Solar Leasing Investment Opportunities

Brian Hicks

Written By Brian Hicks

Posted May 6, 2013

SunPower (NASDAQ: SPWR) has found its Q1 losses greatly reduced from the same period a year ago.

The solar company reported a net loss of $54.7 million in the first months of 2013 compared to $74.5 million in 2012. Sales were distinctly more optimistic; total sales were at $635.4 million, well ahead of SunPower’s expectation back in February of $450-$525 million.

solarSolar leasing has been kind to SunPower. Right now, demand for the company’s residential solar leasing program is so steep that the company actually doesn’t have the money to keep financing it so rapidly.

From GigaOm:

“Our residential lease business remains strong, with demand outstripping our financial capacity in the first quarter,” said Tom Werner, SunPower’s CEO, during a call with analysts to discuss quarterly earnings.

In terms of hard numbers, Q1 saw around 2,100 leases signed. That brings the company to an average of 2,800 per quarter and a total of 16,200 since the launch of the leasing program, which has clearly proven a hit with forward-thinking homeowners.

SunPower’s Solar Lease

The way it works is customers sign a 20-year lease. The rent is paid monthly in exchange for use of the solar equipment that SunPower installs on the house’s roof. The company takes ownership and oversees all maintenance operations.

All of this is financed through capital that SunPower raises from investors as well as an ongoing federal incentive, as GigaOm reports.

This system greatly eases the startup burden on homeowners who’d like to invest in a solar power system for their house but cannot deal with the high upfront costs. The rental makes it a lot easier to enter the solar market without shouldering the total costs.

Right now, SunPower is also working on two massive solar projects in California. The California Valley Solar Ranch will be a 250 megawatt plant, and nearly 90 percent of solar panel installation is already complete.

Two other plants totaling 579 megawatts—called the Antelope Valley Solar Projects—are also underway. These are owned by MidAmerican Solar.

Despite the recent crash in the solar panel market, it’s the leasing program that has really come to SunPower’s aid. The company had to reduce production of solar panels in efforts to save on costs as that market cratered due to massive oversupply.


Solar Leasing Trends

SolarCity (NASDAQ: SCTY) is one of the biggest solar installation and leasing companies in the U.S. And just like SunPower, the company has been raking it in from solar installations.

SolarCity has a deal with the U.S. Department of Defense for installations of 300 megawatts on military housing—worth roughly $1 billion. What’s more attractive is the types who invested in SolarCity—Tesla Motors’ (NASDAQ: TSLA) Elon Musk is a company chairman.

Yet another operator is Sunvest Solar, a company that’s running solar leasing operations in the St. Louis area. What with a 30 percent federal credit, utility rebates, and an endless list of would-be solar converts hoping to lease solar equipment, leasing and installations has suddenly become a far hotter market than solar panels manufacturing.

Now that the solar panels market is clearly undergoing a contraction and is in a consolidating period, it’s become clear that the big thing is solar leasing and installations. SunPower, SolarCity, Sunvest, and comparable companies are making a killing off it, and it’s actually benefiting both the solar makers and the solar buyers.

Just imagine all the benefits of solar power without the high costs. And the makers, too, stand to benefit from strong credits and other financial incentives. Everybody wins—at least for the foreseeable future. 


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