NEW YORK (AP) – SolarCity will begin offering loans to homeowners for solar systems, a move that industry analysts say could reshape the market for rooftop solar and propel its rapid adoption.
Most current rooftop solar deals involve a lease or an agreement to buy power over a period of time, but the company owns the panels. SolarCity’s loan will allow customers to own their systems and still pay less for electricity, a simpler and cheaper prospect.
“The value proposition is becoming clearer and less complicated for consumers,” says Patrick Jobin, an analyst at Credit Suisse. “Solar is going mainstream.”
Other solar companies have begun to offer loans in recent months, but SolarCity Corp is the nation’s biggest installer, and its loan has a twist that may convince reluctant customers to sign up: The customer pays the loan back based only on the electricity that the panels produce.
The growth of rooftop solar has been propelled by financing schemes that allow customers to have solar panels installed for little or no money down. The solar company installs the system, and customers either lease it or enter an agreement to pay for the power over a 20-year period.
The combined price that customers pay to the solar company and the electric utility is less than what the customer paid for power without solar panels.
Those plans were rolled out in 2007 and 2008 by SunRun, SolarCity, Sungevity and others. Last year, two-thirds of all solar systems were installed under those types of plans, according to Shayle Kann, senior vice president of GTM Research, an analysis and consulting firm.
But they are more confusing than a loan and some states do not allow third-party ownership of solar panels.
Lyndon Rive, SolarCity’s CEO, said in an interview that many customers say they’d rather own, but then sign up for a lease because it has been the only way to get a system without high upfront costs.
“Ownership is an important factor for our customers,” he says.
The company can offer the loans now because it has better access to financing, it can predict the performance of panels well, and it has reduced installation costs dramatically, Rive says.