SolarCity to Offer Own Loans to Homeowners

SolarCity, the nation’s largest provider of rooftop solar, said Wednesday that it is offering direct loans to homeowners in California and seven other states who want to own their solar energy systems.

Recent growth of the rooftop solar industry has been fueled foremost by lease and power-purchase agreements that allow customers to buy electricity at a discount from utility rates, typically over a 20-year period, while the solar company owns and maintains the equipment.

Those deals can offer upfront savings with little or no money down. But analysts are predicting a shift toward buying, as confidence grows in the technology and better financing emerges.

San Mateo-based SolarCity says its new, 30-year loans will replicate and improve upon the savings and assurances of a power-purchase agreement. Customers repay the loans according to their power production, billed in kilowatt-hours.

“Nothing like this exists. It combines the benefits of a PPA with ownership,” SolarCity CEO Lyndon Rive said. “Our motivation is always to make sure the (solar energy) system is performing, because if it doesn’t, the loan doesn’t get paid back.”

The loans only become more attractive than a lease if the customer incorporates their federal investment tax credit for solar.

Describing a $30,000 loan for a rooftop solar array, Rive said the borrower would initially repay the loan at 16 cents per kilowatt-hour. After the first year, a $9,000 solar tax credit can be used to buy down the loan to 11 cents or 12 cents per kilowatt-hour.

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