Fitch expects third-party finance and alternative capital sources to play an important role in expanding the market for residential solar DG. Greater access to capital will make enable easier residential photovoltaic (PV) acquisition, reduce upfront cash outlays, eliminate homeowner system maintenance and upkeep costs, and thus broaden the potential customer pool. Third-party finance has not resulted in lower rooftop system acquisition costs and the
Third-party ownership currently represents 60% to 70% of total residential DG installations and remains the key growth driver of DG installations. Third-party-owned systems, themselves, have been fueled by the ability to attract new investors and new forms of capital or recycle capital through securitizations.
Traditional utilities have been the sole distributor of electricity even in restructured states where generation and retail energy supply may be provided by others. However, under the leasing model advanced for solar distributed generation, customers can now purchase electricity - at a lower price than the utility retail price - from the owners of the rooftop systems. The leasing model is similar to the retail electricity model in a restructured state but potentially has more risks for the incumbent utility, as the volume of utility-supplied electricity is reduced.
Fitch believes this will further challenge the traditional utility business model, which is already under siege from energy efficiency and other market dynamics.
The full report 'Alternative Finance Plugs into Distributed Generation Growth' is available at 'www.fitchratings.com' or by clicking on the link.
Additional information is available at 'www.fitchratings.com'.
Source: Fitch Ratings
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