Solar Leases Will Drive Solar Home Growth by 438%

A residential solar financing mechanism that makes solar energy more affordable is set to propel the growth of the residential market in the United States from $1.3 billion in 2012 to $5.7 billion in 2016, according to a recent industry report.

The mechanism makes it possible for homeowners to pay little or no money down to have a set of solar panels installed on their rooftops. Instead of forking over, say, $20,000 to install and own the equipment, they pay a fee each month for using the electricity produced from the panels. Homeowners typically sign a long-term contract of 15 to 20 years with the companies that pay for solar equipment and labor and make sure the solar panels work properly during the lifetime of the contract.

This model, called “solar leases” or “third-party financing,” was rare five years ago. Now it’s available in 22 states. It now accounts for over 70% of all residential installations in California, Arizona and Colorado, said the report by GTM Research.

California is the largest solar energy market and, unsurprisingly, it also is the first market for solar leases. That’s mainly because the state has budgeted roughly $2.2 billion for rebates to support the installations of 1,940 megawatts of solar electric systems for homes, businesses, nonprofits and government agencies from 2007 through 2016.

Previously, solar leases were financed by banks, but that is changing. Overall, 28 funds totaling over $3.1 billion have been set up to finance residential solar leases, GTM said. Non-bank investors include Google and private solar industry firms such as RAMCO and SunLender, as well as utilities that use their own money to finance leases.

The need to raise funds in order expand services and compete effectively has prompted solar companies to look for additional sources of money. Companies such as RAMCO and SunLender help fill that role. Contact SunLender today to answer your questions and start you on the road or roof to solar power.

Residential Solar is affordable

Installing solar panels in your home is an excellent way to make a home more energy efficient and environmentally friendly, but setup and up-front costs can make the move unsettling to many homeowners until they find the right residential solar financing sources. To make the process more inviting and less costly, states and companies are increasingly offering new financing arrangements for PV (photovoltaic) system installation.

According to the Solar Energy Industries Association, the U.S. residential solar market grew nearly 62% in 2013 and has kept on track since, with even higher expectations for 2015. The face of the solar panel owner has evolved: it’s no longer just for early adopters or super-conscious environmentalists. Young homeowners and families are looking to install panel to help combat high energy prices.

Energy prices are sliced dramatically through the use of residential solar systems.  Homeowners can typically save 10% to 20% of their electric bill using solar power, although the exact savings will depend on how much electricity is consumed, the efficiency of the panels and current electricity costs.

In the beginning of the residential solar evolution, homeowners would have to front the entire cost and buy the solar panels and then rely on government tax credits and state incentives to help make the price tag more palatable. But the cost of solar panels has fallen sharply since the end of 2010, making them more affordable and residential solar financing plans, such as those offered in conjunction with SunLender programs, make the upgrade to solar painless and affordable.

Industry gurus herald the fact that the prices of solar panels have decreased by 70% over the last six years, which have seen a cost decline every year.

Additionally, new solar lease agreements that are available in some states have also increased the demand for solar panels. Under these deals, a homeowner doesn’t have to pay any money upfront and essentially leases the equipment for 20 years. The homeowner isn’t on tap for the costs of any repairs and maintenance of the panels, but is locked into a long term agreement.

A 20-year agreement is a long time, but an owner can lock in their monthly rate to eliminate any price hikes that are common with utility companies.

The cost savings continue over the life of solar financing agreements as the typical escalation rate on solar energy is 1% per year compared to the 5% to 7% increase electric companies pass on to customers each year.

Popular solar financing programs, with solar leasing at the forefront are involved in a huge majority of  residential solar panel installation.  Some customers use home equity loans or a traditional loan to cover costs, but most customers are opting for the solar leasing model.

Solar panels can be erected on pretty much every residential rooftop across the country, but they will be more efficient on roofs that face the south or south east and ones that don’t have any obstructions that would prevent the sunlight from reaching the panels. Heavily shaded roofs are an issue, but if there is enough sunlight for a garden, there is enough sunlight for solar panels on your roof.

Additional cost savings can be provided to residential solar users living in a state that offers  state credits(along with federal tax incentives) that will lower the upfront cost. Under the federal tax credit solar systems that are installed from Jan. 1 2009 to Dec. 31 2016 can get a federal tax credit of 30% of the cost. State incentives will further reduce the cost of the system.

If you are interested in installing a residential solar system and need more information on residential solar financing, contact your SunLender representative.

Renewable energy. Life Without Rebates.

Together with a 30 percent federal tax credit, incentives put clean energy systems within reach for many consumers. But Federal rebates and many state rebates and incentives are disappearing. What does that development mean for the solar industry? Will it sustain or will it be irreparably harmed?

While the dependence of many green technologies on government subsidies to compete in the marketplace is undeniable, renewable energy advocates say the rebates were necessary to help jump-start the industry and silicon and solar panel prices haven’t declined enough to make solar energy an affordable option for most homeowners. That’s especially true in Missouri, a state that has among the lowest electricity rates in the country because of its reliance on coal. Lower electricity rates mean it takes longer for owners of solar energy systems to break even on their investment.

But many experts say the equation is changing as solar prices fall and electric rates continue to rise. Energy problems are not like passing fads that tend to go away in a few years. Indicators point to the fact that energy prices and needs are only going to get worse.

In New Jersey, for example, electricity rates have been increasing at about 62% over the last decade. Electricity is projected to increase at a rate of approximately 5.5% for the next 20 years, meaning that if a homeowner is paying about $130 per month now for electricity, the bill will increase to about $390/month by 2030.

With the continued volatility of oil prices and the fact that the average citizen has become more aware of their environment, there continues to be a strong push for the development and implementation of renewable energy.

In addition to monthly savings, homes gain value when solar systems have been installed. In California, for example, homes with solar panels installed on them sell for more than their panel-free counterparts, according to studies conducted by the University of California at Berkeley, UCLA and UC San Diego. The studies found that homes with solar panels add 3.6% to the sales price of a home after controlling for observable characteristics and flexible neighborhood price trends This corresponds to a predicted $22,554 increase in price for the average sale with solar panels installed.


These are just two states, but study after study and expert after expert chime in that the industry will sustain. This bright future is regardless of the status of rebates and incentives, and in addition to the benefit of reducing dependency on oil (and foreign oil) as well as the reduction of our carbon imprint. It is largely mindful of the cost offsets of home solar systems versus what utility costs will be, and the added value to homes after system installation; and it points to a strong future for the industry after rebates, with profitable benefits to manufacturers, installers, contractors and homeowners alike.



Do SRECS have a future?

An SREC, or Solar Renewable Energy Certificate, is a tradable credit that represents all the clean energy benefits of electricity generated from a solar electric system. The SREC program provides a means for credits to be created for every megawatt-hour of solar electricity created. Each time a solar electric system generates 1000kWh (1MWh) of electricity, an SREC is issued which can then be sold or traded separately from the power generated.

As SRECs are sold separately from the electricity they produce, a customer with a solar array on their roof can use the electricity on-site and then sell the SRECs off to another buyer. The buyers are the utilities.

After the credit earner has signed up, it will take a few months before they begin receiving payments. For example, if the system goes online on January 1st, their January generation will be recorded on January 31st. Their first SREC(s) will be actually credited to your account on March 1st. They would then be sold in the March auction, so their first payment would come in late March. After that, payments will come as SRECs are generated. Also note: some states operate on a quarterly basis, rather than monthly.

The Renewable Portfolio Standard (RPS) requires electricity suppliers to secure a portion of their electricity from solar generators. The SRECs are purchased by electrical utilities or energy suppliers who need to meet a Renewable Portfolio Standard (RPS). The value of SRECs are quantified by three major factors:

  1. State RPS requirements
  2. The Value of the state’s Solar Alternative Compliance Payment
  3. Supply and demand of SRECs in that specific state

Because of these factors, SREC values can vary dramatically from state to state, and those prices are volatile.


SREC markets are relatively young but expected to grow rapidly in coming years as state solar requirements ramp up and recently, SREC spot prices have leveled or decreased in a number of markets as supplies have increased and compliance challenges have eased.

Solar Energy is a Go Even in the Snow

It may be spring, but when considering solar photovoltaic power, we must also consider how systems perform in the snow, from those locations that occasionally get wintry mixes, to those places where snowfall can be expected from Halloween through Easter.

We have seen the solar photovoltaic industry grow throughout North America and now, installations are being placed frequently in snowy locations that include the northern United States and much of Canada. While there have been several unanswered questions about the effects of snow on solar cell performance, a hat trick of studies conducted by Michigan Tech University (Houghton, MI) and Queen University (Ontario, Canada) have allowed researchers to nail down the methods to determine the impact of snow on solar cells. In the first study, the team established a novel method for the determination of snowfall losses from time-series performance data with correlated meteorological observations. In the second, they look at the effect of the color distribution of sunlight reflected from snow and its effects on solar output and in the third, they try to cut the snow-related losses with surface coatings.

Joshua Pearce, a professor of Michigan Tech in both Materials Science & Engineering and Electrical & Computer Engineering, explained “The snow losses for photovoltaic systems may warrant paying to have them cleared. However, the bottom line is snow losses for most solar energy systems are much less than people worry about. Solar energy definitely works even in snowy Canada.”

The first study found losses due to snowfall are dependent on the angle and technology being considered. Pearce reported that “The effects of increased albedo (or reflection from the snow) in the surroundings of a solar energy system can actually increase the energy output by a solar array, particularly in the case of high tilt angle systems.”

The second study found that thin film solar cells made with amorphous silicon had a significant advantage for capturing sunlight off of reflected snow. “What makes this especially interesting is we can customize solar cell material selection in addition to systems design to optimize electricity output for specific environments.” explained Pearce.

Finally, in the third study, a new method to determine gains from coatings was established, but both the hydrophobic and hydrophillic coatings tested did not reduce snow-losses enough to justify the cost of coating solar panels.

Researchers concluded that even in snow, solar photovoltaic power is the way to go … for “green” consciousness as well as for renewable power resources.

The studies mentioned in this report are:

Rob W. Andrews, Andrew Pollard, Joshua M. Pearce, “The Effects of Snowfall on Solar Photovoltaic Performance ”, Solar Energy 92, 8497 (2013).

Rob W. Andrews and Joshua M. Pearce, The effect of spectral albedo on amorphous silicon and crystalline silicon solar photovoltaic device performance, Solar Energy, 91,233–241 (2013).

Rob W. Andrews, Andrew Pollard, Joshua M. Pearce, A new method to determine the effects of hydrodynamic surface coatings on the snow shedding effectiveness of solar photovoltaic modules. Solar Energy Materials and Solar Cells 113 (2013) 71–78.

The Solar Industry: Terms and Information

To provide some quick background on the solar industry, the following questions and answers should supply some color.

What is solar?
Solar is a renewable form of energy that produces power from sunlight. Panels are placed on a rooftop to capture sunlight and convert it to electricity for use in the home.

What is Solar Photovoltaic Technology?
Solar cells, also called photovoltaic (PV) cells, directly convert sunlight into electricity. (PV gets its name from the process of converting light (photons) to electricity (voltage), which is called the PV effect.) The PV effect was discovered in 1954 when scientists at Bell Telephone discovered that silicon (an element found in sand) created an electric charge when exposed to sunlight. Soon solar cells were used to power space satellites and smaller items such as calculators and watches. Today, thousands of people power their homes and businesses with individual solar PV systems.

Solar panels are typically made from solar cells that, when combined together, create one system called a solar array. For large electric utility or industrial applications, hundreds of solar arrays are interconnected to form a large utility-scale PV system.

What are the conventional types of solar panels?
Traditional solar cells are rigid panels made from silicon and are generally flat-plated and the most efficient. Second-generation solar cells, thin-film solar cells, are made from amorphous silicon or non-silicon materials such as cadmium telluride. Thin-film solar cells use layers of semiconductor materials only a few micrometers thick. Because of their flexibility, thin-film solar cells can double as rooftop material and are significantly lighter in weight, making them ideal for rooftops that cannot bear the load of traditional solar cells.

What happens on a cloudy or rainy day with no sunlight?
The panels will produce electricity but it will be very limited — depending on how much light can get through the cloud layers. Homeowners with solar power will still be able to use traditional electricity from their local provider just as they did before the solar equipment was installed.

Will solar panels produce the same amount of electricity all year long?
The amount of electricity produced will vary with the seasons as the angle of the sun changes from summer to winter. In the winter, the sun angle is low in the southern sky so the amount of sunlight reaching the panels is less. In the summer, the sun angle is high so the panels produce more electricity.

What is an interconnection switch?
This is the switch that separates the solar panel system from the electric grid. It cannot be activated until your local utility company provides authorization to the contractor that the electric meter is set up for net metering.

What is net metering?
Net metering may also be referred to as a two-way meter. A net meter and a solar net-metering policy allow customers to reap the full benefits of a solar system. When solar panels are installed, the local utility replaces the existing electric meter with a net meter. Whenever the solar system makes more electricity than a home is consuming, the net meter spins backwards. The unused electricity goes back into the power grid and the customer receives credit for that electricity.

The meter spins forward when the solar system isn’t fully meeting a home’s electric needs but is using power from the grid. This is more likely to occur at night and, at times, during the winter.

A net meter tracks how much electricity your home pulls out of the power grid during the year and how much power your solar electric system puts into the grid. At the end of the year, the utility calculates your “electricity balance” and any credit or debit will be applied by the utility to your account.

Available in over 40 states, net metering is an incentive for consumers to invest in renewable energy systems. Net metering measures excess electricity produced through the solar system by spinning the energy meter backwards, banking the electricity until needed. This provides the customer with full retail value for the electricity produced. Customers receive retail prices for excess electricity they generate through solar power. Interconnecting with the utility is done using a standard meter.

What if a customer sells their house before the lease ends?
Most often, the customer will transfer the lease to the new homeowner. The new homeowner will then continue the lease and receive the benefits of the solar system.

What happens when the lease ends?
When most leases expire, a customer has several options:

  • The customer can purchase the system for the current appraised value.
  • Often, the customer can choose to purchase the electricity from the panels based on a per kilowatt price determined by local utilities at the end of the lease.
  • The customer can end the lease and have the system removed with roof penetrations sealed.

How will a solar system affect the value of a home?
Having a solar system on your home may increase its resale value as the potential savings to a new homeowner can be a very attractive selling point. Several university studies point to an immediate, current increase of $25,000 for the average home. Additionally, the Appraisal Institute has published articles showing a $10 to $20 increase in home value for every $1 in reduced utility costs. Showing a potential homebuyer the monthly energy saving from the solar system can create instant additional value for your home. The panels are also easily recognizable, and can create added value simply upon a potential home buyer’s first look at the home.

How will a solar system affect property taxes?
That varies per state, but many states offer exemption, as an example, Under Title 54 of the current New Jersey tax regulations your home may be exempt from increased property taxes due to the installation of a renewable energy system:

54:4-3.113b – Certified renewable energy system; exemption; amount.
“Property that has been certified by a local enforcing agency as a renewable energy system shall be exempt from taxation under chapter 4 of Title 54 of the Revised Statutes. The owner of real property which is equipped with a certified renewable energy system may have exempted annually from the assessed valuation of the real property a sum equal to the assessed valuation of the real property with the renewable energy system included, minus the assessed valuation of the real property without the renewable energy system included.”

This policy is subject to change.

Do customers qualify for any state or federal rebates or tax incentives?

That may also vary per state, and most customers qualify for at least some federal incentives, but in most cases, customers benefit from no upfront costs, and, customers realize savings immediately following the activation of the solar system from the renewable energy generated.

What incentives are available at the state level?
Solar incentives are available in many states but differ in each. State incentives range from credits or rebates, to property tax exemptions and utility rate discounts. Tax credits and rebates can be as much as 50% of the systems cost. See the table below for a summary of incentives currently available in each state. Specific details on available state incentives can be found by visiting the website

What federal tax credits are available for solar panels?
There is a federal tax credits available for up to 30% of the system’s net cost. Expenditures include labor costs for onsite preparation, system installing, and wiring interconnect the system to the home. This 30% credit is applied to the total cost of the system less state rebates.

Is there a maximum federal tax credit amount for eligible systems?
The American Recovery and Reinvestment Act of 2009 removed the maximum credit amount of $2,000. Currently, there is no maximum credit amount on either solar panels or solar thermal water heating systems.

What if the credits exceed your tax liability?
If a tax credit exceeds your tax liability, that additional amount can usually be carried forward to the succeeding taxable year.

Example: you paid $28,800 for a PV solar panel system. Your maximum tax credit amount is $6,210 or 30% of the system’s $20,700 net cost. If your tax liability is $5,000, you can claim a maximum of $5,000 on your 2009 taxes. The additional $1,210 tax credit can be claimed on the following year’s taxes.

Is a tax credit the same as a tax deduction?
No. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $6,210 in income taxes and who receives a $6,210 tax credit would pay nothing.

What is the initial cost of solar panels?
An average cost of a PV System ranges from $5-8 per Watt depending on whether you are a residential or commercial installation. The solar panel system will vary greatly based on your power needs and the specifics of the site.

What kind of payback can you expect on a solar panel system?
With all of the federal and state tax credits/rebates currently available, you could possibly cover most of your initial expenses within the first few years. Once installed, solar panels can save you up to 50% (or more) on your monthly energy bills. This means an immediate payback to you every month.

Example: If your monthly energy bill would have been $200 without solar panels, then with solar panels saving you 50% you would save $100 a month or $1,200 a year. Savings will vary based on number of people living in the home, climate,
and a number of other factors.

What kind of payback can you expect with a solar thermal water heating system?
Water heating is responsible for up to 17% of your energy consumption. A typical solar water heating system can save you 75% on your water heating energy costs. This system typically will pay itself off multiple times over its lifespan. Savings will vary based on number of people living in the home, climate and a number of other factors.

How can these solar systems minimize the effects of rising energy costs?
Installing solar system is like insurance against future energy cost increases. The more you take advantage of solar power, the less you are exposed to energy cost increases.

What is a Renewable Energy Credit?
RECs are environmental commodities which represent proof that 1 megawatt-hour (MWh) of electricity was renewable (generated from an eligible renewable energy resource). The REC certificates can be sold and traded and the owner of the REC can claim to have purchased renewable energy. RECs can incentivize carbon-neutral renewable resources. Note that the energy associated with a REC is sold separately from the credits and is used by another party.


Residential Solar Financing: Lease or Loan? Which is best for the homeowner?

One of the most common obstacles to going green is upfront costs (though we all know the long-term savings are plentiful) and the manner in which the homeowner chooses their residential solar financing often centers on whether they choose to lease the system or own it outright . Many new homes are built solar-ready, with intentions of installing panels once the construction loans are paid down and many older homes are being retrofitted with new solar systems. The residential solar financing question is, which ownership is best: leasing the system or owning it outright through a loan or cash payment?

The homeowner has already taken the major step of choosing to go solar. They have taken the first step towards energy independence. This decision will reduce the size of their carbon footprint  — each solar kilowatt-hour produced by the system will offset more than a pound of carbon dioxide (a source of global warming); protect against rising energy costs, and according to Appraisers, Realtors and numerous University studies, will increase the value of the home by an average of $22,500.

Now, a decision remains that is just as important. Do they choose to take a loan out to buy the system or do they lease the system (if they can’t afford to pay cash for it)?

Which is best for the homeowner?

Assuming the homeowner doesn’t have the cash for an outright purchase, what are their residential solar financing options? Should they purchase the system and finance it with a residential solar financing company? Or should they lease the system with a financing/leasing company. The answer depends upon a variety of factors.

  • Would they rather own the system in 15 years or less or lease for 20 years with the option of a FMV purchase at the end of the lease?
  • Are they able to personally benefit from federal and state tax credits? If so, a loan may be a better option. If not, most lease programs will pass on those benefits through the lease payments.
  • Are there rebate and incentive programs in the homeowner’s state that are only available to the actual homeowner? If so, some loan programs may be a better option.

Regardless, they can’t go wrong, purchasing or leasing a solar system, as it will provide substantial benefits and provide an immediate payback on the investment.

Purchase Option

A home owner purchases the system and pays for installation – either outright with cash or via some form of financing (e.g. a home equity loan or with a solar loan or financing company). Disadvantages of the cash or loan approach include the need for a significant amount of capital for a cash buy or a substantial loan amount, and the fact that the homeowner is responsible for maintenance and repair if anything goes wrong with the system that isn’t covered by a manufacturer’s warranty. However the advantages of buying a system outright are that the panels usually continue to produce energy well past their warranties of up to 25 years, they often require very little maintenance beyond washing the solar panels twice a year, and once they pay for themselves everything the homeowner saves after that is theirs to keep.

Lease Option

The solar lease is designed to address two concerns of homeowners considering solar: the large upfront cost and the hassle/obligation of ongoing maintenance during the life of the system. Companies offering solar leases or PPAs purchase and operate the system on behalf of the homeowner – and take on all maintenance and repair obligations – in return for a the homeowner’s long-term (10-20 year) commitment to lease the solar equipment at a fixed monthly rate (solar lease) or to purchase the power produced by the system at a designated price per kilowatt-hour (solar PPA).

The tradeoff homeowners should consider is the size of the upfront payment versus the long term savings. Buying a system outright has the greatest long term savings, but requires a big upfront cash (or finance) payment. The alternative is much smaller monthly lease payments which result in almost instant savings over the prior energy bill, but result in less money saved over 20 years when compared with an outright purchase. It depends entirely on which approach better matches the homeowner’s financial situation and financial goals.

The solar financing decision is unique to each homeowner’s situation and they have won either way by going solar, now, how much they save each month is only dependent on their loan vs. lease consideration.

Third-Party Residential Solar Financing

SunLender and its solar project financing partner, RAMCO work together to provide turnkey service for homeowners who want to install solar power in their homes. To make solar panels a reality on their rooftops, SunLender and RAMCO offer third-party residential solar financing solutions.

Third-party solar financing allows homeowners to install solar panels on their rooftops by lowering the cost of solar  installation and maintenance of a system. Third-party solar financing is generally accomplished through power purchase agreements (PPAs) and solar leases.

In the PPA model, an installer/developer builds a solar energy system on a customer’s property at no cost. The solar energy system offsets the customer’s electric utility bill, and the developer sells the power generated to the customer at a fixed rate, typically lower than the local utility.  At the end of the PPA contract term, property owners can extend the contract and even buy the solar energy system from the developer.

In the lease model, a customer will sign a contract with an installer/developer and pay for the solar energy system over a period of years or decades, rather than paying for the power produced. Solar leases can be structured so customers pay no up-front costs, some of the system cost, or purchase the system before the end of the lease term. Similar leasing structures are commonly used in many other industries, including automobiles and office equipment.

Currently, third-party financing mechanisms are clearly allowed in 22 states plus Washington, D.C. For third-party ownership models to be viable, a state (or locality) needs:

  • The right combination of incentives or a renewable energy certificate (REC)
  • Clarity as to whether the models can be used under current state and local laws and regulations
  • Favorable interconnection and net-metering policies.

Since 2011, the SunLender program has allowed Installers to provide solar financing to their residential customers with a 20-year operating lease or a 10-year or 15-year loan. Renewable Asset Management Company (RAMCO) is a proven leader in renewable energy financing, and in conjunction with affiliated companies have offered a variety of commercial and residential solar financing programs since 2008. RAMCO and affiliated companies have been working with Installers, Homeowners and Original Equipment Manufacturers and Distributors to finance construction, home improvement and energy management solutions for more than 40 years. The SunLender program is uniquely designed to provide Installers with the cash flow they need to grow. The enhanced program allows Installers to leverage the partnerships, connections and network of RAMCO, and now provides interim project financing through the Pro Power Green™ — Construction Financing program, allowing Installers to get paid faster and fund growth without typical construction cash-flow constraints inherent to other finance programs and Funds. The SunLender program is tailored to help Installers grow their business and increase their sales.

Contact your SunLender representative to fill you in on all the details And help you get started on going Solar.