Dive Brief:
- Distributed energy resources are getting a big boost from innovative financing options, according to a new Fitch Ratings report.
- Alternative and third-party finance options are key to growing the residential solar market, the report found, while the growth of residential solar will challenge the utility industry.
Dive Insight:
The traditional utility model is already under attack and creative financing options that could boost solar penetration are just the latest example of a changing power landscape. According to Fitch, new financing options will be key to expanding access to solar generation. Increased capital from third-party owned solar leasing programs means a customer needs to spend less up front, in turn attracting interest.
Today, third-party ownership makes up about 60% to 70% of total residential distributed generation installations, "and remains the key growth driver of DG installations," Fitch said. "Third-party-owned systems, themselves, have been fueled by the ability to attract new investors and new forms of capital or recycle capital through securitizations."
Fitch likened the leasing model to the retail electricity model in a restructured state — but said there were even more risks for the traditional utility because of reduced demand. "Fitch believes this will further challenge the traditional utility business model, which is already under siege from energy efficiency and other market dynamics," the firm said.
