When shopping for a new Honda or Acura, the salesperson may have a special offer for your house: solar panels, no money down.
American Honda Motor and SolarCity today announced the creation of a $65 million investment fund to finance installation of rooftop solar panels. Honda and Acura dealerships in the 14 states where SolarCity operates can take advantage of the offering.
It may sounds like an odd pairing, but it could be a sign of things to come in residential solar power in the U.S. Rather than buy panels, more than half of solar customers opt for third-party financing in the states where it’s available, according at a recent report by GTM Research.
Rather than purchase panels, consumers either buy the power they produce or pay a monthly lease. The installer owns the panels and takes advantage of renewable energy incentives, such as federal and state tax credits. For consumers, it’s compelling because contracts are typically structured to lower monthly electricity bills.
Financing has fueled rapid growth in residential and commercial solar over the past few years. Installer SolarCity, which has a software system for rapidly generating a bid and system design, went public earlier late last year. (See, SolarCity IPO Tests Business Model Innovation in Energy.)
Honda, which expects to sign on thousands of joint customers, entered into the partnership with SolarCity to burnish its image with environmentally conscious consumers. It says they will explore the possibility of having electric car chargers installed in homes through SolarCity to power Honda’s plug-in hybrid Accord or Fit EV.
For its part, SolarCity has access to more capital and sales leads.
Typically, solar installers that offer financing get money from banks, who earn a return on the equity they put up. But the financing model creates the opportunity for different types of companies to offer solar installation, either themselves or through partnerships such as this one.
Home security and automation company Vivint has been offering solar installation and financing, through a partnership with Clear Power Finance. A startup company called OneRoof Energy offers solar power as an option to customers who need a new roof. Meanwhile, Ford electric vehicle buyers can also acquire solar panels from SunPower at a discount.
Obviously, there’s a limit to the number of companies able to commit tens of millions of dollars to solar financing, as Honda and SolarCity have done. But it shows that innovative business models can drive adoption of residential solar.