Solar Panel Leasing Declines, Homebuyers Look to Buy

Solar Panel Leasing Declines, Homebuyers Look to Buy

Builders looking to offer solar as a standard may want to consider offering complete systems instead of relying on leasing programs.

A new report shows more homebuyers want to own their rooftop solar panels. According to the Wall Street Journal, solar providers such as SolarCity and Vivint that rapidly expanded their business through leasing programs are facing stiff competition from smaller upstarts that sell solar panels to customers directly.

Leasing programs are used to install a complete solar system without the upfront cost. Instead, the homebuyer can pay a monthly fee for a set number of years to pay back the systems’ costs.

SolarCity, Sunrun Inc. and Vivint Solar supplied 56 percent of the residential solar market in the U.S. last year. This year, the same group is on track to serve fewer homes. 

This graph from Off The Grid Solar shows the cost difference between leasing and purchasing solar panels.
This graph shows the cost difference between leasing and purchasing solar panels.

According to GTM Research, that’s because smaller solar companies offering loans to homebuyers or that sell panels are picking up more business.

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This has caused solar providers that offer leasing programs to significantly reduce interest rates in order to keep up with homebuyer demand, as more homebuyers express interest in buying the panels outright.

Case in point, solar leases (power-purchase agreements) accounted for 72 percent of solar sales in 2014, but this share is expected to drop to just 48 percent by 2017.

This industry development among homebuyers is a good reminder of the need to understand the expectations and budget of your clients in order to offer a smart home standard that best meets their needs.

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About The Author

Michael Black is a staff writer and content coordinator at TecHome Builder. He has a particular interest in new solar developments and smart energy systems and is always looking for the next smart home trend to cover. As the youngest member of the TecHome team, Michael brings a passion that keeps the team energized. He also is instrumental in leading our social media efforts.

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