SunPower Corporation (SPWR), SolarCity Corp (SCTY): Solar Loans Coming to Australia

SunPower Corporation (NASDAQ:SPWR) has announced another financing option for customers, this time in Australia. The company is teaming up with Community First Credit Union to offer borrowers two loan options that can be used to buy solar systems. This is different from the leasing option that’s prevalent in the U.S., but may be a sign that more financing options will become more readily available here and abroad.

SunPower Corporation (NASDAQ:SPWR)

Terms of the deal

The SunPower Corporation (NASDAQ:SPWR) Solar Loan program is an unsecured personal loan, which I think will change to secured financing if loans expand to help lower costs. Borrowers can choose an introductory variable rate of 6.99%, or a fixed rate of 7.49%, for the first five years, and varying after that.

That looks expensive when compared to mortgage rates in the U.S., but Australia’s mortgage rates are around 6%, so it’s only about 1% over that right now. Variable rates are also more standard there.

What it means for homeowners

The reason loans may become more attractive going forward is that solar installation costs are dropping rapidly. According to GTM Research, the average installed price for a residential system is down 22% over the past two years, to $4.93 per watt. For SunPower Corporation (NASDAQ:SPWR)’s average system size of 8.2 kW, that’s still a $40,000 installation, making leasing an attractive option for homeowners who don’t have that kind of money laying around.

The picture changes if we project lower costs in the future, and look at areas that are already low cost. Texas averaged $3.55 per watt for residential solar in Q1 2013, and if we assume another 22% reduction over the next two years, the total system cost falls to $22,700, which becomes easier to justify for homeowners, and may make ownership with a loan more attractive than a lease because you would be able to keep not only the cost savings, but tax benefits, as well.

Loans won’t make sense everywhere or for every homeowner, but the more financing options available, the better it will be for solar installers.

Are loans coming to the U.S.?

Solar loans are already available in the U.S.; they’re just not as popular as leasing options right now. As I stated above, I think that dynamic will change as costs fall, secured loans are introduced, and homeowners see the value in capturing all of the benefits of solar.

Right now, Public Service Electric and Gas offers loans to its customers in New Jersey, Velocity Credit Union offers solar loans through Austin Energy, and there are many more options nationwide. SunPower Corporation (NASDAQ:SPWR) is obviously interested in opening these doors in Australia, and I could see them making loans broadly available in the U.S., too. SolarCity Corp (NASDAQ:SCTY) has been focused on leasing systems, but also sells systems to customers, and has offered loans for home efficiency, so they’re a natural fit, as well.

The more options available to customers, the more viable solar will be for homeowners. We’ve seen that leasing can be successful in the U.S., and loans may be the next big thing for the solar industry. Look for SunPower Corporation (NASDAQ:SPWR) and SolarCity Corp (NASDAQ:SCTY) to lead the way.

The article Solar Loans Coming to Australia originally appeared on Fool.com and is written by Travis Hoium.

Fool contributor Travis Hoium manages an account that owns shares of SunPower and personally owns shares and has the following options: long January 2015 $5 calls on SunPower, long January 2015 $7 calls on SunPower, long January 2015 $15 calls on SunPower, long January 2015 $25 calls on SunPower, and long January 2015 $40 calls on SunPower. The Motley Fool has no position in any of the stocks mentioned.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!