SolarCity (SCTY) has joined with Honda Motors on a $65 million residential solar project fund for the benefit of Honda and Acura car buyers.
SolarCity expects the fund to finance thousands of residential installations across its fourteen-state territory, according to a release, which establishes the fund as a way "to remove a pervasive obstacle to the broader adoption of solar power: the high initial investment associated with installing solar power."
The fund allows Honda customers to get solar installed with low upfront costs and a lower electricity bill -- while SolarCity deals with insurance, repairs and monitoring. SolarCity also offers home audit and energy efficiency services as part of its program.
SolarCity CEO Lyndon Rive said, “This is an unprecedented partnership -- few companies have made a more substantive or comprehensive commitment to environmental responsibility than Honda.”
Shayle Kann, VP of Research at GTM, comments, "This seems valuable to SolarCity for two reasons. First, Honda is new to financing residential systems. Given that there have been less than ten active residential solar investors historically, every addition counts. Second, this serves as a new lead-generation channel for SolarCity."
Kann adds, "Apart from this, I would speculate that there are a number of tangential benefits, such as the fact that Honda owners are probably more likely than the general population to qualify for a residential solar lease, and the fact that car owners are likely more primed to understand a leasing arrangement."
He concludes, "Finally, it seems likely that a residential customer who is not familiar with solar (or SolarCity) might be more likely to pursue the possibility when Honda's name is attached to it, much like a customer might be more likely to consider residential solar if it is sold at a Wal-Mart."
Third-party ownership (TPO), as offered here, has become the leading finance model across the big residential markets in the U.S. According to GTM Research's recent report, Residential Solar PV Financing: The Vendor, Installer and Financier Landscape, 2013-2016, "Third-party financed residential installations comprise greater than 50 percent of new capacity in California, Arizona, Colorado and Massachusetts, with the model gaining greater market share in other states such as Connecticut, Delaware, Maryland, New Jersey, New York, Oregon, Texas, Vermont, and Washington."
Kann suggested in an earlier interview, that in addition to the usual third-party financing companies such as SolarCity and Sunrun, the industry should keep its eye on newcomers with a unique twist on financing such as OneRoof and Vivint.
We spoke with the David Field, the CEO of OneRoof Solar, last month.
OneRoof does not have any crews itself but works with roofers to lease and install residential photovoltaic systems and integrate the roofing and solar installation into one process. It makes sense that when you already have contractor boots on the roof that you also consider financing and installing a solar system.
Field said that OneRoof has financed 2,000 rooftops so far and has a goal of financing 8,000 to 10,000 rooftops in 2013. He added, "The focus is on acquiring customers [...and] driving down the cost of customer acquisition."
OneRoof has raised more than $80 million in operating capital and finance capital from Hanwha, Black Coral Capital, U.S. Bank (a subsidiary of U.S. Bancorp; NYSE:USB), The Quercus Trust, Yellowtree Energy, and Spring Ventures. U.S. Bancorp has provided hundreds of millions in financing resources for several other residential PPA firms.
The OneRoof CEO said his goal in life "is to expand the market for residential solar by driving through different channels."
We've reported in detail on Vivint, recently acquired by Blackstone for $2 billion, which can leverage the 675,000 customers of its home security and automation services to move to solar power.
SolarWorld is promoting a financing program "dedicated exclusively to American-made solar products." The plan "guarantees the use of high-quality American-made solar panels in every installation, responding to American consumers’ recently surveyed strong preference for products made in the USA." “The majority of leased solar systems installed in the U.S. last year relied on imported panels from China,” according to Rusty Pittman, director of marketing for SolarWorld Americas.
GTM Research notes that SolarCity (currently the largest player) and Sunrun pioneered the residential third-party financing model, closely followed by Sungevity. (Sungevity closed on $125 million in new venture capital and project financing last month.)
SunPower entered not long after, offering residential leases through its strong dealer network.
SunPower's residential lease program has signed up a total of 14,200 customers and installed 114 megawatts on rooftops. The company also recently finalized a $100 million agreement with U.S. Bancorp in lease financing. SunPower is seeing its leasing program accelerate, with demand overtaking financing capacity, exhausting its cash grant lease program months ahead of schedule. The firm looks to launch new financing programs in the European market, much like its leasing business in the U.S.
Other players in the world of residential solar finance include Clean Power Finance, Borrego Solar, Solar Universe, and Sun Edison.
GTM Research sees the residential solar financing market in the U.S. growing from $1.3 billion in 2012 to $5.7 billion in 2016.
With all that growth, there are some headwinds in the third-party-ownership world. There's the Treasury investigation into the 1603 grant program amidst questions that companies such as SolarCity, Sunrun, and Sungevity have been embellishing the prices claimed on their grant paperwork. Lyndon Rive, SolarCity CEO, comments on that here, and SolarCity also offers a rationale for the practice.
Another potential obstacle to TPO is the plummeting cost of solar, which makes solar increasingly easier to purchase outright. Shayle Kann points out the other shadows in the distance: the net-metering debate, the expiration of the ITC, the decline of state incentives, and the availability of project finance to scale with the aggressive ambitions of all of these companies.