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What Can Solar Companies Do To Woo Homeowners In A Booming Solar Market?
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What Can Solar Companies Do To Woo Homeowners In A Booming Solar Market?

Mar 5 2014, 9:21am CST | by

The U.S. residential solar market grew the fastest in 2013 and will likely outshine the other market segments again in 2014, according to a report released Wednesday. Home solar installations jumped...

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33 weeks ago

What Can Solar Companies Do To Woo Homeowners In A Booming Solar Market?

Mar 5 2014, 9:21am CST | by

The U.S. residential solar market grew the fastest in 2013 and will likely outshine the other market segments again in 2014, according to a report released Wednesday.

Home solar installations jumped about 60% to reach 792 megawatts last year, said the report by GTM Research and the Solar Energy Industries Association. Overall, workers completed about 4.8 gigawatts of projects in 2013 for homes, businesses and utilities throughout the country, a 41% hike from 2012.

For 2014, the forecast calls for 6 gigawatts of new solar panel installations nationwide, representing a 26% growth.

“Growth will occur in all segments, but will be most rapid in the residential market,” the report said.

That boom already is causing an intensifying competition for homeowners’ attention. The latest example comes from Mosaic, a California startup that announced on Wednesday a loan program that it’s launching with installer RGS Energy.

Mosaic will focus on lining up investors to replenish the fund while RGS will market the financing option to its residential customers, starting in California. Mosaic has stood out with its online, crowd-funding campaigns to get individual investors to put money into solar projects from developers who turn to Mosaic for funding. The company promises a steady return over five to 10 years.

Buying solar equipment outright remains an expensive approach, costing tens of thousands of dollars. As a result, financing options have propelled the growth of residential market growth.

popular choice is the lease, in which a homeowner forks over little or no money upfront and pays a monthly fee for the solar electricity from his rooftop solar panels. The majority of the residential solar installations stop solar states today involve leases, which usually run 15-20 years.

California, which generates the most solar electricity in the country, installed 410 megawatts of residential systems and 293 megawatts of commercial projects in 2013, said Shayle Kann, senior vice president of research at GTM.

That growth came despite a nearly tapped out state incentive program. The declining prices of the solar energy systems and another state policy that gives homeowners credits on their electric bills for sending solar electricity they don’t use to the grid – along with a 30% federal investment tax credit – continue to make solar attractive to homeowners. The average price of a solar energy system fell 15% during 2013 to reach $2.59 per watt in the fourth quarter, GTM said.

Here are more examples of how competition is heating up: Vivint Solar, the country’s second largest residential installer, just raised a $280 million fund from undisclosed financial institutions to pay for residential leases. The largest of them all, SolarCity, is working an online portal to attract investors for its residential and non-residential projects.

SolarCity also is developing its second securitization offering, which could be as much as $200 million. SolarCity was the first in the industry to sell notes backed by its rooftop solar systems, a deal it completed last November. It also bought two companies last year to improve its sales and cut labor time and costs.

Meanwhile, Soligent, a long-time solar equipment seller, sees an opportunity in helping smaller solar companies grow by offering services in sales, design, financing and installation. The company launched those services last October.

And let’s not forget Sunrun, a solar financing company that recently bought the residential installation business of Mainstream Energy. SunPower, which started off as a solar panel maker before become a project developer as well, entered the residential leasing market in 2011 and announced a $220 million fund for residential leases with Bank of America Merrill Lynch in January this year.

While the residential market has room to grow, major solar companies are fighting over customers mostly in the same states where incentives have driven much of the growth.

Mosaic contends that the growth rate of the leasing business has slowed in the past six months, however.  The company said  homeowners are increasingly interested in borrowing money to buy their own set of solar panels and taking advantage of that 30% federal tax credit. Some banks and other solar companies share that view. Mosaic expects to make loans that range from $5,000 to $50,000 through its new program with RGS.

 

Source: Forbes Business

 
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