Solar Financing in 2025: How PACE, PPAs, and Loans Are Evolving

Introduction

As commercial solar adoption accelerates in 2025, one thing is clear: financing options are more flexible, accessible, and innovative than ever before. With interest rates stabilizing, IRA-backed incentives in full swing, and new private capital entering the clean energy space, businesses now have more ways to go solar without large upfront costs. Understanding your financing options is essential to making solar pencil—and Surge is here to help.

Why Financing Matters More Than Ever

The economics of solar have never been better—but financing remains the bridge between interest and action. Even with generous tax credits, many property owners prefer to conserve capital, preserve borrowing power, or shift risk to third parties. The right structure can mean the difference between a 10-year or 4-year payback.

Power Purchase Agreements (PPAs): Still Popular, More Sophisticated

PPAs remain a go-to option for nonprofits, municipalities, and businesses seeking zero upfront cost. In a PPA:

• A third-party developer installs and owns the system

• You buy the electricity it produces at a fixed rate (usually below utility rates)

• The developer claims the tax credits and handles maintenance

In 2025, we’re seeing:

• Shorter contract terms (10–15 years vs. traditional 20+)

• Escalator clauses capped at 1–2%

• Hybrid PPA + battery storage models

• More flexible early buyout options

PPAs work well for those who want clean energy without becoming energy asset managers.

PACE Financing: Gaining Ground in More Markets

Property Assessed Clean Energy (PACE) financing allows building owners to fund solar and efficiency upgrades through property tax assessments, typically over 20–30 years. Benefits include:

• No upfront capital required

• Off-balance sheet treatment in many cases

• Payments tied to the property, not the owner

• Often cash-flow positive from day one

In 2025, new commercial PACE programs have launched in states like Pennsylvania, Virginia, and Florida, opening the door for broader adoption.

Traditional Loans: Now More Clean-Energy Friendly

Many banks and credit unions now offer solar-specific commercial loan products, often with:

• Fixed rates under 6%

• 7–15 year terms

• No prepayment penalties

• IRA-aligned underwriting for tax credit timing

Loan-backed ownership allows you to capture full tax benefits and long-term savings. Surge helps clients structure deals for the fastest possible payback.

Energy-as-a-Service and Operating Leases

For clients who prefer to treat solar as an operating expense, energy-as-a-service (EaaS) models offer:

• No capex

• Fixed monthly fees

• Performance guarantees

• Ongoing O&M bundled in

We’re seeing growing interest in this model, especially in hospitality, logistics, and healthcare sectors.

New Federal and State Programs to Know

• Direct Pay for tax-exempt entities allows schools, cities, and nonprofits to access the full 30%–50% IRA tax credit as a cash payment

• Green Bank loan programs and credit enhancements for energy projects

• Tribal and rural energy grants making projects viable in new geographies

• Enhanced ITC and MACRS bonus depreciation boosting ROI for owned systems

How Surge Helps You Choose the Right Path

Financing isn’t one-size-fits-all. At Surge, we:

• Match you with vetted financing partners

• Model scenarios across loan, lease, and PPA options

• Layer in available incentives, rebates, and adders

• Structure deals for long-term value and performance

We make solar affordable, bankable, and customized to your goals.

TL;DR Summary

• In 2025, there are more ways than ever to finance commercial solar: PPAs, loans, PACE, leases, and more

• The right structure depends on your financial goals, tax appetite, and risk profile

• Surge helps clients evaluate and secure optimal financing to maximize ROI and minimize barriers