Returns on investing in solar has banks and investors funding distributed solar

SLevy: Distributed solar is disruptive to electric distributors, especially in regions with high power rates. Solar will accelerate installations, a fact that must be factored into the future business plans of our distributors here in the valley. To support this statement Edison Electric Institute recently published a report entitled “Disruptive Challenges: Financial Implications and Strategic Responses to a Changing Retail Electric Business.” TSEA offers distributors its services in understanding the impact and has suggestions towards solutions to avoid faced with unpleasant alternatives.

There were a record number of solar panels installed in the U.S. on rooftops and on ground-mounted systems in 2012. Now both traditional financing companies and new types of investors are starting to get in on the trend of providing the funds for the high upfront costs of installing solar panels, in exchange for making some money back several years down the road. But the potential to make money in this way has only just started.

Solar leases are a contract between the building owner and SolarCity, whereby SolarCity pays the upfront cost of installing the system, owns and maintains the panels, and the building owner pays for the monthly electricity for the power from the panels over around 20 years. As Ucilia noted on GigaOM Pro today, the residential solar leasing market alone is expected to grow from $1.3 billion in 2012 to $5.7 billion in 2016, according to GTM Research.

SunPower said earlier this month that demand for its residential solar leases is far greater than the money available to finance them.

It’s not just banks and corporate do-gooders that want the opportunity to make a decent return — some 10 to 12 percent in some cases. Crowd-funding is starting to appear as an interesting blip on the radar. Startup Solar Mosaic says that it’s now raised $1 million from its crowd-funders for its solar panel systems, which offer around a 4.5 percent annual yield.

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