Last month GTM Research published its latest report on residential solar financing. As part of that update on the leaders and trends in the industry, we outlined the top (and emerging) finance providers in the market.
Source: GTM Research's U.S. Residential Solar Financing 2014-2018 (click to enlarge)
We changed the format and companies included in this taxonomy since the version released last year to reflect two important trends we’re following in the world of residential solar finance.
First, while last year’s taxonomy was exclusively a list of companies offering third-party-owned solar (leases and PPAs), we’ve since added loan providers to the list. Third-party ownership is expected to peak at 68% of the residential PV market this year, and loans are already beginning to play a much larger role as a financing option for consumers. Loan providers include banks (Admirals), as well as new players in the residential solar market, some of which have experience financing energy efficiency loans (Kilowatt Financial) or commercial solar (Mosaic).
Second, we split the companies into four categories based on business model. The first two were previously the only major financing models that existed in the residential market:
- Vertically integrated financiers both provide financing and install systems themselves. The only two companies that currently use this model are SolarCity and Vivint, the two largest residential installers.
- Partner model financiers provide financing for systems installed by multiple local or regional partners. Currently, this list includes companies that provide leases (e.g., Sunnova), loans (e.g., Sungage Financial), and both (e.g., SunPower).
Over the past six months or so, two entirely new categories have emerged as a result of acquisitions and other changes to business models:
- Semi-integrated financiers finance all systems but use both partners and internal resources for sales and installation. Falling into this category are Sunrun and NRG, each of which recently acquired one of their installation partners but still continue to utilize others.
- Semi-integrated installers use both internal and external sources of financing but sell/install all systems themselves. Included in this list are Sungevity, which recently began installing systems for Sunrun and Clean Power Finance in addition to using its own financing, and RGS Energy and Astrum Solar, two installers which are now raising their own project funds.
Which of these models will prove most effective? So far, SolarCity’s status as both the leading installer and the leading TPO provider (complete third-party financier rankings are available in the report) supports the vertically integrated model. However, the shifting mix of consumer financing options suggests that the future market leaders will be those which can combine a scalable business model and the availability of financing options that consumers want.
Nicole Litvak is a solar analyst at GTM Research and the author of the recently released report U.S. Residential Solar Financing 2014-2018. For more information on the report, visit http://www.greentechmedia.com/research/report/u.s.-residential-solar-financing-2014-2018 or contact Matt Casey at Casey@gtmresearch.com.