Dive Brief:
- A poll of small and mid-sized solar installers across the U.S. found that over half do not offer third party ownership (TPO) lease or power-purchase agreement (PPA) options to their customers but rely on cash purchases and unsecured loans, according to national online solar marketplace operator EnergySage.
- 44% of the 103 installers surveyed said that price competition is their biggest barrier to closing new rooftop solar sales. Installers now average 15 marketplace competitors and said their top needs are access to more financing options and better quality customer acquisition leads.
- One-fifth of EnergySage respondents said they compete with over 80 installers. Only about half find cutting margins a cost-effective way to increase their market share, with the balance committed to sustaining margins and working with a smaller market share.
Dive Insight:
The TPO financing structure revolutionized residential solar in the last five years, bringing billions in investor money into the sector to provide financing packages to decrease upfront purchasing costs for customers. But according to the new survey from EnergySage, more than half of installers do not offer TPO packages or PPA agreements.
While TPO was 72% of the national residential market in 2014, its market share is expected to be less for 2015 as loans and direct ownership take on a bigger role, according to U.S. Residential Solar Financing 2015-2020 from GTM Research.
In the national market, leases and PPAs made up approximately 60% of system sales between December 2014 and November 2015, according to data from the Solar Electric Power Association (SEPA). A previous EnergySage poll found 90% of non-TPO customers take unsecured loans to purchase solar.
Most large TPO financier-installers now offer loans, including national market-leader SolarCity and Sunrun, which is third in market share. Clean Power Finance, in partnership with Elevate, is expected to announce loans for solar and energy efficiency in 2016. Sungevity and NRG Home Solar offer loans through Mosaic.
Correction: An earlier version of this article stated that 90% of respondents were spending more to acquire customers. That statement was incorrect and has been removed. The statistic that leases and PPAs made up about 60% of sales between Dec. 2014 and Nov. 2015 is also from SEPA, not the EnergySage survey, as originally reported.
