THE SOLAR LEASE

SolarCity aims to make solar power more affordable
Julie Schmitt, November 8, 2009 (USA Today)

"…[I]n three years [SolarCity] has grown to become a leading residential solar installer in California, the nation's largest solar market…[and] has emerged as one of the top consumer brands in solar at a time when green is hot and President Obama makes solar and other renewable energy sources front-page news.

"Last year, SolarCity helped pioneer a way to bring solar to the masses and remove one of the biggest hurdles to its widespread adoption: costs of $15,000 or more for homeowners to go solar. With a SolarCity residential lease, customers can lease a system at no money down, and in many areas, save 10% to 15% a month on their combined electric and lease-payment bill…[O]ther companies offer similar financing options, [but SolarCity has created the first brand in solar]…The company claims 4,500 residential and commercial customers in California, Arizona and Oregon, including eBay and Intel."

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"[President and CEO Lydon] Rive says SolarCity's revenue will grow 40% this year – despite the recession – and 250% next year, given orders on the books. SolarCity employs 450 and plans to add 180 workers in the next quarter…It also aims to expand to at least five states in the next year. Rive, while not releasing revenue for the privately held SolarCity, says it turned its first profit in the recently finished third quarter…

"Nationwide, hundreds of solar companies and installers vie for business [in the competitive solar market], especially in SolarCity's key market, California. Competitors, such as REC Solar, Akeena Solar, GroSolar, SunPower and others, are also building successful brands…[S]olar provides 1% of the USA's energy…[but] many states still lack strong enough incentives and laws to move broad solar adoption…Financing and incentives can also be touch-and-go…[but]SolarCity has…a $100 million fund by US Bancorp to finance its lease deals…"

From solarcity100 via YouTube

"…[O]ne of Solar City's biggest challenges is overcoming homeowner skepticism that its lease deal is too good to be true…SolarCity's leases run for 15 years. The company designs, installs and maintains the system. SolarCity owns the system and gets the accompanying federal tax credits and state incentives. Homeowners pay SolarCity for the lease and the electricity they use. That's typically about 15% less than their traditional monthly electric bill…Lease rates go up each year by up to 3.9%, no matter how much or how little electric rates move. And people who don't use a lot of electricity [bills under $150 a month ] aren't likely to see savings…

"Given federal tax credits, homeowners with available cash may also do better financially to buy a system…[Most companies offer] outright sales, as well as leases or leaselike options…But for those without cash or the gumption to maintain their solar systems, leasing is a [good option]…[which is why] SolarCity has raised $80 million in venture capital funding…[A]bout 65% of SolarCity's new residential customers choose to lease vs. buy a system…The key to SolarCity's future success, [CEO] Rive says, is getting every homeowner-customer to feel like a VIP – whether they lease or buy…"