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.

blog comments powered by Disqus
Insider Monkey Headlines
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

10 Things The World Can’t Stand About Americans

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Burger Kings: The 10 Most Expensive Burgers in the World

The 10 Most Ethnically Diverse Countries in the World

The 10 Most Exclusive Credit Cards in the World

The 10 Most Expensive Cruise Ships in the World

The 10 Fastest Supercomputers in the World

The 10 Best Countries for Doing Business 2015

6 Most Expensive Fruits 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 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!