#solarcity

Solar

The size of your solar installation depends on your energy consumption, roof space availability, and your budget. A solar professional can conduct a site assessment to determine the optimal system size. Consider factors such as your electricity usage patterns, future growth, and potential changes in energy needs.

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Residential solar has always faced a big impediment to growth: installing and maintaining solar panels is expensive, and few consumers wanted to spend tens of thousands of dollars in cash to pay upfront for what was a relatively untested product. To get around this problem, a company called SolarCity came up with a new model in the early 2010s—leasing solar panels to customers, allowing them to pay little to no upfront cost. … SolarCity’s other innovation was to package together thousands of consumer leases and sell them to investors as asset-backed securities [ABS], which enabled the company … to move debt off their balance sheet. … However, these financial innovations also increased the pressure on companies to grow quickly. Solar companies needed lots of new customers in order to package the loans into ABS and sell them to investors. … SolarCity ran out of money in 2016 and was acquired by Tesla, but the problems created by its expensive model have persisted. … Even today, about one-third of the upfront cost of a residential solar system goes to intermediaries like sales and financing people, says Pol Lezcano, an analyst with Bloomberg New Energy Finance. In Germany, where installation is done locally and there are fewer intermediaries, the typical residential system costs about 50% less than it costs in the U.S. “The upfront cost of these systems is stupidly high,” says Lezcano, making residential solar not “scalable.”

So a scheme originally aimed at reducing upfront costs actually ends up doing the opposite. Nice.

In some ways, the current situation in the residential solar market is analogous to the subprime lending crisis that set off the Great Recession, though on a smaller scale. Like in the subprime lending crisis, some companies issued loans to people who could not—or would not—pay them. Like in the subprime lending crisis, thousands of these loans—and in solar’s case, also leases—were packaged and sold to investors as asset-backed securities with promised rates of return. The Great Recession was driven largely by the fact that people stopped paying their loans, and the asset-backed securities didn’t deliver the promised rate of return to investors. Similar cracks may be forming in the solar ABS market.