Liam Denning, Columnist

The Not-So-Simple Life for Solar

The plans are worth less, and there's more competition, including from Fannie Mae.

June 8, 2016 at 1:08 PM UTC

Liam Denning is a Bloomberg Opinion columnist covering energy. A former banker, he edited the Wall Street Journal’s Heard on the Street column and wrote the Financial Times’s Lex column.

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On its latest earnings call, SolarCity was dragged over the coals for being too complicated. Simplicity won't be a cure-all in this business, though.

SolarCity's complexity partly reflects the fact that it and its peers operate in an industry intimately tied to America's Rube Goldberg machine of renewable energy incentives. About two-thirds of solar systems are sold under long-term power purchase agreements (PPAs) or leases. They are installed and owned by a third party such as SolarCity, to which the homeowner pays a monthly fee over, say, 20 years. Homeowners put little or no money down, because solar companies can use renewable-energy tax credits to finance the cost of installing the system and then get paid out over time by the customer's monthly payments. The idea is that the present value of those payments adds up to more than the costs.