A note before we start: This article is written from the perspective of a practising solar installer and is based on our real-world experience helping customers navigate solar finance. Solar Guide Australia has no affiliations with finance providers, and the information below is general in nature and is not financial advice.
If you’ve been quoted for a solar or battery system, there’s a good chance finance has come up somewhere in the conversation.
I spent years running a solar installation business in Adelaide, and finance was something we discussed with customers all the time. Most people weren’t against financing solar, but they were understandably wary of it.
And I think that’s sensible.
You might be looking at a $10,000 or $20,000 solar and battery system and wondering whether you really want to take that much out of your savings. Then the installer tells you that you can finance it for a manageable weekly or monthly repayment.
It sounds good. Maybe a little too good.
What’s the interest rate? Is the solar system more expensive because I’m financing it? What does “interest-free” actually mean? Is putting it on my mortgage a better option? And if the salesperson says the electricity savings will cover the repayments, can I actually believe them?
These are exactly the questions to ask.
Green loans can be a very useful way to pay for solar. Instead of finding thousands of dollars upfront, you’re financing something that starts reducing your electricity costs as soon as it’s installed. In the right circumstances, those savings can offset a good portion of the repayments.
But that doesn’t mean every solar finance offer is a good deal.
The important thing is understanding what you’re actually paying for the finance and whether the savings make sense compared with the repayments.
What is a green loan?
A green loan is essentially finance specifically designed for environmentally friendly or energy-efficient purchases.
Depending on the lender, this can include solar panels, home batteries, EV chargers, heat pump hot water systems and other home energy upgrades.
You borrow the money, install the system and repay the loan over an agreed period, much like other types of finance.
Because the money is being used for an eligible “green” purchase, green loans often have lower interest rates than standard unsecured personal loans.
Green loans work particularly well with solar because solar saves you money on electricity from the moment the system starts generating power.
Say you’re currently spending $250 a month on electricity. Once solar is installed, your electricity bill drops and you now have a loan repayment. In effect, some of the money previously going to your electricity retailer now goes towards paying off your solar system instead.
It’s a bit like the difference between renting and paying off a mortgage. Once the solar loan is repaid, you own the system outright and it continues reducing your electricity costs for years afterwards.
Are green loans worth it for solar?
Yes, they absolutely can be.
For most households looking at solar finance, the real question is:
Are the savings from my solar system going match with the repayments of a loan?
That’s the comparison that matters in day-to-day household finances.
For example, if your solar system reduces your electricity costs by around $200 a month and your green loan repayment is $220 a month, you’re putting an extra $20 a month towards an asset that you eventually own outright.
Once the loan is paid off, the repayments disappear while the solar system keeps generating electricity and reducing your bills.
That can make a lot of sense. In essence, you pay whilst you save.
But you need to make sure the maths adds up.
The amount you save depends on how much electricity you use, when you use it, your electricity tariff and how well the solar system has been designed for your home compared alongside the terms of the loan.
Government-supported green loans
There’s another option worth knowing about before accepting the finance offered with your solar quote.
The Australian Government’s Household Energy Upgrades Fund (HEUF) is designed to help households access discounted finance for energy-efficiency improvements.
This means that you can access a green loan with a further reduction provided by the government.
The $1 billion fund is administered through the Clean Energy Finance Corporation (CEFC).
Eligible upgrades can include solar PV, home batteries, EV charging, heat pumps and other home energy improvements.
How the Fund Works
Rather than the government lending money directly to homeowners, the CEFC works with participating banks and finance providers to offer eligible customers discounted green finance.
There can also be additional requirements around the equipment you install and the solar company you use. This can include requiring the solar retailer to be NETCC Approved. This is important to check early because not every solar company has NETCC approval. The New Energy Tech Consumer Code (NETCC) is a voluntary consumer protection program for businesses selling new energy technology, so a legitimate solar installer isn’t automatically NETCC Approved.
If you’re planning to use a particular green loan, check the lender’s requirements before committing to your solar installer. Otherwise, you risk choosing your system and installer and then finding out they don’t meet the eligibility requirements for that finance product.
Finance providers, rates and eligibility requirements change, so always check the current requirements before making a decision.
Pay upfront, green loan or mortgage: how do you pay for solar?
There isn’t one option that fits every household.
Paying upfront is the simplest. There’s no interest or finance fees, and you know exactly what the system has cost you.
The main problem with paying upfront is if you are putting off installing solar whilst you save up for it, you can loose out on rebates reducing and by continuing to throw money at your electricity provider.
A green loan lets you spread the cost while keeping your savings available. With a competitive rate, the savings from the solar system help offset the repayments from day one allowing you to pay whilst you save.
Your mortgage is another option homeowners consider. Home loan rates are generally lower than unsecured personal loan rates, so accessing funds through your mortgage or a green finance product from your bank can reduce the interest rate.
The catch with using a mortgage is the repayment period.
Putting $10,000 of solar onto your mortgage at a relatively low interest rate sounds attractive. But taking 20 years to repay that additional borrowing means paying interest on it for a very long time.
When comparing the options, look at the repayment amount, interest rate, loan term and total cost of the finance.
Be careful with interest-free solar
Interest-free solar sounds like an obvious winner.
But “interest-free” doesn’t mean the finance costs you nothing.
Usually, a solar system sold using interest-free finance has a higher purchase price than the same system purchased upfront.
So it’s something we’d caution you to be very wary of.
What I’d check before financing a solar system
Before signing a finance agreement, there are a few numbers I’d want in front of me:
- The upfront price for exactly the same system
- The amount you’re actually borrowing
- The interest rate and any fees
- The length of the loan
- Your weekly, fortnightly or monthly repayment
- The total amount you’ll repay
- Any fees or conditions for paying the loan off early
- A realistic estimate of how much the solar system will save you
Pay particular attention to the relationship between the energy savings and the loan repayments. If solar dramatically reduces your electricity costs and the repayment is close to those savings, financing the system can have a relatively small impact on your monthly household expenses.
Then compare your options. Look at green loans, see what your bank offers and check your eligibility for government-supported finance.
Most importantly, treat the solar system and the finance as two separate decisions.
First ask:
Is this a good solar system at a fair price?
Then ask:
What’s the best way for me to pay for it?
An attractive weekly repayment doesn’t make an overpriced solar system a good deal.
Solar is a great investment for many Australian homes
There’s been a fair bit of discussion here about what to watch for with finance, but that doesn’t change the reason people are looking at solar in the first place.
A well-designed solar system can substantially reduce the amount of electricity you buy from the grid and continue producing savings long after you’ve finished paying for it.
The important part is buying the right system and getting it installed properly.
Solar is a long-term purchase. Your panels will likely sit on your roof for 20 years or more, so the quality of the installation and the company standing behind it matter.
This is where choosing a reputable local solar installer is valuable. A good installer takes the time to understand your electricity usage, assess your roof and recommend a system that actually suits your home.
Solar Guide Australia lists recommended solar installers in your area to help you find established local companies and compare your options. We don’t list every installer. Each one is personally vetted to ensure a proven history of customer service and premium installations. No affiliations, you contact them directly on your own terms.
Once you’ve found the right system at a fair price, you can work out whether paying upfront, using a green loan or another form of finance makes the most sense.
Get the solar decision right first. Then work out the best way to pay for it.
Green loan and solar finance FAQs
Can I use solar rebates and a green loan together?
Yes. Government solar incentives and green loans serve two different purposes, so using one doesn’t prevent you from using the other in most cases.
For rooftop solar, the federal Small-scale Renewable Energy Scheme provides an incentive through Small-scale Technology Certificates (STCs). In most residential installations, the solar retailer handles the STCs and applies their value to reduce the upfront price.
You can then finance the remaining amount with a green loan, subject to the lender’s eligibility requirements.
Battery incentives work in a similar way where applicable, although the rules and available programs vary. If you’re combining an incentive with finance, confirm with both the installer and finance provider how it applies before signing the contract.
Will my solar savings cover the loan repayments?
In many cases, solar savings cover a large portion of the loan repayment.
The exact figure depends on how much electricity you use, when you use it, your electricity tariff and the design of your solar system.
A useful comparison is:
Your estimated electricity bill after solar + your loan repayment
versus:
Your current electricity bill.
This gives you a practical picture of how financing solar affects your household expenses from month to month.
Are green loan interest rates cheaper than personal loans?
This is usually the case. Green loans often have discounted rates because the money is being used for eligible energy-efficient improvements.
Rates and fees still vary between lenders, so compare the interest rate, fees, repayment amount and total loan cost before choosing a product.
Does my solar installer organise the green loan?
Many solar retailers work with finance providers and can point you towards an application. The customer generally completes the finance application directly with the lender.
You’re the one entering into the finance agreement, so make sure you understand the terms rather than relying solely on what you’re told during the solar sales process.
Do green loans have rules about which solar installer I can use?
Finance providers can set requirements around the solar retailer, installer and equipment being used. Some require the solar retailer to be NETCC Approved.
Not every solar retailer has NETCC approval, so check the requirements of your chosen finance product before committing to an installer.
Finance approval also doesn’t replace your own research into the solar company. You’re buying a system that will likely remain on your roof for 20 years or more, so choosing a reputable local installer still matters.
How long do I finance solar for?
The right loan term depends on what you’re trying to achieve with the finance.
If your priority is paying the loan off quickly and reducing the amount of interest you pay, a shorter loan term is ideal.
If keeping your regular repayments low is the priority, a longer loan term gives you smaller repayments, although you generally pay more interest over the life of the loan.
Can I pay a green loan off early?
Many green loans allow additional repayments or early repayment, although the exact conditions depend on the lender and loan product.
This is a common question and an important one to check before signing. Look for any early repayment fees, additional repayment restrictions or other conditions.
If you plan to use a longer loan term to keep repayments low but expect to pay extra when you have spare cash, flexible early repayments are particularly useful.
Can I get a green loan for a solar battery?
Yes. Many green finance products cover eligible home batteries as well as solar panels.
This is particularly useful because adding a battery can significantly increase the upfront cost of a solar project.
Check the lender’s eligible equipment requirements before selecting the battery.
Can I finance solar panels and a battery together?
In almost all cases where the lender finances both eligible solar and battery products, yes.
If you’re installing solar and a battery at the same time, the green loan can generally finance the remaining cost of the complete system after applicable incentives have been taken into account.
Eligibility and equipment requirements vary between finance providers, so confirm the details before signing your solar contract.
