In the second quarter of 2014, SolarCity installed more solar panels in America than its next 50 competitors combined. It already has a dominant position in the market.
But seeing how customers would prefer to own their energy hardware rather than lease it–the model that’s been key to its expansion–it’s come up with a new solar financing product, called MyPower, to further propel the residential solar boom.
Leasing solar panels allows customers to put panels on their roof immediately, no money down, but it doesn’t let homeowners buy the equipment, at least not until the end of the agreement period. If they miss a payment or two, it reverts back to the company. The advantage is that the rates customers pay for electricity tend to be low–lower than what they pay a utility in many cases–because they’re fixed at the outset.
By contrast, under a power purchase agreement, another popular arrangement, ownership never falls to the customer. Although they get low fixed rates, they never get the pleasure of actually keeping what they install.
MyPower, which is available in eight states, combines elements of those two models. SolarCity will make loans to customers to buy equipment, with customers making monthly repayments. The unusual aspect is that the repayment amount will depend on the performance of the panel. If it produces more than predicted in the agreement, customers will be able to pay off the loan faster. SolarCity says customers can pay as little 4.5% on the loan over 30 years and that it will pay customers back if the system fails to meet the projected target.
The product is available in Arizona, California, Colorado, Connecticut, Hawaii, Massachusetts, New York, and New Jersey, with other states expected to come online soon.
Solar is already booming. This new product could give it an extra boost by attracting customers who want to own their equipment from the beginning.