A new funding model in China may allow some people to get solar power for “free,” or at very low upfront cost.
Third-party financing is the way this could happen, and it is already used in the United States. In China, a firm based in Singapore is trying out this approach. A solar developer named UGE International and its finance partner Blue Sky Energy lease space on Redwood’s rooftops in China to place their solar panels on them and make electricity. It is sold to the Redwood Group, which owns the building but not the solar panels.
Redwood doesn’t save a lot of money each month by buying the solar electricity at less than grid rates, but the PPA agreement it signed protects it from having to pay more if those grid rates rise over the 20-year period, and any savings are a bonus, right?
Redwood owns over half-a-million square meters of roof space in China, so if the first solar power project goes well, more solar panels might be added.
Of course, the point of using more third-party financing is not to help one company expand its solar power capability — it is to add much more solar power in China, a nation that leads in solar panel production, but not in rooftop solar panel installation.
China could actually reach 100 GW of solar by 2020, but faces some challenges, such as high installation costs and rooftop rights issues.
Third-party solar can help alleviate those issues and make the process of ‘going solar’ less of a hassle. In fact, in the US, 72% of the residential solar installed in 2014 was estimated to be from third-party arrangements. Some of the US companies that most commonly employ this approach are SolarCity, Vivint Solar, and Sunrun, all of which are now publicly traded companies enjoying quite a bit of success.
There is no reason why the third-party way can’t be adapted for use in China as well, and many people are probably aware that China very much needs a clean energy alternative to coal due to very severe and hazardous air pollution problems.
One of the many intriguing aspects of the clean energy field is the creative financing and economic opportunities that are cropping up. They are needed to help usher in more solar, wind, geothermal, and energy storage.
Originally posted on SustainInnovate by jrichardson.
Photo courtesy of Agnieszka Bojczuk.
