The fund, named MySolar, was created by Clean Power Finance, an online marketplace for solar financing; MS Solar Solutions Corp, a unit of the investment bank Morgan Stanley, and Main Street Power Company, a developer of solar systems and provider of power-purchase agreements.
The fund, which will provide financing for up to $300 million in projects, is the largest residential solar lease facility in the US, the partners said. It’s designed to take advantage of growing interest in solar-system leasing, which in California has surged by 75% in the last year as more consumers seek to cut power bills without the high upfront cost of purchase.
The overall capacity of US residential solar installations rose 11% to 297 megawatts in 2011 while installation costs declined by 20%, according to a survey by GTM and the Solar Energy Industries Association.
The residential solar market has been boosted by a sharp fall in the cost of solar panels driven by plunging silicon prices and increased supply of solar cells from manufacturers, especially in low-cost Asian markets, said Kristian Hanelt, Senior Vice President of Renewable Capital Markets at Clean Power Finance.
The cost of panels has dropped by about 75% since 2007, while the price of silicon has plummeted to $25 a kilogram from $400 over the same period, Hanelt said.
The new fund is seeking to capitalize on the resulting demand by providing substantial funding from a range of investors.
“You really have to have scale to attract the kind of investors we’ve got here,” Hanelt told Breaking Energy.
The first member of a syndicate of debt providers is Zions Energy Link, part of Zions Bancorporation.
“Our marketplace and asset management and underwriting services make residential solar an attractive investment to major financial institutions,” said Clean Power Finance CEO Nat Kreamer.
The new fund, which will initially be available to solar professionals in Arizona and California, brings the total amount of solar project financing under Clean Power Finance management to some $500 million, the company said. The fund will be marketed via CPF Tools, a solar sales software platform.
The fund anticipates continued growth in solar leasing as homeowners discover that system installation does not have to cost as much as purchasing a new car. The increasing availability of finance will make it easier for residents to have a system installed without an upfront payment, Hanelt said.
Homeowners typically sign 25year leases to receive power at below utility rates, and have the option at the end of their contract to purchase the system that has been installed on their roof.
“This type of financing is the driving force behind residential solar adoption today because nearly one third of U.S. homeowners can save money with solar financed by a lease or PPA structure,” Clean Power Finance said in a statement. “Further U.S. residential solar market expansion is a function of financing availability.”