The heavy upfront costs of a residential solar system is one of the biggest obstacles for people that want to start generating their own clean energy, whether they are motivated by cutting their carbon footprint or lowering their electrical bill.
Only in the last couple of years, there has been a rapid growth in number of solar installations across the country: The major reason being new and creative financing models, which either drastically lowers or completely eliminates the upfront costs of solar systems for the customer.
California is the Nation’s Largest Residential Solar Market
PV Solar Report and Sunrun, one of the largest solar installers in the country, just recently published new numbers on the development of the solar market in California:
According to their report, the Californian market has nearly doubled (80%), compared to the same timeline one year ago.
¾ Homeowners Prefer Third-Party-Owned
Sunrun’s co-Founder Lynn Jurich, credits the newfound expansion in the industry to third-party-owned solar:
“Home solar is at the tip of the iceberg in terms of growth, […] As costs continue to drop and more homeowners realize they can go solar without high upfront payments, adoption will scale exponentially.”
The same report showed that in most cities that were surveyed (all in California), more than 75% of homeowners preferred solar service to buying panels.
Third-party-owned solar was already more than 50 percent of the residential market in California last year. This number has now risen even further. Below is an overview over the market share growth in California since March 2011:
Although the Californian market is at the very top when it comes to third-party-owned solar, the same trend can be seen in the rest of the country as well.
There are two main financial models based on third-party-owned solar:
The solar company owns the solar panels, is responsible for installation, maintenance and repair. The customer pays a fixed amount every month, and will receive bill credits according to how much power the solar panels generate and the caps and limits of the net metering system where they live.
Power Purchase Agreement (PPA)
The PPA model is almost identical to leasing. The only difference being that you pay for the electricity that the solar panels produce on a per kWh basis.
What model to choose is ultimately determined by what state you live in and which electric utility connects to your system.
Both PPA and leasing have the advantage that the customer/homeowner will not have to pay heavy upfront costs (usually somewhere between $15,000 to $60,000 for a complete solar system), which makes the investment much more feasible for most people. All that is required is a suitable place to put the solar panels.
The opinions expressed in this article are solely those of the author, Mathias is doing a Masters in Energy Engineering. In his free time he writes about solar panels cost at Energy Informative, as well as wind and geothermal power.