SolarCity, which is know for its power-purchase agreements (PPAs), is relaunching a solar loan product replacing its MyPower loan. The product will allow customers to choose from a number of loan options with options starting at roughly $50 a month. The move reflects growing interest homeowners have in owning rather than leasing solar arrays as the costs of solar continue to come down.
SolarCity is the US’s largest residential solar installer and recently entered the large commercial market. It’s expanding product lines as the solar markets change.
The company is launching the loan offering across 14 states from California to Delaware. Customers can choose 10 or 20 year loans, with annual percentage rates as low as 2.99 percent and 4.99 percent, respectively. SolarCity said that the package will include a 20-year warranty and a Nest Thermostat. Additionally customers with a loan prepay their entire balance or a portion of the loan at any time to lower their monthly payments.
“We can now offer a loan that makes it possible for many customers to pay less for solar from day one, and still receive thousands back in tax credits on top of that,” said SolarCity CEO Lyndon Rive. “This program will allow thousands of additional customers across the U.S. to install solar this year and start saving money immediately, and we expect to work with multiple lenders that will allow us to expand to several new states by the end of the month with the same great terms for our customers.”
SolarCity claimed the MyPower loan product, launched in 2014, was popular and allowed the company to sell more solar loans in 2015 than any other company. But some said the product was complex and didn’t lead to expected energy savings.
“It seemed like it would be a simple transition. It turned out to be totally the opposite,” said Nicole Litvak, a senior analyst with GTM Research. “Even for the customers who were able to take advantage of the federal Investment Tax Credit, there were still numerous other sticking points that made it a tough sell. There was the issue of the 2.9 percent escalator, which made the transaction more like a PPA than a fixed loan. Another problematic feature was the 30-year payback period, far longer than the average 20 years for PPAs.”
The new offering is intended to simplify SolarCity’s loan product and allow homeowners to own their solar array. “Direct ownership via loans (and other mechanisms like PACE) is gaining traction, because PV systems continue to get cheaper while financing options continue to improve,” explained Eric Wesoff, editor-in-chief at Greentech Media. “Third-party financing is still the dominant form of financing for residential solar, but by 2020, GTM Research forecasts that direct ownership will eclipse third-party ownership.”
The SolarCity loans are now available in Arizona, California, Colorado, Connecticut, Delaware, Maryland, Massachusetts, New Hampshire, New Mexico, New Jersey, New York, Oregon, Rhode Island, Texas and Washington, D.C. SolarCity said it expects to announce new locations soon.Tweet