As the US residential solar and home energy efficiency market takes rapid strides forward, the combined segment is expected to cross $10 billion of revenue in 2014. In the last couple of years, sales growth was driven by the popularity of third-party based financing schemes: solar leases and PPAs, which were expensive means to achieve energy-bill savings with ‘zero-out-of-pocket’ projects.
Home-equity borrowing came to nearly a standstill in late 2008 and by late 2011, nearly a third of U.S. homes with mortgages owed more on their loan than their house was worth. That picture has now changed significantly. Home prices rebounded in 2013, helping more than 3 million home owners regain long-lost equity, according to CoreLogic, the mortgage-data leader. More than two-thirds of all homes with a mortgage now have at least 20 percent equity, giving home owners more financing options to upgrade their homes. And most lenders are beginning to offer home-equity lines again.
This trend is coupled with another: solar system prices continue to decline, making such upgrades well under $20,000 for the average home in California, less than half the price they were in 2008 and expected to reduce further, as soft costs decline. So such a purchase is now well-within the reach of most home-improvement loans and mortgage-backed lines and can be packaged with a home-kitchen upgrade!
This presents a new opportunity for the traditional home lenders – local and community banks, credit unions and mortgage firms to step into the residential energy-upgrade financing sector in a broader way.