Which will win – solar leases or loans? That seems to be the question this year in residential solar financing. Though leases and power purchase agreements (PPAs) have brought residential solar to its current boom in the U.S., that seems set to change. As solar loans gather steam, some are saying their growth rate will overtake third-party ownership very soon.
But why pick one or the other? San Francisco financing company Dividend Solar is combining the best that each model has to offer. In doing so, it seems to be following in the footsteps of Mosaic, which recently introduced a solar loan that includes operations and maintenance (O&M). While Dividend Solar is not the first to add offerings like this, the company says it’s leading the transition from the leasing/PPA model to the next phase in the growth of residential solar — which it’s dubbed solar-ownership-as-a-service™.
Today, the company announced the nationwide launch of its full-service solar loan platform that gives homeowners an alternative to existing solar financing options. The platform also provides investors with a vehicle to invest in residential solar at a meaningful scale.
Dividend Solar is providing a lot in its comprehensive, full-service loan offering. The company’s $0-down loan combines the benefits of a solar lease – energy production guarantees, system warranties, and performance monitoring – with the significant financial upside of solar ownership.
Through its partnership with PV O&M provider Next Phase Solar, Dividend Solar ensures hassle-free maintenance and performance guarantees on all systems. In addition, its partnership with Locus Energy enables homeowners to monitor system performance and track their daily energy savings at no additional cost, while allowing Dividend Solar to identify any potential system performance issues in real-time.
Dividend Solar’s model simultaneously delivers stable financial returns to investors and shifts the long-term value of solar back to the homeowner. The company expects this combination to accelerate the development of distributed generation assets across the U.S.
“The solar financing market is remarkably mispriced,” says Steve Michella, CEO and Co-Founder of Dividend Solar. “We’re looking to maximize the economic benefits for both homeowners and investors, and make solar an investment – not just another monthly expense.”
Geared toward institutional investors and accredited individuals, Dividend Solar’s direct lending platform, the EmpowerPortal™, enables investors to make attractive, large-scale investments in residential solar. This is significant because small projects have often been hard to finance, since large investors have a certain baseline for making investments.
Dividend Solar says its EmpowerPortal is the bridge between large-scale, yield-seeking capital and individual homeowners. The platform can reduce the soft costs of solar and offers unprecedented investor protections.
The solar loans offered are secured by stable, energy-producing assets and backed by creditworthy homeowners, quality-driven installers, and top-tier equipment. Through a carefully designed corporate structure, Dividend Solar loans are held in a bankruptcy-remote vehicle designed to provide investors with the same protections or those equivalent to what they’d get in a public securitization of the loans. The company’s structure has attracted the interest and financial backing of leading Wall Street principals and firms.
The company is partnering with quality-driven installers across the U.S. to provide streamlined access to solar loans, enabling homeowners to directly realize any tax credits and incentives and maximize the benefits of going solar. Dividend Solar also offers its installation partners long-term financial incentives for all systems that consistently outperform their benchmarks.
“It’s all about alignment at Dividend Solar – it’s our defining value,” says Eric White, President and Co-Founder. “Our model benefits every member of the solar value chain – homeowners, investors and installers – all while furthering the adoption of clean, renewable energy.”
With large-scale investors now able to easily participate in this asset class and solar costs continuing to decline, the company says, solar is no longer just an environmental dream – it is an economic reality.