Homeowners go for solar power — when someone helps finance it

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Green Right Now Reports

When people have access to financing for home solar power, they’re apt to jump on board, according to a report just released by the American Clean Skies Foundation.

The report documented a surge of solar installations in states that allow third parties to relieve the heavy upfront capital costs for homeowners. It looked at both types of popular solar-financing models that provide homeowners with a path to acquire a solar array – solar leases and solar power purchase agreements, known as PPAs.

Leases, as their naming suggests, allow homeowners to simply lease rooftop arrays by paying a monthly fee for the equipment to a solar provider. The homeowner is able to pay the lease because the solar panels concurrently lower his or her electricity bill. The sum of the monthly lease and the electricity bill is likely to be even less than the homeowner’s pre-solar electricity tab.

A solar PPA works a little differently. A solar company installs a rooftop array and the homeowner agrees to buy back all the power from it over a set period of time (like 20 years). The homeowner remains attached to the grid, paying monthly bills to both the solar panel provider and to the municipal utility company, but again, still realizes an overall savings.

The report put out by the ACSF found that states that allow PPAs and solar leases have experienced a jump in homeowners installing solar panels.

Solar Leases on the Rise, chart
Chart shows the percentage rise in solar installations in California, Arizona, Colorado and Massachusetts, states where third-party financing of rooftop solar installations is allowed.
Solar 3rd_Party_PPA_map

Here’s another graphic, showing the states (in yellow) that allow third-party solar financing, enabling allowing homeowners to participate in solar leases or PPAs. The report also found that net metering helps incentivize homeowners to install solar, because it allows them to get money back from a utility when their rooftop installation produces an overage of power. (Some of the states listed below that allow third-party financing do not allow net metering.)

The report, Buying Green Power Today: Emerging Options for US Electricity Consumers, can be downloaded at the ACSF website.

The author, Geoff Bromaghim, is ACSF’s Energy Policy Research Associate. gbromaghim@cleanskies.org.

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