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.

1. Third Party Ownership Financing for Residential
Solar
James Tong
Senior Director
November 2013

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
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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.

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TPO financing becoming increasingly popular.
The installed cost of TPO financed or equivalent or less than the cost of host owned
systems.
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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.
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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
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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
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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.
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8. Contact
James Tong
Senior Director, Strategic Initiatives & Government Affairs
jtong@cleanpowerfinance.com

9. Appendix
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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)
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