Third Party Ownership Financing for Residential
Solar
James Tong
Senior Director
November 2013
Helping Investors Build and Manage
Solar Portfolios, at Scale

Manufacturers
Distributors
Installers

Financial Services
a...
Residential Solar Currently Dominated by Third Party
Owned (TPO) Financing
Growing Share of TPO Financing

Installation Co...
Trends in Residential PV in CA
Top 50 Residential PV Installers in California
Q1 & Q2, 2012
8,747 Residential PV
systems
6...
Studies suggest TPO Financing is open solar to new
customer segments
Correlation between PV
adoption and household
income
...
Differences in PV economics for Lease v. Own
PV adopters have similar expectations of returns

Third Party customers have ...
Third Party Financing Currently Limited in Select States
Availability of Residential Third Party Solar Financing




TPO...
Contact
James Tong
Senior Director, Strategic Initiatives & Government Affairs
jtong@cleanpowerfinance.com
Appendix

9
Overview of Third Party Ownership Financing
Product Attributes
•
•
•
•

Typically require 680+ FICO
10 - 20 year term
Down...
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November 21, 2013 | Next Steps: Financing solar for your business | James Tong: Third party ownership financing for residential solar

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For many businesses and property owners, the high upfront cost of solar photovoltaic systems remains the single largest barrier to adoption. The solution? Solar financing. Fresh Energy’s solar financing event, the final installment of a three-part Solar Opportunities Series, will introduce participants to the range of current and emerging solar-financing options available in Minnesota. Learn more at fresh-energy.org/solarseries.

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November 21, 2013 | Next Steps: Financing solar for your business | James Tong: Third party ownership financing for residential solar

  1. 1. Third Party Ownership Financing for Residential Solar James Tong Senior Director November 2013
  2. 2. Helping Investors Build and Manage Solar Portfolios, at Scale Manufacturers Distributors Installers Financial Services and Software for the Solar Industry Utilities Corporates Financial Institutions Solar Professionals Investors Grow Their Business by Offering Compelling Solar Finance Products to Homeowners Ability to Efficiently Manage Risk and Invest in A Residential Solar Portfolio Top Investors Major Fund Investors 2
  3. 3. Residential Solar Currently Dominated by Third Party Owned (TPO) Financing Growing Share of TPO Financing Installation Costs of Residential PV Source: NREL, CSI Database, MA SREC Program, Arizona Public Services, Salt River Project ; Maryland Energy Administration.   TPO financing becoming increasingly popular. The installed cost of TPO financed or equivalent or less than the cost of host owned systems. 3
  4. 4. Trends in Residential PV in CA Top 50 Residential PV Installers in California Q1 & Q2, 2012 8,747 Residential PV systems 617 PV installers 20 large PV installers 50% of the PV Market   600 medium and small PV installers While larger installers typically have TPO financing, the CA landscape is highly fragmented with small and medium installers. TPO financing may be peaking, as installation cost falls and financing options for ownership increases. 4
  5. 5. Studies suggest TPO Financing is open solar to new customer segments Correlation between PV adoption and household income Source: Drury et al. 2012   NREL study suggests that TPO financing is opening solar to household with more modest incomes households. UT Austin study makes similar conclusion. TPO financing may enhance sales of host-owned systems. Separate studies by Yale and UT Austin indicate greater visibility of solar accelerates consumer adoption 5
  6. 6. Differences in PV economics for Lease v. Own PV adopters have similar expectations of returns Third Party customers have a better understanding/estimate of returns Third Party customers have higher returns • ~300 customers (mostly Dallas, Austin) • TPO customers reported tighter cash flow led them to lease rather than buy. • Differences in expected returns in lease vs. own are possibly a reflection of the greater need for precision for TPO products. Source: Rai & Sigrin, UT Austin 2012 6
  7. 7. Third Party Financing Currently Limited in Select States Availability of Residential Third Party Solar Financing   TPO financing available in areas where states clarify that such providers would not be regulated as utilities. More predictability in state incentives/rebates and net energy metering policies would promote more TPO financing and solar adoption, in general. 7
  8. 8. Contact James Tong Senior Director, Strategic Initiatives & Government Affairs jtong@cleanpowerfinance.com
  9. 9. Appendix 9
  10. 10. Overview of Third Party Ownership Financing Product Attributes • • • • Typically require 680+ FICO 10 - 20 year term Down payments of $0 - $2500 and annual escalators of 0% - 2.9% Can pay monthly or prepay all payments for additional savings Benefits Sold to Consumers • • • • Savings of 10-15% Low or no upfront cost and faster payback period System monitoring and maintenance with full insurance and warranty Annual money-back performance guarantee Ease in Sales • TPO financing changes sales dynamics; system cost is irrelevant focus is on savings • Different financing structures can cater to different segments (e.g., no price escalators appeal to fixed income households) 10

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