Loans And Cash Eclipse Leases And PPAs In The Solar Market


As the economics of solar technology continue to change, homeowners are also changing the way they pay for rooftop installations.


According to “U.S. Residential Solar Financing 2016–2021,” a report by market research firm GTM Research, more U.S. residential solar customers are choosing to purchase, rather than lease, their solar panels. The report projects that 55 percent of all U.S. residential solar capacity installed next year will be purchased by customers paying either in cash or with a loan.


This marks a reversal of the recent trend, as so-called third-party ownership emerged as the preferred method of financing. Leases and power purchase agreements (PPAs), the prevailing forms of third-party ownership, represented 72 percent of all systems installed in 2014.


The report said several factors will propel direct purchase to the top of the market, a position it has not held since 2011. For example, large national installers that deploy more solar in the form of leases have seen their business declining. At the same time, local installers that sell more systems for cash are expanding their operations. As the costs of solar decline, owners are also finding it more economical to purchase solar panels.


The report also points to emerging state markets, such as Utah and Florida, where PPAs are not allowed under current laws, and installers have no choice but to sell systems to customers. Finally, the loan market offers many more options than the leasing market, providing the economies of choice to consumers when choosing to borrow to pay for their panels.


This trend will continue for at least another five years. GTM Research forecasts that 73 percent of all solar-power systems sold in 2021 will be owned directly by customers.


About the Author

Rick Laezman

Freelance Writer

Rick Laezman is a Los Angeles-based freelance writer who has been covering renewable power for more than 10 years. He may be reached at richardlaezman@msn.com.

Stay Informed Join our Newsletter

Having trouble finding time to sit down with the latest issue of
ELECTRICAL CONTRACTOR? Don't worry, we'll come to you.