By Jonathan Doochin, CEO of Soligent & Mark Colby, GM of Ygrene
For the last two years, renewable energy has been the largest source of new power generation, and the solar industry will have another banner year of growth, doubling capacity from 2015 with an expected 13.9 GW install base in 2016. Continued growth is imminent as BNEF analysts expect solar to continue to expand, adding 40 gigawatts over the next couple of years, which will be driven largely by economics, rather than historical federal policies, like the solar investment tax credit (ITC).
Even with today’s competitive solar pricing, however, many Americans are still unable to afford financing models that require up-front, out-of-pocket payments and strong personal credit history. Paradoxically, it is this huge market segment that stands to benefit the most from increased access to affordable financing and the predictable energy pricing that solar power brings. Though the demand for this type of financing has existed for years, there’s been a shortage of financial products designed to accommodate and capture this market segment.
Property Assessed Clean Energy (PACE) financing ticks all the boxes and democratizes solar across the socio-economic spectrum of property owners. A competitive alternative to traditional credit-based financing, PACE financing is based on the available equity in the property (among other factors), and not on credit scores, proofs of employment, income or financial statements. The PACE model typically translates to lower payments that are paid over a longer period of time, up to 30 years in many areas.
While the big five solar companies have suffered stagnating growth (12% year over year), the regional long-tail solar contractors, installing both residential and small commercial solar, are growing faster (36% year over year). To feed their demand and assist in their growth, Soligent and Ygrene have partnered to provide participating contractors access to Soligent’s Tier 1 pricing and vastly expanded credit lines. This collaboration enables contractors to build more jobs and offer property owners quality solar equipment with industry beating prices and no money down, 100% financing through the YgreneWorks PACE program.
Looking ahead to the next five years, going solar will not only make sense, it will become the norm as solar prices drop and the ITC continues to provide the near term financial push. Even as it wanes, the ITC will help provide market certainty through 2023 as solar prices and financial products provide electricity cheaper than the grid.
While some competitors are attempting to buy their way into contractor’s businesses, Ygrene and Soligent are committed to materially helping our contractors truly grow their businesses. We are starting by eliminating the most pressing growth inhibitors: credit line limitations and installation capacity. With our innovative partnership, solar contractors gain nearly unlimited access to solar materials, and through Ygrene’s expanding relationships with solar installation providers, contractors will also gain access to “low, fixed-cost” installation services. This dramatically reduces risk by allowing contractors to build more jobs per month now while methodically and thoughtfully expanding the number and size of their own installation capacity over time.
In what promises to be a year of change for the nation, one thing we can count on is that 2017 is poised to be another year of tremendous growth for the long tail solar contractor, fueled by FICO-free financing and nearly unlimited access to quality material. With both economic and environmental benefits, PACE’s reputation as a job creation engine and its widespread support from elected leaders across the nation, will ensure its growth trajectory.