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[Source: The US Department of Energy's Office of Energy Efficiency and Renewable Energy (EERE)]

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Honda and SolarCity Partner on Low-Cost Home Solar Power Leases

Using a financing tool called power purchase agreements, a large solar developer has struck a new deal with automakers Honda and Acura. This is expected to give a big boost to the “already-rapidly burgeoning solar leasing market.”

Solar leases, or solar power purchase agreements, are one of the new innovative tools for encouraging solar deployment. Basically, instead of purchasing a solar array outright, the customer plays host to a developer’s solar system in exchange for an agreement to pay a pre-determined fee structure for the electricity over a set period of time. That allows the developer to acquire a new income stream, and most likely the benefits of renewable energy tax credits.solarcity_install

Meanwhile, the customer gets the electricity for a price that’s often slightly below the going market rate. Perhaps more importantly, they avoid many of the problems that have bedeviled solar installations, such as the up-front installment costs, the permitting process, and the performance risk. As a firm with assets, the developer is generally in a far better position to tackle those hurdles than individual solar customers.

As the Times reports, Honda and Acura will offer their customers home solar systems at little-to-no upfront cost via the partnership with SolarCity, the largest player currently in the solar leasing market. (Honda and Acura will also offer their dealers preferential terms to lease or buy SolarCity’s systems on a case-by-case basis.) So SolarCity gets new capital and a massive new customer base, Honda and Accura get a cut of the returns, and customers get an added promotional deal to lease their homes to SolarCity’s systems and purchase its electricity.

The intial phase of the program is starting in 14 states (not including Maine). However, if the initiative is successful, it is expected to expand. Read the rest of the article.

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