SolarCity’s nearly four-month old residential solar leasing program has become so popular that 90 percent of the company’s sales now come from the program, the company said this week.

"Since April, when we started offering this program, we have already surpassed all of our 2007 sales," said David Arfin, vice president of customer financing for SolarCity, at the Intersolar conference in San Francisco during a Wednesday Greentech Media seminar.

Arfin said the privately owned company in Foster City, Calif. tallied $29 million in sales last year.

While solar power systems can pay for themselves over time, they are expensive to buy and install. The upfront cost has prevented many single-family homeowners in the United States from producing their own renewable and cheaper energy.

SolarCity's SolarLease program offers to cut homeowners’ upfront solar-installation costs from about $25,000 to about $2,000. The company guarantees a minimum amount of power from the system and charges a fixed monthly fee.

In late April, SolarCity announced it would offer a zero-down financing option to California and Arizona residents until July 31. Previously, residential customers would have to pay for the solar power equipment outright and for the installation cost, usually with the help of a bank loan.

The SolarLease program, backed by Morgan Stanley, is working to help make residential solar more accessible through financing.

SolarCity isn't the first to try to attract new customers by offering financial options that make solar power installations more affordable.

Open Energy Corp., which finances residential solar projects, announced its first agreement in March. The deal with Jon DeWald & Associates calls for Open Energy to finance and install 1.2-kilowatt solar-power systems on 47 town homes in California. The company, which also manufactures the solar equipment, says it requires no upfront cost from developers or homeowners (see Solar Roundup: Another Tax-Credit Proposal, Big Deals for Solar-Thermal and Thin-Film).

SunRun, which installs and operates residential solar systems and charges homeowners a fixed rate for the electricity, emerged from stealth mode in September (see Power Purchases for the People).

Businesses that want to generate solar energy for their own use have turned to companies such as SunEdison and MMA Renewable Ventures, which offer power-purchase agreements, or PPA, to help their business customers offset the costs.

Under the PPA model, MMA and SunEdison would buy, install and operate solar energy equipment in exchange for the right to sell the electricity back to their commercial customers.

The model has worked in the commercial market where solar companies typically work on fewer, but larger, projects.

But bringing such a model to the residential market – where small-scale installations mean the companies would have to deal with a greater number of customers, handle more paperwork and run a decentralized maintenance operation – has proven difficult.

But that hasn’t prevented more companies from trying different approaches to make money from the residential market.

Not all residential solar installers find the PPA model or the leasing program a lucrative approach, however.

After going to a variety of financing conferences and meetings with lawyers, "we were advised not to do it," said Steven Daniel, executive vice president of sales and marketing for Akeena Solar (NSDQ: AKNS).

To make a PPA or a leasing program work, solar companies would have to raise a hefty amount of money from private investors or through bank loans to offset the equipment and operational costs.

Daniel said it's harder to get banks to provide financing for companies to offer residential leasing programs because they tend to be small, often requiring low millions in loans, and are not likely to provide a lucrative return for the banks.

Still, Akeena sees opportunities in the residential solar business and has formed a partnership with SunRun recently. In May, SunRun said it would provide homeowners with Akeena’s solar power system.

Daniel estimates that about 20 percent to 25 percent of Akeena's sales are now coming its SunRun partnership.