Aug. 6 (Bloomberg) -- Sungevity Inc., a closely held U.S. developer of rooftop power systems, expects consumers to shift away from the leasing model that’s made homes the fastest- growing solar market.
Chief Executive Officer Andrew Birch said the company won’t offer leases in Vermont and New Mexico, its two newest markets. The Oakland, California-based company now operates in 11 states and the District of Columbia, according to a statement today.
Banks are now offering loans for residential solar projects. That’s making buying a system more competitive with leasing one and Birch expects to see more customers opting to own the panels on their roofs.
“We’re seeing the mix creep up for customers actually buying systems outright, either using loans or paying cash,” he said in an interview today. “What you’re seeing is the standardization and commoditization of financing.”
Admirals Bank offers loans of as much as $40,000 for renewable energy systems and in June announced a partnership with SunPower Corp., a solar-panel manufacturer and rooftop system provider. SunTrust Banks Inc.’s LightStream unit offers financing for rooftop power at rates that start at 4.99 percent.
With a solar lease, customers pay little to nothing up front and sign decades-long contracts with monthly costs that typically are less than they pay their local utilities. SolarCity Corp. is the biggest provider of solar leases.
The chance to immediately lower out-of-pocket expenses has made leasing a popular option. About two thirds of the U.S. residential solar systems in operation last year were funded by third parties, not homeowners, according to a June report from GTM Research. That will peak this year at 68 percent and then decline to 61 percent in 2016 as other financing options become more common, the research company said.
The U.S. installed 792 megawatts of residential solar systems last year, up 60 percent from 2012, according to the Solar Energy Industries Association, a Washington-based trade group.
With loans becoming easier to get, more consumers are going to choose to buy their systems, said Angelo Zino, an analyst in New York at S&P Capital IQ. In the long run, owning is a better option for homeowners, though leasing often has lower monthly payments and will remain widely used.
Buying a rooftop system, either with a loan or by paying for it upfront, “ends up being the best approach over the long term, but not every consumer has the capability of doing that,” he said.