Solar Financing Impeding the Growth of Solar in Colorado
A recent round table with Colorado-based solar executives and senior executives from national and regional banks explored the major roadblocks to solar companies in Colorado. The meeting, hosted by the Colorado Bankers Association and the Colorado Solar Energy Industries Association (“COSEIA”), identified financing as the biggest impediment to substantial growth for solar in colorado.
According to COSEIA, approximately 80-90% of the solar companies in Colorado are facing growth restraints due to lack of available financing. This is particularly critical as more and more solar installers are moving away from a model where they only sell the solar system to a consumer. Even after available government or utility rebates and incentives, the cost of a solar system can be upwards of $15,000 which may represent too large of an outlay of cash for many consumers particularly during a recession.
As a result, third party ownership models, such as a lease or other financing system, are increasingly becoming popular as the consumer is not required to come up with such a large upfront payment to go solar. Instead, consumers pay a small down payment and then pay a monthly fee for the solar system on their home. And typically the monthly fee for the solar system plus the newly lower utility bill are still less than the consumer’s utility bill absent solar. This savings typically increases over time as the cost of electricity increases due to inflation or spikes in demand.
Without financing from banks, solar installers do not have the capital to extend the kind of credit necessary to help consumers go solar. In fact, this may be the single biggest impediment to growth in the solar market throughout the country. According to the Solar Energy Industry Association, third party ownership plans represent the fastest-growing segment of the residential solar market. “They’ve kind of taken the market by storm,” Shayle Kann, managing director at GTM Research in Boston, said last month during an industry briefing with reporters. And according to AC Solar, a local Colorado solar company, co-owner JoElyn Newcomb, “If I had an easy financing program, I would double my size tomorrow,” she said.
So without access to capital, the Colorado solar market, like many other state solar markets, will be stuck in neutral waiting for the perfect consumer that has the cash available to purchase a solar system.
Via Solar Colorado