More people in the United States are deciding to buy outright their residential solar systems rather than lease solar panels from a third party, and new figures from GTM Research suggest that direct ownership will overtake solar leasing for the first time since 2011 next year.
According to GTM Research’s latest report, US Residential Solar Financing 2016-2021, 55% of all US residential solar capacity installed during 2017 will be purchased by customers paying either in cash, or through a solar loan financing arrangement, growing to 73% of all solar systems installed in 2021.
Conversely, solar leasing, or third-party ownership, once represented 72% of all solar systems installed back in 2014, but has only decreased since then, and is expected to account for only 45% of all solar systems installed in 2017.
Residential TPO Penetration and Installations by Ownership Type, 2011-2021E
The authors of the report point to several key factors which are contributing to the swapping of positions. Specifically, there is a slowdown among the larger national installers like SolarCity and Vivint Solar, which rely more on solar leasing than loan products, while smaller local installers are growing more quickly by selling systems for cash. Additionally, the report points to emerging state markets like Utah and Florida, both of which prevent Power Purchase Agreements under current laws, leaving selling outright the only option for anyone who wants solar.
“The solar loan market is much more fragmented than the leasing market ever was,” said report author Nicole Litvak. “Installers and homeowners have access to more companies financing loans as well as multiple options for loan tenors, interest rates, and dealer fees.”
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