SunRun said that it has secured $200 million from a bank to finance the installation of residential solar panels, a sign of confidence in a business model that avoids the upfront cost of solar.

The company said that a subsidiary of US Bancorp will provide the money, which will be the largest single fund for financing residential solar projects. US Bancorp has already made financing available to SunRun in separate deals.

A SunRun-financed array in New Jersey

(Credit: SunRun)

Prices for solar panels themselves continue to fall but, with installation half the cost of an array, the upfront cost remains a barrier to residential solar. The financing model offered by SunRun and competitors such as SolarCity allows consumers to sidestep the initial cost and pay a fixed monthly fee instead.

In this model, SunRun or other entity will own the panels and benefit from the tax credit for renewable energy. The homeowner will commit to purchasing power from the panels at a fixed rate for 20 years, which lowers monthly bills by ten to 15 percent, according to the company.

US Bancorp makes the capital available to SunRun and gets a return based on tax credit. Consumers can monitor the performance of the panels and SunRun maintains the system.

Solar leasing or power purchase services are available in states with incentives for renewable energy. SunRun offers its service in Arizona, California, Colorado, Hawaii, Massachusetts, New Jersey, Pennsylvania, and Oregon.

Utilities, too, are experimenting with financing distributed solar. Duke Energy, for example, has a program where it essentially leases the rooftops of residential and commercial customers and owns the solar panels.

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