To Finance, Or To Lease Solar?  That Is The Question

We are on the cusp of a historic moment for the renewable energy market.  Prices have dropped on solar panel costs so much that we are starting to see market trends shifting again. For the first time since 2011,  more people paid cash or financed their residential solar panel systems, than signed leases, or PPA agreements. This trend is a reversal of what was happening, and it is still the opposite of how the commercial sector is installing solar, according to a report from GTM Research.
 
Approximately 90 Percent Of New Solar Consumers Are Cash Buyers

Roughly 90 percent of new consumers of solar panel installations were paid for with cash or financing, while third-party-owned solar panel systems dropped to just 41 percent. Expected by economists, the trend has witnessed. As the industry changes and moves toward consumer ownership, companies that offer third-party ownership (TPO) are in short supply, and the ones that do provide it exclusively, are losing business to the ones who work with financial institutions. 

Also, when Tesla purchased SolarCity, the corporation moved away from a TPO business model, to one where homeowners buy Tesla solar equipment and batteries. Vivint also ran away from the TPO market, and that forced the switch.

Stated in the report we have mentioned, the share of TPO in the market is expected to drop to 33 percent by 2023 as companies switch to consumer ownership of the solar panels. This TPO percentage is higher than previously forecasted, as legislation in states like Florida allow for companies to lease solar panels to customers whereas before they could not. This practice will cause a slight rebound in the TPO market, but it won’t stop homeowners from buying their solar systems.
 
Solar Loans Become Popular

Market trends are important indicators of consumer preference. As the popularity of solar loans grows, many banks, credit unions, and solar-only loan companies are entering the market. Mosaic is currently the most popular residential financier with about 14 percent of the market. This seems to be because they choose to work with more than 150 of the leading solar installers in the country. Many other banks and financiers are able to find room in the market because sometimes they can find a niche group that fits them. Sunlight Financial is one of the financial institutions that use their tight relationship with a few large installers. Dividend Solar, another company, is growing because they fit in with a lot of smaller installers.
 
Competition In The Solar Market Flares

Shifting market trends have indicated many solar-specific loan providers, as well as traditional banks and credit unions, have recently entered the solar market. This competition has led to very competitive rates for the solar panels. While it might hurt some of the loan providers who continue to offer such low rates, but others state that this is just the market correcting itself, and companies that don’t adapt will always fall to the side. Some lenders are primarily focused on growth and market share, while others are focused on more profitable sales.

It is common now that solar lenders are expanding into additional verticals such as storage and home improvement to boost margins. At the same time, roofing companies are partnering with lenders, and solar distributors, to offer their customers a complete modern solution, and not just a new roof. 

In today's solar market landscape, there are more than 30 banks and credit unions that specialize in solar panels loans. Homeowners are also becoming more comfortable with more extended loans because they see that it will improve the value of their home, and banks are warming to customers for the same reason. As the industry grows and solar panels become ubiquitous, this trend will only continue.
 
 $1.4 billion Solar Panel Loans In 2017

The same report mentioned also demonstrates that 2017 was a record year for solar securitizations, with more than $1.4 billion in issuances (up from a cumulative $795 million prior to 2017). While GTM Research expects Mosaic and Dividend Finance to continue to securitize as a way to raise capital (in addition to selling portfolios of loans), most other lenders choose to finance themselves exclusively through portfolio sales, which can generate higher returns than securitization.

If you want to move into the future and join the solar revolution, or if you want to find out what solar panels are right for you, go to HahaSmart.com and try our price checker tool. You can see how much a system will cost, and how much you can save over the next 20 years.

For more information relating to going solar, don't forget to visit our solar blog section for more handy guides and articles.