Financing takes off
The uptick in purchases has also spawned new financing model -- loans for solar systems.
"The solar loan market has exploded," said GTM Research solar analyst Nicole Litvak. "Every...financier has introduced or is planning to introduce a loan, and an entirely separate group of pure-play loan providers has emerged."
Tyler Ogden, a solar analyst with Lux Research, said consumers are aware that the installation price for solar has fallen through the roof and see an opportunity to get all the financial benefits from installations, from tax incentives to free electricity.
A typical solar system installed today can pay for itself in electricity savings in anywhere from a couple of years to 10 years -- with five years being the average ROI, Ogden said.
There are, however, pros and cons to owning a solar system, Ogden said. For example, while owners get the full benefits, they also inherit full responsibility for maintenance.
That doesn't mean consumers are without a safety net, as solar systems are typically warrantied to perform with up to 85% of their original efficiency for 25 years. After 25 years, they can still generate electricity, but at a rate typically far less than 85%, Ogden said.
Additionally, more and more solar system installers and other third parties now offer supplemental warranties to cover items such as maintenance or damage repair. Solar provider Anaphase acquired Next Phase Solar, a provider of system operations and maintenance, last year with that in mind.
Those warranties typically cost a few hundred dollars per year, according to Aggarwal.
As the cost of solar systems continues to decline and their efficiency continues to rise, owning becomes more viable compared to leasing or signing a PPA, Aggarwal argued.
Even if a consumer or small business decides to upgrade a system half way through its warrantied life in order to get more efficient solar panels, the cost would only be a few thousand dollars. And the more efficient panels would repay the owner as more energy is produced that can be sold back to a utility at commercial rates.
While much of the solar installed today is under a lease or PPA, that doesn't mean the consumer can't get out of that contract. Many leases and PPAs have buyout clauses where, after a certain period of time -- say five to seven years -- the lessor can purchase their system from the installer at either their price or a fair market value, whichever is higher.
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