Economics of Rooftop Solar
While the cost of solar photovoltaics has fallen dramatically, the upfront cost of a residential system remains a significant barrier for many. Incentives, which make solar a more attractive investment, are no substitute for financing, which makes that investment possible in the first place. An equitable solar policy supports both incentives and financing.
Solar Loans: Some utilities provide low-cost financing options and some banks or credit unions provide “green” loans targeted at renewable energy improvements. See this List of Solar Lenders and consult your local utility.
State Incentives: Many states and utilities offer incentives in the form of rebates, tax credits, and production incentives. For an overview of incentives by state, visit the Washington and Oregon incentive pages.
Group Purchase Model: Neighborhood group purchase campaigns, such as Solarize Washington, can help reduce the upfront cost of solar PV by providing a concentrated and informed market, streamlining the development process, and collectively negotiating with a solar contractor.
Third Party Ownership: Under third party ownership, a solar finance company owns the solar system and the building occupant pays a monthly fee for the use of the solar energy produced—either as a lease payment or through a power purchase agreement. Third party ownership is active in Oregon, but is currently limited in Washington.
Property Assessed Clean Energy: By creating special tax assessment districts, state and local governments can provide homeowners with upfront funds for approved home improvements in exchange for additional property tax payments. (PACE programs are currently not available in Washington State.)
The current Washington solar market is over 90% single family (residential) systems, purchased by homeowners who currently have tax appetite to take the Federal Tax Credit. This paper seeks to evaluate different kinds of ownership and financing models from the customer perspective. It explores the possibility of Third Party Ownership in Washington State,as well as the untapped potential of government as a consumer. Published 2015.
The Lawrence Berkeley National Laboratory (LBNL) released a new report in June 2015 that explores how some state and local PV incentive programs have responded to the dynamic solar energy market environment by adopting their incentive offerings to help optimize expenditures and maintain their relevance. The report describes the evolution of residential PV finance in the United States since 2007 and pays particular attention to market drivers in each case.
The National Renewable Energy Lab’s report released in November 2014 provides a high-level overview of the developing U.S. solar loan landscape. It covers the range of consumer and commercial loan products available for financing solar, discusses the market players in the distributed solar loan space, and provides analyses of how solar loans stack up against third-party financing.
To Own or Lease Solar: Understanding Commercial Retailers Decisions to Use Alternative Financing Models
This NREL report examines the tradeoffs between solar financing methods for businesses in case studies of two commercial retailers: IKEA, which owns its PV, and Staples, which leases its PV through PPAs. The report clarifies the economic and institutional costs and benefits of financing strategies.
The Clean Energy States Alliance (CESA) has released a new guide to help homeowners navigate the complex landscape of residential solar PV system financing. This free online guide describes three popular residential solar financing choices – leases, loans, and power purchase agreements (PPAs) – and explains how they compare to a direct cash purchase. It clarifies key solar financing terms and provides a list of questions homeowners should ask before deciding if and how to proceed with installing a solar system.
Published by the Evergreen State Solar Partnership, this white paper introduces the concept of Third Party Ownership (TPO) as a strategy for financing solar systems and discusses the challenges and opportunities of allowing TPO in Washington state. Published June 2013.
This webinar covered local and national best practices and examples of utility solar loans and rebates, utility-owned community solar, third party ownership and financing, and other creative government efforts to facilitate financing. This webinar was geared for utility, government, and financial partners that have an interest in advancing financing options for solar PV. Delivered February 5, 2013.
Published by the Evergreen State Solar Partnership, this report provides a brief summary of the financing options and incentives currently available in Washington State for solar PV systems. Published February 2013.
A summary of the findings of the Evergreen State Solar Partnership’s financing work group. This fact sheet summarizes the latest incentives and financing available to Washington residents and provides examples of how utilities, local governments, and financial institutions are deploying programs to encourage investments in solar.
Published by the National Renewable Energy Laboratory, this report examines new and innovative financing methods for residential PV and compares them to traditional self-financing methods. It provides policymakers with an overview of advantages and challenges between various financing mechanisms. Published October 2012.