The U.S. Department of Energy’s National Renewable Energy Laboratory (NREL), recently announced a Banking in Solar working group to address the challenges that homeowners face getting loans for rooftop solar projects. The end goal is to achieve mass adoption of solar loans, bringing down solar financing rates significantly.
Some of the ongoing concerns for investors, bankers, appraisers and other stakeholders looking at financing solar projects include:
- Do the panels really operate for 20+ years?
- What happens in the event of a default on the property?
- What happens when the home is sold?
- What is the risk of being secondary to the mortgage holder?
- What if the project isn’t paid off? What does the lender do with the asset?
This group is also working in parallel with another group called Solar Access to Public Capital, that is helping the banks securitize the loans that they originate. Fortunately, private-sector companies, like Solar City, have already paved the way for securitization
Not unlike the auto industry, the proliferation of solar will be driven by the growth, and competitiveness, of financing solutions. While lenders fully understand credit and risks associated with the auto market, solar is still a work in progress on this front. Fortunately, NREL is working to speed this up!