Trend Favors Third-Party Ownership in Californian Photovoltaic Cell Market

According to the U.S. Energy Information Administration, installation of solar photovoltaic cells for electrical generation has been on the rise since 2007. For the next four years, the majority of PV cells installed in California were owned by homeowners themselves. The amount of cells installed by third-party companies was also growing during this time. In 2012 there was a majority switch, and the number of third party installs began to outnumber the self-owned. Currently, more than two-thirds of all solar photovoltaic cells installed in California are owned by third-parties.

Typically, these third party installations offer two options to consumers. The first is for the homeowner to lease-to-own the installation of the PV cells. In this scenario the customer and the leasing agency come to a price agreement, and regular monthly payments are made. The second option is known as the “Power Purchase Agreement” or PPA. With the PPA, the consumer agrees to purchase all electricity generated through the PV cells at a fixed rate over a long term contract. At the end of the contract the homeowner receives the option to buy out the third-party and bring the PV cells under their ownership.

Homeowners stand to reap a number of benefits by having PV installations done by a third party. When homeowners install themselves they are required to shoulder the initial upfront costs. This is not true with third party installations. Additionally, installations by third parties offer consumers peace of mind. All maintenance and repairs are handled through the leasing agency. It also gives the consumer the ability of to purchase energy in a fixed rate long term contract, protecting them from the volatility of the energy market.

Homeowners are not the only ones gaining an advantage from this relationship. The solar leasing companies receive a number of benefits by installing PV cells for homeowners. Any incentives offered through the government are rewarded to the leasing companies and not the homeowner. Examples of these incentives include renewable energy certificates and federal benefits awarded through the Modified Accelerated Cost Recovery System. In the case of PPA agreements, the third-party is also guaranteed income throughout the length of the contract.

The symbiotic relationship between homeowners and third party solar leasing companies has lead to a rise in the number of PV cells leased instead of owned by the homeowner. Since 2012 the number of third-party owned PV cells on residential homes in California is higher than systems owned by homeowners themselves. This can be attributed to numerous benefits awarded to both the homeowner and the solar leasing companies.