From Guest Blogger Jenny Richards: Five Sources of Financing for Solar Energy
A few years ago, when the world entered its first stages of transitioning to solar and wind energy, it became apparent that cost would be the biggest impediment to the transition. Installing solar in homes meant that home owners had to invest a lot of money in solar equipment.
There has been a lot of progress in innovation of solar financing solution, which would make it easier for you to install solar systems in your home today. The government, banks, utility companies and solar companies have put in a lot of time and effort and thanks to them; you do not have to pay for solar installation upfront.
Solar companies for instance can install a full solar system in your home and then charge you in installments over a prolonged period. This system is good for a number of reasons:
- You don’t have to go through a long loan application process
- The system will pay for itself
- Your monthly electricity bill will be locked-in
- Your bills will be lower, right after installation
In addition to traditional methods of financing–namely, getting financing through solar energy companies or taking out home equity loans–a few other financing models are leading to the fast adoption of solar. They include:
- Solar asset securities
Solar systems and solar leases are among the cash flow generating assets in the solar industry. In 2013, SolarCity decided to securitize these assets, by making an initial bond offering of 54 million dollars. Solar city has securitized more assets since that initial offer, a move that has contributed to its current financial pool, which is capable of funding over 4 billion dollars’ worth of solar projects.
Other solar companies such as SunPower, are following in the same steps to raise money for funding solar projects.
- Solar storage financing
Under this financing model, solar companies such as, Stem, install leased solar storage for business owners. The businesses pay for the storage systems in the long term.
Customers make savings by using their storage systems when grid power is expensive and recharging them when prices are low. This way, the system pays for itself in the long run.
- Yields
Yet another idea for financing option offered by solar companies is yield or dividends. This financial option happens when solar companies turn some of their assets into yield. SunEdison used this model and took its yield (known as yieldco) public in 2014.
Other solar companies are following in this example and this could lead to cheaper solar financing being more readily available.
- Crowd funding
Mosaic, a solar company in California, crowd sources investments for specific solar projects; investors in a solar project are entitled to a share in the project, and they reap cash returns after installation.
This approach is direct and allows investors to put in money in projects in their own communities.
- Climate bonds
Climate bonds provide financial backing for a variety of projects aimed at fighting climate change. The climate-bond-initiative works to provide funding in collaboration with banks. The climate bond market grows rapidly every year, and targets to stand at $100 billion dollars at the end of 2015.
With such large funding pools that are so easy to access, the world is likely to transition to solar energy faster than expected. Fossil fuels could soon become a thing of the past.
About the author
Jenny Richards has been a financial advisor for 5 years. She has helped many individuals and business deal with their debts issues, including offering them advice on how to get out of debt relief. Visit her blog for more information.
Thank you so much Jenny Richards for this information about financing solar energy. For every solar energy plant lots of finance is required because it is very expensive to establish a solar plant. Sometimes these expenses can lead you to the debt. Since that debt settlement reviews are important. Such reviews can give you the right way to stay away from debt and if you have any debt then how to settle them. You have excellent writing skills and I do not have any doubt about that. Keep writing such informative articles and make them available for us. Good luck.
Solar energy is radiant light and heat from the sun harnessed using a range of ever-evolving technologies. It is an important source of renewable energy so that this article is important and its technologies are broadly characterized as either passive solar or active solar depending on the way they capture and distribute solar energy or convert it into solar power. While financing debt settlement reviews Active solar techniques include the use of photovoltaic systems. Passive solar techniques include orienting a building to the Sun, selecting materials with favorable thermal mass or light dispersing properties, and designing spaces that naturally circulate air.