Third-Party Financing: A Powerful Solution For Solar Development

Third-Party Financing: A Powerful Solution For Solar Development

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While there are many benefits to North Carolina’s solar development—it’s already brought millions of dollars in investment and thousands of jobs—there are a number of perennial objections raised by ill-informed naysayers. Chief among these is the question of cost: the false assumption that residential solar only works with a huge upfront investment by the customer or via government subsidies derived from tax revenue.

While this was true historically, in many states a solution exists in the form of third-party financing or lease arrangements. Under this model, private companies translate solar’s upfront costs into manageable monthly payments, much like financing a house or an automobile. This flexible approach makes solar both affordable for customers and profitable for industry, allowing rapid expansion of sustainable energy development statewide.

The third-party approach may seem like common sense, but under North Carolina law it’s prohibited. Only utility companies may sell electricity or electrical generation equipment in NC under an archaic law intended to regulate coal or oil powered electrical plants. These are large industrial complexes rather than clean and innocuous residential solar installations, and the restrictions made sense for them. However, the ban on third-party sales is restricting consumer freedoms and economic growth opportunities offered by clean and renewable energy. Let’s look at the facts.

  • Third-party financing makes solar affordable. While the price of going solar has fallen by half over the past five years, its upfront cost can still put it beyond many household budgets. Third-party financing can change that. In states that allow these financing options, the benefits to the middle class are overwhelming. The average household investing in solar through third-party options has an income of $30,000-$50,000 a year.

  • Third-party financing speeds growth of the industry. By removing the upfront cost barrier of going solar, third-party financing accelerates the adoption of residential and commercial solar. In California, Arizona, Colorado, and Massachusetts, rooftop solar grew rapidly with third-party financing, which accounts for the lion’s share of their residential markets.

  • Third-party financing creates jobs. Employment in the U.S. solar industry grew more than 20% last year, marking the third consecutive year of strong double-digit growth.  And solar job growth is also outpacing many conventional sources of energy, employing twice as many people as coal for example. Analysts attribute solar’s economic success in part to the availability of third-party financing options. By making solar energy affordable to middle-income households, third-party financing draws increased investment and consumer spending, fueling sustainable economic growth.

  • Third-party financing helps lower utility costs. By clearing the way for private investment in local solar power production, third-party financing helps reduce the need for expensive utility power plants, transmission and related infrastructure.

The facts are in: enabling third-party financing would bring tremendous benefits to North Carolina. And the voters know it; when polled, voters in our state overwhelmingly support expanding third-party solar options, with 75% of both Republicans and Democrats and 80% of unaffiliated voters in agreement.

Solar energy is a growing economic force in the Southeastern U.S., despite the reluctance of many Southern states to allow third-party solar development. Georgia, which unanimously approved a law last year to bring third-party options to its consumers, finds itself leading solar growth and development in the United States. And some experts estimate that a third-party financing or leasing approach could do the same for its neighbor states of North Carolina and Florida. In order for North Carolina to take full advantage of its solar opportunity, state law must clear the way for more consumer financing options.

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