No-money-down leases helped SolarCity become the largest U.S. supplier of rooftop solar power. Wednesday it began offering 30-year loans in eight states including New York and New Jersey [and Massachusetts] that are repaid through borrowers’ power bills, the San Mateo, California-based company said Wednesday in a statement.
Loans may offer a better deal for consumers than leases, said Chief Executive Officer Lyndon Rive. Under SolarCity’s current model, the company owns the equipment and the customers make monthly payments for power, an arrangement typically called a power purchase agreement or PPA.
“Once consumers understand it, they should prefer this product over a PPA,” Rive said in an interview yesterday. He estimates these types of loans will make up half the company’s business by mid-2015. “The total savings is greater than with a PPA.”
Two-thirds of U.S. residential solar systems last year were funded by third parties through PPAs, according to Boston-based GTM Research. That’s expected to peak this year at 68 percent and then decline to 61 percent by 2016 as more financing options emerge, the research company said in a June report.
With SolarCity’s MyPower loan program, homeowners who qualify can finance rooftop solar systems at a rate as low as 4.5 percent. There are no penalties or fees for prepayments.
“Loans make more sense as solar systems get cheaper and homeowners become more confident in the technology,” said Nicholas Culver, a solar analyst at Bloomberg New Energy Finance in New York. “SolarCity is addressing a potential threat to their business model.”
Homeowners will also qualify for a 30 percent federal tax credit.
SolarCity to Finance Rooftop Panels in Shift from Leasing
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