GTM Research Prediction: Residential Solar Leasing will Peak in 2014


GTM Research predicts that residential solar leases will peak in 2014 at 68% of the market. Their new report, authored by analyst Nicole Litvak, even goes so far as to predict that in 2015, the tide will turn toward ownership.

Leases have been huge in growing the residential solar market, and they’re still going strong. But GTM Research thinks this trend is peaking. According to their new report, U.S. Residential Solar Financing, 2014-2018, 2014 will be the year when we’ll see a transition in residential solar financing.

We’ve been watching some interesting developments in this area. Solar loans have been popping up and providing more options than before. Property Assessed Clean Energy (PACE) financing has also picked up again, particularly in California. The increase in focus on operations and maintenance may also help fuel the appeal of ownership.

While solar leases and other third-party ownership (TPO) models helped propel residential solar to outpace commercial solar for the first time this year, GTM Research says that’s set to change. They present very specific predictions: TPO share for residential solar, now at 66% of the market, will grow to 68% and peak there. With new financing options, ownership will once again become the trend in 2015, with TPO falling to 63% by 2018.

We can expect strong growth in 2014, the report says, with the U.S. residential PV market exceeding 1 GW for the first time. Just funding the growing demand will be a challenge for TPO providers. And with more loan and other financing options, plus lower costs overall, ownership is becoming more attractive — and more feasible — for many homeowners.

According to GTM Research Analyst Nicole Litvak, the report’s author, “the share of third-party-owned solar has already begun to come down in leading state markets, including Arizona and Massachusetts.”

The GTM report offers a closer look at a couple other major trends in residential solar. The competitive landscape is changing with the many mergers and acquisitions that have been happening, plus new business models and new entrants into the market. And the report looks at how the cost of capital has been lowered by more investors entering the market as well as new financing vehicles.

The report also provides a comprehensive update on the vendor landscape. And it gives an outlook on the total addressable U.S. residential market, the share of TPO versus direct ownership, and the market size by ownership type with forecasts to 2018.

The full report can be found here.