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.