The financial crisis of 2008 that cratered the US economy justifiably causes a cynical reaction to the claim that financial innovation can boost growth. But suspend disbelief for a moment.
Massive declines in the cost of solar panels--from $4 per watt to $1 per watt--attracted entrepreneurs to the solar installation business. Now the retail end of the solar industry--where solar panels are sold to homeowners and businesses--is becoming as innovative as solar manufacturing and is driving solar growth.
Entrepreneurial excellence in retailing the panels has birthed the solar lease, a financial tool that is still just 5 years old, and subject of a major article in the Sunday New York Times Magazine on August 11. http://www.nytimes.com/2012/08/12/magazine/the-secret-to-solar-power.html.
The solar lease has the system installer own the panels, while the retail customers provide roof space. Homeowners and businesses signing solar leases get guaranteed power bill savings--typically 10% or more off their current bill, even after they pay a lease payment to the solar company. No upfront costs, no capital to recover, no payback period calculations but guaranteed power bill savings from day one for the retail customer. And no worries about "owning" a solar system.
This business model is proving attractive to both homeowners and sources of capital like Bank of America and Barclays that are providing hundreds of millions of dollars to finance solar leasing arrangements. The result of this entrepreneurship is more solar growth.
Solar leasing, that had none of the market 5 years ago, now constitutes 63% and 80% of the California and Colorado distributed solar markets. In turn, the distributed solar market, where solar systems compete against the full bundled electricity rate, and not the wholesale generation price, is booming.