Solar Financing - CivicSolar

[Pages:50]Installer's Guide to Solar Financing

Seven Things to Know

... about financing residential solar systems

DECEMBER 2016

eBooks

Table of Contents ______________________________________________

Introduction: How to use this eBook.............................................. 3 1) A History of Solar Financing ..................................................... 4 2) The Competition........................................................................ 7 3) The Solar ROI ......................................................................... 13 4) Understanding Customer Needs and Preferences ................ 19 5) Solar Financing Options.......................................................... 25 6) Selecting a Financing Partner ................................................. 38 7) Peace of Mind for Customers ................................................. 41 Conclusion .................................................................................. 44 Appendix: Solar Financing Providers .......................................... 45

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Introduction

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As the leading solar equipment distributor servicing independent solar installers throughout the U.S., we are proud to support thousands of contractors building solar PV installation businesses by providing them with technical, product, and design related information and services.

Since 2009, we have seen the world of solar financing evolve in many ways and remain a critical area where we have received many questions and requests.

Our goal with this guide is to provide you the necessary knowledge about the rapidly developing solar project financing options for your business and customers. This is by no means an exhaustive guide, but covers the basics of evaluating and offering various solar financing solutions with the goal of helping you increase your success rate when selling solar solutions.

Please note, we love feedback! If you have any suggestions for improvement to the next edition of this eBook, please email us at content@.

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01 A History of Solar Financing

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A History of Solar Financing

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2010 National, vertically integrated solar developers (e.g. SolarCity, SunPower, Vivint, SunEdison, SunRun, Sungevity, etc.) rapidly increased their market shares. This was a result of a new type of financial product: the Third-Party-Owned (TPO) solar model, or, as they are known to home and property owners, solar leases and solar Power Purchase Agreements (PPAs).

While these TPO solutions provided the average home and property owner a worry-free way of investing in solar, they failed to provide full transparency (for home and property owners) or the level playing field necessary for the thousands of independent competing installers to succeed. As a result, independent installers who did not have access to TPO solutions were forced to contend by selling customer-owned solar solutions for which there were limited financing solutions.

2012 Customer-owned financing solutions, such as solar specific loan products and TPO solutions for independent installers, began entering the market and leveling the field for competition. Soon after, innovative financing solutions such as Property Assessed Clean Energy (PACE) entered the market and provided an increased number of choices for property owners.

2015 - 2016 For the first time in years, TPO solutions began losing market share to customer-owned solutions. This shift was

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caused by the entry of structured capital into the market along with increased consumer knowledge of the benefits of investing in solar.

Now, as we prepare for 2017, we agree with industry analysts who expect a continued decrease in the share of TPO solutions as customer-owned solutions become more competitive (seen in the graph below). In this environment, it is critical for independent solar installers to understand and be able to communicate the pros and cons of each type of solar financing solution to potential customers.

In the next chapter we will discuss the competition in more detail and show you how to offer potential solar customers financing options that provide them with full confidence in their investment.

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02 The Competition

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The Competition

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Choosing to own in a lease dominated market

In today's digital world, customers have access to more information than ever before. This means, they will often conduct independent research online before consulting a solar professional. For this reason, it is critical to:

understand what competitors are offering be comfortable leading with the appropriate financing

solution and be able to clearly explain the advantages of the solution

being offered versus larger, more-established competition.

We categorize the various solar players into three major classes:

1. National, vertically integrated solar developers. There are less than a dozen of such companies, but they make up close to 40% of the market today. Examples include: SolarCity, SunPower, Vivint, SunRun, etc.

2. Independent local and regional dealers who offer both the TPO solutions from the class one national companies along with their own cash or financed solutions.

3. Independent local and regional installers with no allegiance.

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