Here at GetSolar just about every conversation we have with homeowners involves a discussion around solar financing options; be it leasing, power purchase agreement, loan, home equity line, cash, you name it.  Residential Leases and Power Purchase Agreements (PPA’s) have driven some 30% of California solar installations in the last year, and for good reason. For many customers, they can start saving on their electric bills right away, while keeping more cash in their pocket for other expenses. We welcome additional financing choices in these markets, as it helps our partner installers offer creative solutions to residential solar customers, allowing them to save money on their utility bills while helping America strengthen its energy future.

See the press release.

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SunPower Corp. and Citi today announced a new fund to finance approximately $105 million in residential solar lease projects. According to the announcement, the lease program will be available to qualifying homeowners in eight states: Arizona, California, Colorado, Hawaii, Massachusetts, New Jersey, New York and Pennsylvania.

Here’s a requisite sound bite:

“Citi’s global financial leadership combined with SunPower’s leading technology and quarter century of experience offer customers an unprecedented level of assurance that is vitally important when a homeowner enters into a 20-year lease agreement,” said SunPower CFO Dennis Arriola. “We are proud to partner with Citi, and applaud its commitment to promoting the use of solar power.”

Solar leases enable homeowners to pay a monthly fee for their solar home energy system rather than buy it outright. The approach makes good financial sense in those parts of the country where the homeowner’s combined monthly lease payment and electric bill sum to an amount that’s less than their pre-solar electric bill. Let’s take a quick example:

• Current electricity bill = $200/month
• Projected bill after installing solar panels = $100/month
• Your monthly solar lease payment = $60/month
• Monthly savings from Day 1 = $40

Solar power is relatively less cost competitive in those regions, like the Southeast, where electricity rates are lower than the national average. That’s partly why you’ll tend to see many solar lease options available in states like California and New York, but relatively few in, say, Alabama.

The news from SunPower and Citi comes just a few days after Sungevity, a California-based solar lease provider, announced a mid-summer tour to promote its financing option among homeowners in five northeastern states. And, back in June, Google announced it would provide $280 million to SolarCity for its residential lease programs. The other major solar lease provider is SunRun, which is active in nine states across the U.S.

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Sungevity, a California-based company that bankrolls the option to lease solar panels for an increasing number of Americans, is coming to five northeastern states — in an ice pop truck.

As part of the company’s Rooftop Revolution campaign, Sungevity representatives will pile into a bio-diesel-powerd ice pop truck equipped with solar panels and tour New York, New Jersey, Maryland, Massachusetts and Delaware. Destinations along the route include events like music festivals, county fairs, farmers markets and minor league baseball games.

Two other solar lease providers, SunRun and SolarCity, are already active in parts of New England and the Mid-Atlantic.

Patrick Crane, Sungevity’s Chief Marketing Officer, had the following to say about his company’s summer initiative:

[w]ith our ‘Rooftop Revolution’ campaign, we are taking the leadership position in breaking through the last major barrier to adoption – raising awareness around the ease, accessibility and most of all, the affordability of solar energy.

Why ice pops? Well, if you couldn’t tell, the campaign is ripe with symbolism, as explained in the press release:

[The ice pops] symbolize solar energy as the refreshing alternative to fossil fuel.  Quarters on Sungevity-branded seeded paper also will be distributed to symbolize the cost savings homeowners’ typically experience through the company’s $0down solar lease.

As hokey as the campaign may sound, who in their right mind is going to turn down a free ice pop in 100-degree heat?

All joking aside, it’s great news that Sungevity is moving into the northeast. While the region doesn’t get as much annual sunshine as some other parts of the country — like the southwest — its residents tolerate some of the highest electricity rates in the country. It is exactly here, where the price for conventional electricity is the highest, that solar power often makes the most financial sense.

Related: Lowe’s Teams with Sungevity to Offer Solar Lease Option, Starting in California

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Last week, Google announced a plan to invest $280 million in SolarCity, a California-based company that offers solar leases in ten states across the U.S.

Hours after, news broke that Suntech Power Holdings Co. Ltd — a large China-based manufacturer of solar panels — was working on plans to offer a solar home energy lease option of its own. Both developments are likely to increase the availability of solar leases to qualifying homeowners in select states.

Speaking at the Reuters Global Energy and Climate Summit in San Francisco last Wednesday, Suntech America President Steven Chan said the company plans to launch four or five financing programs in the U.S. market in the coming six to nine months. Beyond solar home leases, plans are also in the works for a power purchase agreement (PPA) option for commercial projects and a financing initiative for utility-scale projects.

Suntech’s residential solar lease option is somewhat unique in that it will be spearheaded by a manufacturer. By contrast, the core business of SolarCity — and other solar lease providers like Sunrun and Sungevity — is to provide financing and arrange for solar installation, maintenance and other services.

Why should you care?

Solar leases have become popular in recent years mainly because they enable homeowners to pay a recurring fee for solar panels instead of a large amount upfront. That fee is typically more than offset by savings on monthly electricity bills.

Solar leases aren’t without their limitations, however. Sunrun and SolarCity, for instance, currently only operate in ten or so states. And, just like any kind of financing, standard solar lease offers require homeowners meet minimum credit requirements in order to participate.

Nevertheless, Suntech’s residential solar lease option should help make solar power an affordable, accessible option for more American homeowners. This is especially true because Suntech solar panels are among the most competitively priced on the market today.

Image of Suntech’s building in China (above) via Suntech America.

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In order to connect a residential solar photovoltaic (PV) system to the electric grid, homeowners across the country are required to complete the permitting process set up by their local government.

By convention, solar installers handle the associated paperwork. But permitting variations from town to town can nevertheless increase solar installation costs. A recent report by SunRun, for instance, suggests that inconsistent local permitting and inspection processes add about $0.50 for each watt of solar PV installed. In other words, simply harmonizing permitting standards could shave about $2,500 off the cost of installing a residential solar power system. Clearly, we’re not talking chump change.

Vermont lawmakers agree.

Answering the pleas of pro-harmonization groups like SolarTech and VoteSolar, Vermont Governor Peter Shumlin last Wednesday signed the Vermont Energy Act of 2011, which (among other things) sets up a standard permitting process for solar PV systems smaller than 5 kilowatts (kW) in size.

“These are the sort of ‘Micro-Policy’ Innovations critical to driving up to $1.00 per watt of red-tape out of the marketplace in the next few years,” Doug Payne, SolarTech’s co-founder and Executive Director told Greentech Media. “We still need to standardize on codes, inspection requirements, and fee structures, but this is clearly a step in the right direction.”

SunRun’s Director of Government Affiars, Ethan Sprague, meanwhile suggested the optimal permitting process for small PV systems “should be more like installing an appliance than re-wiring a house.”

It bears noting that the cut off for the standardized permit is 5 kW, which may prove to be limiting in coming years as the average residential system size in the U.S. continues to increase. Nevertheless, Vermont’s new law represents an important step toward reducing the so-called “soft-costs” associated with going solar — and it proves that a standardized permit-granting process can be implemented across various jurisdictions.

Image credit: AllEarth Renewables

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The home improvement retailer has taken a minority stake in Sungevity that will help each company make up ground where it was previously lacking. Starting at stores in California, Lowe’s will at last have a solar power option to discuss with its customers. Its main competitor, Home Depot, has offered such an option since March 2010, when the Atlanta-based company launched a partnership with SolarCity.

Sungevity, meanwhile, will get some in-store exposure. Until now, the solar company has connected with potential customers almost exclusively via its website, where, like GetSolar, it provides free solar quotes.

Why might you be interested in leasing a residential solar-panel system?

Simply put, leasing solar panels can be an effective way to immediately reduce your monthly electricity bills without having to cover the solar installation costs with a loan or cash. When a solar lease provider like Sungevity or SunRun has solar panels installed on your roof, you’re in effect signing up to lease lower monthly bills for 12 or 15 years, depending on the contract terms. Solar leases work when the new lease payment and the resulting (lower) electric bill are less than the original, pre-solar electric bill.

When does that happen?

Unfortunately for many Americans, the conditions are currently right for solar leases only in several states. So while 15 million people visit Lowe’s nationwide each week, only a sliver of them will get a peek at Sungevity’s solar lease.

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One that’s being discussed a lot lately is that solar homes tend to sell at a premium relative to non-solar homes. Why?

Andy Black, founder of OnGrid and an industry expert on solar economics, explains
by discussing an example where a homeowner installs a solar energy system that saves $1,000 a year on utility bills:

The rational is that if the $1,000 is not spent on electricity, it is available to be spent on a larger mortgage payment at no net change in the cost of living. The amount of mortgage that can be supported by $1,000 depends on mortgage rates and the tax rate of the borrower.

Black goes on to discuss in detail mortgage- and tax-related impacts (see the full paper, “Financial Payback on Residential California Solar Electric Systems“). He also discusses a commonly cited rule of thumb that a solar photovoltaic (PV) system increases home value by $20,000 for every $1,000 reduction in annual operating costs.

The main takeaway here is that, all else equal, the cost of ownership for a solar home is lower than for a conventional one. That extra cash freed up by the solar panels may be applied to either a larger mortgage, as Black suggests, which supports both the desirability and resale value of the home itself.

To be sure, most of Black’s financial analysis focuses on the country’s largest solar power market, California. As such, not all his case studies will apply in every market across the U.S. Nevertheless, as more homeowners begin to appreciate the value of consistently low electric bills, we expect solar-powered homes to continue to sell at a premium relative to non-solar ones.

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The recently completed facility is located on 47 hectares (116 acres) in Brandenburg an der Havel, near Berlin. The power plant has a peak capacity of 18.65MWp, which puts it among the largest in Germany.

Google is always looking for new ways to encourage development and deployment of renewable energy across the world. This facility will provide clean energy to more than 5,000 households in the area surrounding Brandenburg. Until the early 90’s, the site was used as a training ground by the Russian military. We’re glad it has found a new use!

We agreed to jointly invest in this project with the German private equity company Capital Stage, which brings strong experience in the German photovoltaic and renewable energy market. Germany has a strong framework for renewable energy and is home to many leading-edge technology companies in the sector. More than 70% of the solar modules installed in Brandenburg are provided by German manufacturers.

Google has been making headlines for its clean energy-related activities in the U.S., as well. The company is backing a plan to build an undersea transmission line that, if completed, would facilitate the transfer of offshore wind power to densely populated Atlantic seaboard markets.

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(1) Michael Liebreich, chairman of the research group, noted in a talk that he expects the cost of developing a solar power project to drop by half in the next decade, worldwide. New Energy Finance numbers suggest the cost of large solar photovoltaic (PV) projects to decline to from  around $3.00 per watt today to $1.45 per watt in 2020.

A reduction of that magnitude would make solar energy more competitive with fossil fuels. Note, however, that the cost of large-scale solar has always been — and will likely remain — lower than the costs associated with residential solar energy installations.

(2) Meanwhile, New Energy Finance analyst Chris Gadomski expects that plans to build more nuclear reactors in the U.S. will go forward, despite calls to scale back nuclear’s role in our energy mix.

“We’ll see a reassessment and reevaluation and then stay the course,” Gadomski said today at a conference in New York today. Plans to build the five reactors are already underway, he said, and “We don’t see that changing.”

You can follow the conference chatter on Twitter: #BNEF2011

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Citing unnamed sources, China Securities Journal today reported that the country’s solar target might be raised to 10 gigawatts (GW) of PV by 2015, up from the current target of 5 GW. For comparison, global solar PV capacity was about 40 GW in 2010.

This news comes after a report released yesterday found that, in terms of clean energy investment, the United States has slipped to third place behind China and Germany.

Put out by the Pew Charitable Trusts and titled, “Who’s Winning the Clean Energy Race?,” the report offers some additional insights beyond “the U.S. is losing”:

• Worldwide clean energy investment and finance has grown 630 percent since 2004.
• Regionally, Europe remained the leading recipient, attracting $94.4 billion, led by Germany ($41.2 billion) and Italy ($13.9 billion).
• Italy ranked fourth, attracting $13.9 billion. It is the first country in the world to achieve grid parity, or cost-competitiveness, for solar energy.
• The Asia/Oceania region, led by China, continued its sharp rise, attracting $82.8 billion, a 33 percent increase over the previous year.
• The Americas also saw investment grow 35 percent, but as a region it remains a distant third, attracting $65.8 billion.
• Investments in small-scale, residential solar in G-20 countries grew by 100 percent to $56.4 billion. Germany accounts for more than half the total, followed by Japan, France, Italy and the United States.
• Installed generating capacity increased to 388 gigawatts from wind, small-hydro, biomass, solar, geothermal and marine, with China accounting for more than 25 percent of the global total

It’s worth noting that China is the world’s biggest exporter of solar panels, and is home to such solar-panel-making powerhouses as Suntech Power, JA Solar, Trina Solar and LDK Solar. Assuming that these companies continue to hold a decent share of China’s internal market, a new solar PV target of 10 GW would help advance China’s energy independence goals.

It’s also worth noting that the U.S. held the number one spot until 2008, when it was eclipsed by Germany.

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