Can you pay for solar panels with what you save on the bill?

'Install without putting a peso in: the instalment is paid with what you stop paying the utility.' It is probably the most repeated line in Colombian solar advertising, and it is not a lie. Nor is it a general truth.

The claim carries an implicit condition that is rarely stated: that the monthly saving exceeds the monthly instalment. That happens in some cases and not others, and it depends on three things — the size of the saving, the term and the cost of credit — all of which can be checked before signing anything.

This article does not recommend financing or avoiding it. It explains how the calculation works so that the answer is yours and not the salesperson's.

In its simplest form the operation has two numbers. What you will stop paying each month on the bill, and what you will start paying each month to the bank. If the first exceeds the second, your cash flow improves from month one; if it does not, you are putting money in every month in the expectation of getting it back later.

Neither number should be taken lightly. The monthly saving is not a constant: it depends on your tariff, your consumption and, above all, on how much of what you produce you consume on the spot. The energy you self-consume saves you the full tariff; what you export is offset according to article 25 of Resolución CREG 174 de 2021, as amended by Resolución CREG 101 072 de 2025, and that value need not match your tariff.

So a serious comparison sets the instalment against a range of savings, not against the most optimistic figure. If the instalment fits inside the conservative end of the range, the plan holds even if the favourable scenario does not materialise. If it only fits at the optimistic end, you are financing an expectation.

Of all the loan variables, the one that moves the outcome most is not the rate: it is the term.

Stretching the term reduces the instalment and makes the 'it pays for itself' line come true sooner. It also multiplies the total interest you end up paying, because the principal takes longer to amortise. Shortening it does the opposite: cheaper in total, but for those years you put money in from your own pocket every month.

Neither option is right in the abstract. It depends on what you are optimising for. If what you cannot do is unbalance the monthly budget, a long term is a reasonable decision and the extra financial cost is the price of that peace of mind. If you have room and what you want is the best economic result from the project, the short term wins nearly always.

What is not reasonable is choosing the term without seeing the total. Ask for both simulations — short and long — with the total amount paid in each, and the difference between those two figures tells you exactly what the low instalment costs.

The instalment you end up paying usually includes items that were not in the rate you were first shown: insurance tied to the loan, arrangement fees, guarantees or handling charges, depending on the product and the lender.

There is also a confusion of units worth avoiding. A monthly rate and an effective annual rate are not comparable, and quoting the first makes an offer look cheaper than it is. The effective annual rate is what lets you compare two different proposals, and it is what you should demand in writing.

As a reference for the framework, the Superintendencia Financiera periodically certifies the current banking interest rate, and with it the usury ceiling that no supervised lender may exceed. It is not a sign that an offer is good — staying under the ceiling is compulsory, not a merit — but it is the starting point for telling whether what you are offered is within market range.

Financing changes how you pay for the system, not the system. Equipment that is badly sized, badly installed or never legalized is still exactly that, however comfortable the instalment.

It is worth saying because credit reduces the friction of the decision, and that friction was sometimes the only thing pushing people to compare. With easy financing it is more common to sign the first proposal that arrives, which is precisely the opposite of what you should do.

The healthy order is the other way round: first you choose the project — capacity matched to your consumption, brands and models stated, warranties separated, connection process included — and then you decide how to pay for it. If the installer offers the financing, comparing that offer with your own bank's is still compulsory.

And be wary of a proposal that only talks about the instalment. A seller who has stopped mentioning the total price of the system and only repeats 'it's X pesos a month' is selling you a payment plan, not an installation.

There is a part of the calculation that is nearly always left out and where much of the value lives: what happens once the loan is paid off.

A consumer loan is settled in a few years. The modules, by contrast, carry performance warranties on the order of twenty-five years, with low, known annual degradation. Between the end of the term and the end of the service life there is a long stretch in which the saving no longer offsets any instalment: it is money that stays at home.

That stretch is also what makes the comparison with a financial product odd. A fixed-term deposit returns capital and interest and then ends; a solar system keeps delivering savings for as long as the equipment works, and those savings grow if the tariff rises.

The component that usually needs replacing within that horizon is the inverter. A financing plan that ignores that future expense is not wrong for ignoring it, but you should have it written down.

For a company the range is wider than a consumer loan: there is leasing, operating rental and schemes in which a third party installs and operates the system and sells the energy.

The difference is not just the instalment. It changes who owns the asset, how it is recorded in the accounts and who makes the investment, and that interacts directly with the incentives of Ley 1715 de 2014, amended by Ley 2099 de 2021, which are granted on a project certified with UPME.

This is exactly where the tax adviser should be involved before choosing the structure, not after. An arrangement that cheapens the instalment can leave the tax benefit in someone else's hands, and in a business project that benefit is no detail: it can be a meaningful fraction of the return.

Two financing offers are only comparable if they describe the same thing. Ask for both parts separately — the project and the loan — and in the same format.

For the project: capacity in kWp, brands and models, estimated annual output with its assumptions, separate warranties for module, inverter and installation, and the connection process included. For the loan: effective annual rate, term, full monthly instalment, total amount paid and early repayment conditions.

With that you can make the only comparison that matters: the full monthly instalment against the conservative end of your estimated saving. If it works there, it will work in every other scenario.