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Honda And SolarCity Partner On Low-Cost Home Solar Power Leases
First published on ClimateProgress.org, a project of the Center for American Progress Action Fund, which was recently named one of Time magazine’s Top 25 blogs of 2010.
According to the New York Times, a new deal between automakers Honda and Acura and solar developer SolarCity may give a big boost to the already-rapidly burgeoning solar leasing market.
Solar leases, or solar power purchase agreements, are one of the new innovative tools for encouraging solar deployment. Basically, instead of purchasing a solar array outright, the customer plays host to a developer’s solar system in exchange for an agreement to pay a pre-determined fee structure for the electricity over a set period of time. That allows the developer to acquire a new income stream, and most likely the benefits of renewable energy tax credits.
Meanwhile, the customer gets the electricity for a price that’s often slightly below the going market rate. Perhaps more importantly, they avoid many of the problems that have bedeviled solar installations, such as the up-front installment costs, the permitting process, and the performance risk. As a firm with assets, the developer is generally in a far better position to tackle those hurdles than individual solar customers.
As the Times reports, Honda and Acura will offer their customers home solar systems at little-to-no upfront cost via the partnership with SolarCity, the largest player currently in the solar leasing market. (Honda and Acura will also offer their dealers preferential terms to lease or buy SolarCity’s systems on a case-by-case basis.) So SolarCity gets new capital and a massive new customer base, Honda and Accura get a cut of the returns, and customers get an added promotional deal to lease their homes to SolarCity’s systems and purchase its electricity:
The deal, in which Honda will provide financing for $65 million worth of installations, will help the automaker promote its environmental aims and earn a modest return, executives said. It could also open the door for more corporate investment in solar leasing companies, which has largely been limited to a small cluster of banks to provide capital for their projects….
The program will give Honda and Acura customers an extra $400 discount on top of SolarCity’s normal promotions, which they can use to sweeten the terms of the solar contract, like eliminating the escalation of the monthly payment. Honda projects the fund can finance as many as 3,000 systems on homes and 20 for its dealers. If the program catches on, Honda plans to expand it.
The growth of solar leasing has been one of the biggest recent drivers of the United States’ solar market — even more so than increases in cell efficiency — putting new arrays on government buildings, public and private schools, and private businesses and homes.
A new report from GTM Research found that solar leases are now available in 14 states — comprising over 50 percent of the new residential solar capacity in California, Arizona, Colorado, and Massachusetts, and rapidly gaining market share in the ten others. GTM Research anticipates the solar leasing market will rise from $1.35 billion in 2012 to $5.7 billion in 2016.
“I don’t think that by finding Honda buyers you’ve homed in on the perfect solar customer,” Shayle Kann, vice president at GTM, told the Times. But since car owners are more likely to have the income and credit history to qualify for solar leasing, “there’s enough overlapping between the demographics that you’re better off than the general population.” The initial program will be available in 14 states: Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Maryland, Massachusetts, New York, New Jersey, Oregon, Pennsylvania, Texas and Washington, and the District of Columbia.
Apparently, Honda originally proposed the partnership with SolarCity in order to supply solar installations for its hybrid and electric vehicle customers. But when encouraging solar deployment seemed to promise more overall carbon emissions cuts than simply selling electric vehicles, they expanded the program to all customers — including those who’ve just clicked through its web sites as opposed to actually buying a car. Honda and Acura are hopeful the project eventually helps integrate solar power with electric vehicle recharging.
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2013-02-20 14:36:07
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