Federal Reserve Interest Rate Cut 0.5%
Yesterday’s 0.5% interest rate cut by the Federal Reserve marks a pivotal moment for the solar industry in 2024, and it’s the moment many California and Nevada businesses have been waiting for.
It is the first time the interest rate has dropped since March 2020.
The cut is expected to precipitate an acceleration of applications for commercial solar projects in Q4, with the landscape at the beginning of 2025 uncertain due to tthe impact of tariffs on imported equipment and the tax credit decisions of the new administration still to be known.
Here’s what this means for your business if you’re considering an investment in commercial solar in 2024:
1. Reduced Financing Costs
With the interest rate cut, financing companies are likely to reduce dealer fees by 3-4% in the coming weeks, lowering the overall cost of solar investments. This could mean more favorable financing terms, allowing your company to pursue a solar project with reduced capital outlay.
Should the Federal Reserve implement an additional 0.5% rate cut in the next few months, dealer fees could drop even further, enhancing the appeal of loan-based solar financing over third-party ownership models.
2. Rising Equipment Costs in 2025
Solar panel prices are projected to rise into the high 20-cent range due to new import tariffs. While U.S.-assembled panels will become more competitive with non-U.S. options, both are expected to see price increases.
However, battery prices are likely to fall, driven by reduced raw material costs, providing an opportunity to future-proof your energy system with energy storage at lower prices.
3. A WINDOW OF OPPORTUNITY for Solar Investment
This week’s interest rate cut adds to the feeling that the end of 2024 will be the best time to invest in solar for some time, presenting the opportunity to take the plunge at a reduced rate before project costs rise in 2025.
4. NEXT STEPS
If you already have a solar project proposal and you’re financing the investment, ask your lender for renewed terms.
Contact your solar specialist to ensure your project economics have not changed and the overall amoun you need to finance remains the same.
At Sunistics, we are committed to helping businesses and nonprofits navigate these developments and capitalize on the benefits of solar energy. With tariffs increasing equipment prices and financing costs set to drop, plus the backdrop of tax credit uncertainty in 2025, the end of 2024 is likely to be the best time to invest in solar in the short to medium term.
If you have questions about an existing proposal or need to get started, email customer@sunisticsgroup.com and we will schedule a time to review your options.