SolarCity, the San Mateo, Calif.-based company that finances and installs clean energy systems, on Wednesday launched a zero-down financing program specifically for builders. The program will be available initially in California, Arizona, Colorado, Maryland, New Jersey, and Oregon, after which SolarCity plans to expand the program to 14 to 20 markets in the coming months, says Walter Cuculic, the company’s national manager of builder programs.
With this program, SolarCity is attempting to capture a bigger share of the burgeoning third-party financing market for residential solar energy. SolarCity alone has raised nearly $2 billion from investors for this purpose, including $500 million from Goldman Sachs and $280 million from Google. In December, Solar City also raised $92 million from its initial public offering of common stock.
In a report it released in February, GTM Research projected that total annual investor capital into the solar energy sector will increase to $5.7 billion by 2016, from $1.2 billion in 2012.
Demand for residential solar energy continues to rise in certain markets, along with demand for financing. The California Solar Initiative reported that sales of new homes with solar systems in California doubled last year to 4,000 units, or 10 times more than seven years ago. San Jose, Calif.-based SunPower Corp. recently installed its 10,000th solar power system onto a new production home. That house, built near San Diego, was sold in June by KB Home.
California represents more than two-fifths of total photovoltaic panel demand in the U.S., according to NPD Group’s Solarbuzz, which on Monday reported that panel demand should grow significantly this year, and residential and small commercial rooftop installations would account for 18% of that demand.
SolarCity previously had been offering zero-down financing options only to homeowners through power-purchase agreements or solar leases. Builders, on the other hand, had to ante up a full prepayment before they could integrate one of SolarCity’s systems into their new construction. A prepayment for a 4-kilowatt system could run $7,000, says Cuculic, which inevitably the builder would tack onto the price of the house. That added cost would sometimes put the house out of budgetary reach for certain home buyers.
SolarCity believes its zero-down financing program will “help builders meet their aggressive construction timelines and stay within their budgets,” says Cuculic. SolarCity also has dropped its credit score requirement for financing. “Now everyone can qualify,” Cuculic adds.
John Caulfield is a senior editor for BUILDER.