By Mark Chediak & Christopher Martin, Bloomberg News
Silicon Valley has something to offer the world in the drive toward a clean energy economy. And it’s not technology.
It’s a financing formula. In a region that spawned tech giants Apple Inc. and Google and is famous for innovators and entrepreneurs like Steve Jobs, a handful of startups began offering to install solar panels on the homes of middle-class families in return for no-money down and monthly payments cheaper than a utility bill. This third-party leasing method — which made expensive clean energy gear affordable — ignited a rooftop solar revolution with annual U.S. home installations increasing 16-fold since 2008, according to the Solar Energy Industries Association and GTM Research.
“There is a reason why California is a tech Mecca for the world because the infrastructure is here to attract that talent,” said SolarCity Corp.’s Chief Executive Officer Lyndon Rive, whose company popularized third-party solar leases for homeowners starting in 2008. “All the major innovation is going to occur in California. One of the innovations is the financing of solar assets.”
SolarCity took the leasing model that SunEdison Inc. first developed for the solar industry by a graduate student named Jigar Shah. SolarCity adapted that model for residential consumers in 2008 and many more offered similar arrangements including Sunrun Inc., which developed the first one in September 2007, and Vivint Solar Inc. And now the idea is spreading to other industries trying to sell expensive capital equipment that reduce pollution and fossil fuel consumption.