
What to watch out for
  • Borrowers should ensure that they calculate the total cost of repayments before deciding whether this option is right for them
  • People who lease their solar systems save far less than those who buy them outright or with a loan
  • You may miss out on federal tax benefits and any local incentives
Suitable for
  • Anyone who doesn't want to buy a system upfront
Offered by
  • Various solar installers

Power purchase agreement

Features and benefits
  • Allows you to get a solar system installed for no upfront cost
  • You have to agree to buy electricity from the solar company for a fixed term, such as 15 or 20 years
  • Ownership of the system stays with the solar company
What to watch out for
  • Ownership of the system stays with the solar company
  • You are contractually obligated to buy a specified amount of electricity from the retailer, even if you don't need it
Suitable for
  • Large solar systems in commercial premises
Offered by
  • Various solar installers

How much do solar panels cost?

The cost of installing a solar power system is influenced by a few main factors:

  • The size of the system
  • The solar power rebate that applies
  • The quality of the solar panels you choose
  • Installation costs (these can vary based on any constraints or restrictions at your property)

A reasonably sized solar system of 5kW or more could set you back over $6,000. To find out how much going solar could cost you, head to Solar Calculator and calculate the cost of your system.

What is the Small-scale Renewable Energy Scheme?

The Australian Government offers a form of rebate under the Small-scale Renewable Energy Scheme (SRES) to help make it more affordable to install solar power, as well as hydro and wind power. Under this scheme, installing an eligible system allows for the creation of a Small-scale Technology Certificate (STCs). STCs allow you to reduce your electricity bills, as well as your greenhouse gas emissions.

Eligible small-scale renewable systems certificates include:

  • Solar photovoltaic (PV) panels
  • Wind turbines
  • Solar water heaters
  • Hydro systems
  • Air source heat pumps

You can receive benefit for your STCs by:

  1. Assigning them to an agent (usually the system installer) in exchange for a discount or delayed cash payment
  2. Selling the certificates themselves

You can sell certificates:

  1. Through the open STCs market with pricing subject to market forces, including;
    • The amount of renewable electricity the system produces or the amount of electricity consumption it reduces
    • The climate region where it's installed
  2. Through the STCs Clearing House with the price fixed at $40 per STC, excluding GST.

Home owners, small businesses and community groups are all eligible for this Australian solar panel subsidy and no-one is means tested under the scheme.

How can I compare my solar panel finance options?

Not checking the true cost of finance is one of the most common solar mistakes, so it's worth comparing a few options before you sign up.

Make sure to consider the following factors when comparing your finance options:

  • Fees. Remember to check the fine print for upfront fees, such as establishment and application fees, as well as any ongoing charges that apply. These can have a big impact on the total cost of finance.
  • Interest. Compare the interest rates available from different finance providers to find the lowest rate available. Remember to make sure you compare variable personal loan rates with other variable rates and fixed personal loan rates with other fixed rates.
  • Repayment schedule and amount. How much will the regular repayment amount be and how often do you need to make repayments? What will the total cost be over the life of the loan or lease?
  • Repayment flexibility. If you come into some extra cash, will you be allowed to make additional repayments without incurring any fees? Can you pay the loan off early without penalty?
  • Loan amount. Check the minimum and maximum limits that apply to be sure that you can borrow as little, or as much, as you need.
  • Security. Will you need to offer an asset as security for the loan, or is the finance offered on an unsecured basis?

Quick guide to choosing a solar panel

There are three types of solar system available:

  • Grid-connected solar systems. Grid-connected systems allow you to avoid energy storage costs by letting you feed the unused energy from your home solar system directly into the power grid. You will then receive a feed-in tariff from your electricity retailer. This also means that you have the flexibility to access traditional power from the grid whenever you need.
  • Off-grid solar systems. Ideal in remote areas where there are only limited (or even no) utilities available, off-grid systems mean you can completely generate your own power and don’t have to rely on any outside utility provider. However, you will need to cover the extra cost of batteries and/or other energy storage devices, and as storage space is limited, you will often waste unused energy.
  • Hybrid solar systems. These systems allow you to store the excess energy you create yourself, rather than feeding it back into the power grid. However, they also allow you to access power from the grid in periods of high energy use or when there is limited sunlight available.

To find the best system for you, it’s important to consider a range of factors. These will include where you live, the size of your home, your energy requirements, the tilt of your roof and even the shade around your property.

Once you know the type of system you want, it’s essential to compare all your options to find the best deal.

solar energy icon

Are solar panels a good idea in Sydney?
Solar panels might be a great idea in Sydney if your property fits the criteria and you are willing to make the investment. Learn more and get a solar panel quote.

Am I eligible for solar panel finance?

To qualify for solar panel finance you will need to be 18 years or older and an Australian resident. After that, eligibility criteria differ depending on the type of financing you choose.

For example, green personal loans are typically only available to borrowers with good credit who want to use the funds to buy an energy-efficient solar system. However, some interest-free finance providers specialise in offering loans to people with bad credit, so it’s essential that you familiarise yourself with all requirements before you apply.

Frequently asked questions

Sources

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Tim Falk is a writer for Finder, writing across a diverse range of topics. Over the course of his 20-year writing career, Tim has reported on everything from travel and personal finance to pets and TV soap operas. When he’s not staring at his computer, you can usually find him exploring the great outdoors. See full bio

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Bria Horne was a writer for Finder, with a specialist knowledge of personal loans, car loans and business loans. Originally from the UK, Bria has been a professional personal finance writer in Australia for over 2 years. She has an M.A and B.A in Philosophy and Literature from the University of Sussex, and previously worked on the UK’s leading hospitality publication. See full bio

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