Solar Leasing: The Future of the Australian Solar Market
The solar leasing market in Australia is predicted to expand substantially in the next decade, and the Clean Energy Finance Corporation (CEFC) has mobilised financing to make this possible.
CEFC recently approved a total of $120 million in financing to three solar companies to help boost the solar leasing market in the country. The three companies are Kudos Energy, US solar giant Sun Edison, and Tindo Solar, the only solar module manufacturer in Australia.
CEFC’s financing aims to facilitate the removal of financial barriers to rooftop solar and open up the solar leasing market in the country by the elimination of up front costs. It believes that it can expand the solar market in the country way past the 3.4GW of electricity that has impacted more than 1.25 million households.
Kudos Energy, which received $30 million in financing from the Clean Energy Finance Corporation, believes that there is a huge potential for the Australian solar leasing market. It projects that the rooftop solar leasing market for home and commercial use could top the $100 billion mark by the turn of the new decade.
Kudos Energy Managing Director David Jones says that the solar leasing market in Australia is about to take off thanks to the depth of the Australian capital markets, and the amount of investments that the country has allocated to the sector.
Aside from the $30 million in financing from the Clean Energy Finance Corporation, Kudos will raise $20 in equity to handle as much as 3,000 solar panel installations to contribute to the solar leasing market.
Also called third-party ownership, the solar leasing market provides numerous benefits to home owners and business owners. In this arrangement, the rooftop panel system is owned by a third-party, which is also responsible for the installation and maintenance of the system. The contract usually extends to 20 or more years.
Aside from the lack of upfront costs, a solar leasing arrangement shields home owners and business owners against rising prices of electricity.
Kudos Energy follows the footsteps of other solar companies that have tried to jumpstart the solar leasing market in Australia. Late last year, Chinese company Trina Solar introduced a solar leasing scheme through a new company called Lightleasing.
According to Infinity Solar, the removal of upfront costs would enable customers to install superior quality photo voltaic system. The company also said that the reduction of interest rates would translate to energy savings, reduced power bills and cover the monthly loan amortisations so customers can save money from the very start.
One of the first companies that went into the business of solar leasing was California, U.S.A.-based SunPower. The solar leasing model that the company rolled out in Australia more than two years ago even drew the interest of banking giants Citi and Credit Suisse.
The solar leasing product of SunPower was launched in August 2012 and in partnership with the Community First Credit unit. The company offered financing of a maximum $35,000 stretched over ten years. Likewise, Citi and Credit Suisse agreed to finance $300 million of lease capacity.