Day 2: No Money Down
by Kealy Devoy -- April 14th, 2012
“No money down, save money month one.”
That’s what we heard at SolarCity on Day 2 of our trip. It’s become a sort of motto for them. The phrase refers to their innovative residential solar financing structure, which they call SolarLease.
SolarLease approaches residential solar with an elegant simplicity. SolarCity funds the installation of solar panels on a residential home. The system is sized to reduce electricity bills considerably, but not generate more than the home typically consumes. The homeowner then pays for the system in monthly installments to SolarCity. The greatly reduced electric bill plus the monthly payments to SolarCity are guaranteed to be less than the previous average electricity bill. They’ll even help homeowners increase the energy efficiency of their homes before engineering the solar system, which saves more money on electric bills and leads to a smaller solar system that will cost less overall.
Let’s say I usually pay $200 per month for electricity. SolarCity will install a solar array large enough to lower my bill. My new electricity bill might be more like $60 per month. I also pay SolarCity $110 per month for the system, leaving me with a savings of $30 per month, right off the bat. It’s hard to argue with that.
SolarLease is just one of the many creative financing mechanisms that SolarCity employs. They are always striving to innovate in the financing realm. One of their goals is to commodify these financing mechanisms, which decreases the legal costs associated with setting up contracts. Having so many “off-the-shelf” financing mechanisms makes the process go more quickly and more smoothly, as well.
SolarCity is the first vertically integrated solar services provided in the United States. They provide everything from sales and financing to design, installation, monitoring, and maintenance; everything but the manufacturing, actually. This business model provides consistency and encourages a team approach among employees.
We had a great visit with the folks at SolarCity – they certainly made an impression on me. I can’t get “no money down, save money month one” out of my head!