I attended the Solar Power International conference in Orlando a couple of weeks ago and learned something interesting about the roof of the building where the conference occurred.
The Orange County Convention Center in Orlando is the second largest such facility in the US. My sore feet will attest to that fact after walking many miles through the exhibits. The roof of the Center is the surface for a big solar panel array. The capacity of this solar farm in downtown Orlando is almost 1.1 Megawatts.
James Doyle is a senior project manager for Solar Source, the Largo, Florida based company that designed and installed that solar power system in 2009. According to Mr. Doyle, the Orange County Convention Center’s average power bill is about $1 million a month. That’s a lot of electrons.
The solar panels on the roof save the Center between 10% - 12% of that power bill, month in, month out. It’s an impressive savings. But even more impressive is how much the economics for solar systems have improved since that system was installed.
The state-of-the-art panels used at the time had a capacity of 150 watts. Today, the same sized panels will produce about 275 watts. What’s more, the prices of solar panels have dropped enormously. The end result, according to Mr. Doyle, is that today’s panels would have “90% more production for 30% of the cost” of the panels on the roof of Orlando’s Convention Center. That price drop has occurred in only four years and it is one of the main reasons that new solar power installations in the US are booming.
The number of photovoltaic solar panels (measured in Megawatts) installed in the US in the second quarter of 2012 increased 116% over last year – to a total of 742 Megawatts. Part of the reason for the increase is new utility scale operations coming on stream – 477 Megawatts of these big projects in the quarter. And part of the reason is creative finance.
And part of the reason is creative finance.
A number of companies are now offering residential solar customers new financing options for installing solar photovoltaic systems on their roofs. These programs are variations on an equipment leasing theme – third parties actually own the equipment and the homeowners lease the systems. Government incentives and the ability to sell power back to the utilities help the calculations to make these deals work.
Companies are stepping in to offer residential solar power systems to homeowners with 0% down financing. These companies are also offering various package deals – design, installation, finance and maintenance combined in one. These deals are winning over droves of homeowners to the benefits of going solar, so residential installations are growing even in a muddling economy.
There are a number of different formulas for the financing. In each, the homeowner is being presented a package that is as risk-free and simple as possible. There is no money down. The monthly fee is locked in and is compared to the equivalent of a utility bill – except the bill won’t go up as monthly utility bills tend to do, because the contract has a locked in monthly rate.
The abundance of new customers for these systems is attracting new money from banks. Their willingness to finance these deals is testimony to the success of the business model.
SunPower Corp. is a public company that has been doing a lot of third party ownership business. In August, SunPower announced that it had received $325 million from Citi and Credit Suisse to go towards solar leasing deals. Citi evidently likes the business, having dropped $105 million into SunPower a year ago for this same kind of financing.