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Middletown, Connecticut Solar Power for Your Home – Leases, Loans, Rebates, and Incentives

Ah, Connecticut, the Land of Steady Habits. And considering Middletown is situated right in the center of the state on the banks of the Connecticut River, maybe it’s the place from which all Steady Habits emanate. After all, the city is full of smart people who know the value hard work and clean living. That’s why it can be frustrating to see so many of your hard-earned dollars go to paying Connecticut’s high electricity rates.

We know a better way, and, given the name of this website, it’s no surprise that it involves putting solar panels up on your roof. Here’s the thing: Electricity can be expensive, and the costs just go up over time—an average of 3.5% per year. One reason solar power is so great is that you get a fixed cost, with less risk than paying the prices traditional utility companies charge.

That fixed cost means you can count on savings every month, and there are multiple ways to pay for solar, from paying cash up front for a system to leasing solar panels, getting a solar loan with low interest, or even leasing panels with no money down and a low monthly charge. It might seem confusing, so in the next section, we’ll break it down for you. Let’s take a look at the options from a financial standpoint:

Lifetime Return For 4 Different Methods of Going Solar in Middletown, CT

Just above is a chart showing the amount of money you can make over the 25-year life of a solar panel system in Middletown. As you can probably tell—you smart person, you—buying a system outright will make you the most money in the long term, followed by other options. But looks are a bit deceiving here. The Purchase option requires you to put a lot of money up front, so it’s not the best return on your investment.

Here’s how each option works and the advantages of each:

 Option 1: Lease

This is the best option in Connecticut for a number of reasons. You might have a certain impression of leases based on how car companies do it, but a solar lease is a different animal, and Connecticut especially does it right.

Here’s how it works: you sign an agreement to pay a fixed monthly price for 20 years. The panels go up on your home and you get all the electricity they provide, which reduces your bill by just about the same as your lease payment. Over time, your payment stays the same, while the cost of electricity goes up by about 3.5% per year. Think back to how much you paid for electricity in 1995. Would you like to have the same bill now? That’s what a Connecticut solar lease can do for you.

Here’s the other major benefit of a lease: the installation company actually owns the system, and they do all the maintenance and repairs if any are ever needed. That takes away a ton of responsibility for you, the homeowner. All you have to do is get quotes from installers in your area, sign up for the leasing program through them, and get solar for no money down! You can sign a 20-year agreement with a fixed monthly payment that will guarantee your savings long into the future. Talk about a win-win!

 Option 2: Loan @ 6.5% with Lump-Sum Payment

This is another great option for people who want to have a long-term commitment to solar but don’t have a lot of cash right now. And instead of leasing a system, you’ll own it and get all the financial benefits.

There are banks in Connecticut that are happy to give loans for profitable, low-risk investments like this. You can definitely find a home-equity loan or line of credit (HELOC) with favorable terms and a 20-year amortization period.

The first step is to get quotes from local expert installers in Connecticut. Then, start talking to your bank or credit union about loan options. Anything with a 20-year term and an interest rate of 6.5% or lower is great.

Getting a loan means you can get solar panels now and pay them off over the long-term. It will mean that your loan payments are a bit higher than your energy bill savings—about $37 per month. But as electric rates rise and you get closer to paying off the loan, you’ll start to see savings.

What’s the lump-sum payment? Glad you asked! Because you “purchased” the solar panels (with the bank’s money), you’ll get the federal government’s 30% Energy Investment Tax Credit (ITC) at the end of the year. That means $4,400 in direct tax relief. This is important: PAY THE LOAN DOWN BY THAT AMOUNT. It will save you thousands in interest and reduce your payment timeframe from 20 years to less than 12. It makes your investment’s rate of return a sterling 15.2%, which is nearly twice as good as an investment in the stock market, for example, and less risky.

Here’s how the numbers work for a solar loan with lump-sum repayment in Middletown:

  • Installing a typical 5-kW solar system should start at about $17,500. Don’t worry – you’re getting a loan, and it will be for less than that amount.
  • Connecticut has a state rebate of $540 per kilowatt of panels. That reduces your cost directly from $17,500 to $14,800. That will be your loan amount.
  • The payments on a $14,800 loan with 6.5% interest over 20 years will be just about $110 per month, but you’ll be saving $73 per month on electricity. Essentially, you’ll pay $37 per month for the privilege of one day owning those panels.
  • Here’s that important part again: The Feds will give you a 30% tax credit based on the cost of your system. That’s $4,440. Pay the loan down by that amount! You can take the credit over two years if you don’t owe $4,440 in taxes this year.
  • With a conservative estimate of 3.5% per year for the future rise of electricity prices, you’ll start making an annual profit on your solar panels in year 12, and every year after for the 25-year life of your system.
  • Your total profit in 25 years will be close to $19,000! The rate of return on your investment will be 15.2% That’s much better than investing in an S&P 500 index fund.
  • And don’t forget… your home’s value just increased by more than $17,500, too (your expected annual electricity savings over 20 years), and thanks to Connecticut’s property tax exemption for solar, you won’t pay taxes on any of it!

Remember: these figures are estimates. Your home is unique, and how much money solar will save you depends on that uniqueness. Thankfully, we know some experts in Connecticut. Just sign up for personalized savings estimates and one of them will be more than happy to go over all those details and help you craft a plan to get the maximum savings from a solar power system in your home. Your quote is 100% free, so go ahead and shop around… grab two or three, or five, and compare all your possible options.

 Option 3: Loan at 6.5%

What happens if you take the loan and don’t pay it down with your tax credit? Well, it ain’t too pretty. You’ll pay $26,483 over the course of 20 years, ultimately ending up with a profit of only $7,621. The Internal Rate of Return (IRR) for this investment is on the low end at 7.25%. It’s better than a savings account, but probably a little worse than the stock market.

The only way a solar loan makes sense without the lump-sum payment is if you can get a rate less than 5.5% on your 20-year loan. That pushes the IRR up over 10%. But don’t lose hope if you can’t get a tax credit! If you don’t have a lot of income but you want to get solar on your home, you’re much better off taking one of Connecticut’s excellent solar leases (see below).

 Option 4: Purchase

Okay, so you’ve got some cash and you’re ready to buy. An outright purchase can be a good idea if you’re averse to financing a big purchase, and if you want to make the most possible cash in the long term. But for this option, the rate of return is actually lower than the loan, since you’re sinking a large amount of money into it now, as opposed to small amounts over time.

That’s why the solar loan with lump-sum payment is a great option. You’re taking advantage of someone else’s money paid back over time, reducing your immediate burden and shifting the cost to the future, which is actually better, considering how inflation works. If you’re the kind of person who wants solar now and likes to pay cash for things, check this out:

Here’s how the numbers work for a solar purchase in Middletown:

  • Installing a typical 5-kW solar system should start at about $17,500. Don’t worry – the incentives available will reduce that number quickly.
  • Connecticut has a state rebate of $540 per kilowatt of panels, which is paid to the installer to reduce your costs. That system will cost you only $14,800 up front.
  • Next, the federal government will give you a 30% tax credit based on the cost of your system. That’s $4,440. You can take the credit over two years if you don’t owe $4,440 in taxes this year.
  • The electricity you’ll save in the first year of operation would have cost $876. That’s like a really nice dinner and a bottle of wine with your significant other every two months.
  • Those savings and incentives mean the first-year final cost of your 5-kW system is just $9,484.
  • With a conservative estimate of 3.5% per year for the future rise of electricity prices, your investment will be fully paid off after 10 years, and you’ll be making a profit until 2039 or later.
  • Your total profit in 25 years will be almost $24,000! The rate of return on your investment will be 11.4%, which is a good deal better than an investment in an S&P 500 index fund.
  • And don’t forget… your home’s value just increased by more than $17,000, too (your expected annual electricity savings over 20 years), and thanks to Connecticut’s property tax exemption for solar, you won’t pay taxes on any of it!

Remember: these figures are estimates. Your home is unique, and how much money solar will save you depends on that uniqueness. Thankfully, we know some experts in Connecticut. Just sign up for personalized savings estimates and one of them will be more than happy to go over all those details and help you craft a plan to get the maximum savings from a solar power system in your home. Your quote is 100% free, so go ahead and shop around… grab two or three, or five, and compare all your possible options.

Additional Information about Solar in Connecticut

Connecticut Solar Power Rebates

Connecticut offers a great rebate program, which offers direct payments to installers in the state, reducing the costs of installation for you! The current rebate is $540 per kilowatt (kW) of solar panels. Now, these rebates aren’t as amazing as they have been in the past, but they’re still really good.

For an average 5-kW installation, the CT rebates reduce the cost by $2,700. That goes a long way to making solar the best deal around. In fact, with the Federal tax credit, state rebate, and energy savings, the cost of a solar installation is cut in half after just one year of operation. Wow!

Tax Exemptions for Solar in Connecticut

Connecticut is at the head of the class when it comes to reducing the burdens on homeowners who want to do the right thing and go solar. When you pay for installation of solar panels in Connecticut, you won’t spend a penny in sales tax.

Furthermore, Connecticut exempts the value of your solar installation from property taxes. Numerous studies around the country have shown that homes with solar panels sell for more than homes without. The premium is about equal to the 20-year energy savings. That means a home in Connecticut with solar panels on it will sell for about $15,000 more than one without them, and the state exempts that extra value from property taxes!

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One thought on “Middletown, Connecticut Solar Power for Your Home – Leases, Loans, Rebates, and Incentives

  1. Sasha59 says:

    We are currently in the process of purchasing a solar system for our home. In doing our due diligence, one cost we never read or was informed about is if your solar system is very large (our proposed system is 14.4 kW), your utility company can charge you the customer for all expenses to upgrade their electrical infrastructure to handle your interconnection. That is what United Illuminating informed us. They say we are required to pay for all infrastructure costs needed to install a dedicated transformer that can handle our load since the existing transformer cannot handle it given the current customer needs on our street. This amounts to a LOT of money UI says we have to pay if we install our 14.4 solar system, even though we will not own the equipment. We were totally blindsided with these additional costs as we never read about such a situation occurring nor did our solar company outline this in our contract. Residents should be made aware of this potential financial setback before entering into a contract and this info should be widely posted on solar sites. Buyer Beware: A commonly held principle of utility rate regulation throughout the U.S. is the so-called “doctrine of cost causation”, which holds that an entity that imposes costs on a utility system must pay for all such costs!

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