US household PV finance companies to raise US$7.8 billion by 2022

Financing for household PV and energy storage in the US is a separate and complete industry in itself, dominated by specialised finance companies such as Sunrun, Sunnova or Sunlight Financial. Traditional banks, credit unions and mortgage providers also offer loans, but most household PV installers work with one or more of these businesses. Bloomberg New Energy Finance estimates that household PV finance companies raised US$7.8 billion in 2022.

Excessive customer acquisition costs and inefficient bureaucracy have led to high upfront costs for residential PV, requiring many US homeowners to seek external financing for their PV systems. Federal tax credits led to a third-party ownership model for residential PV, which in turn gave rise to SolarCity (which was acquired by Tesla) and Sunrun.
Financing for household PV finance companies plummeted from US$16.3 billion in 2021 to US$7.8 billion in 2022. PV loan financing has been hit the hardest. Many US household PV companies are still using funds obtained in the past few years, most of them in the form of revolving credit facilities.
Fewer household PV systems are equipped with battery storage in 2022, but we expect this trend to reverse once the battery shortage is alleviated in the second half of 2023. The allocation of storage significantly increases the overall upfront cost of the system, which makes financing even more critical.
Soaring electricity prices in most US states offset the impact of higher capital and installation costs for household PV in 2022. Prime loans, leases and power purchase agreements (PPAs) will have an average coupon rate of 4.3% in 2022, up from 2% in 2021.
Loans are currently the most commonly used financing product in the market, as customers prefer to own PV systems outright. We expect loans to be the preferred financing option, despite rising interest rates and increased federal subsidies for third-party ownership models of PV for residential use.
The US PV market is large enough to accommodate multiple financial institutions, with Sunnova, Goodleap and Mosaic Solar together securing $5.6 billion in financing in 2022, enough to fund capital expenditures (excluding fees and interest) for over 2GW of PV in the home. Bloomberg New Energy Finance expects the market to reach 5.6GW of new installed capacity in 2022 and 5.2GW in 2023.