SolarCity has certainly made a splash in the industry this year. It has made strides to vertically integrate is solar leasing business, starting with its acquisition of mounting company Zep Solar last year for $158 million. Zep has a rackless mounting design, which has reportedly saved SolarCity on both cash and system installation time. It also recently announced plans to move into the commercial space with a new specialized Zep mounting system. In June, the leasing company announced further vertical integration plan with the acquisition of solar cell manufacturer Silevo. It plans to open a 1-GW manufacturing facility in New York within the next two years.

Now, the company is focusing on its financing mechanisms. Earlier this month, it unveiled a new loan program to be offered alongside its leasing options. According to Jonathan Bass, vice president of communications at SolarCity, many homeowners today value just that — ownership. So SolarCity combined the value of a solar lease’s low upfront cost and rates with the benefit of ownership to reach a larger audience.

“We knew that if we offered the customer a chance to own that system we would bring more value. All of our customers are homeowners and they value that ownership. Many of them want to own solar over leasing,” said Bass. “So we knew if we offered a very low upfront cost and a very low effective kilowatt-hour rate electricity with the benefits of ownership, it would be a very powerful product.”

According to Bass, the 30-year loan is offered at a rate of 4.99 percent, and customers are able to pay down their principle payments to shorten that time period, similar to a mortgage. What’s unique about this loans compared to others on the market, like Admirals Bank, is that SolarCity has chosen to take on full service acting as the lender and subsidiary, which saves on costs.

“With most other loans in the space, you would have a financing company, like a commercial bank, offer the loan for the system, and then you would have another loan to install the system. The OM and warranty would likely go through the financing company, but the installer does the work, so it’s multiple party transaction,” said Bass. “The terms are typically shorter and the interest rate is higher, so then the kWh rate is generally higher.”

The loan is offered to homeowners with a credit score of 680 or above, which is also more generous than most other loan offerings, according to Bass.

Does this all mean that solar leases are on the downturn? Not necessarily. According to Bass, the leasing market has driven the industry for the past six years, so there will still be a large appetite, at least in the short-term. Residential loans are also highly dependent on tax appetite — the 30 percent federal investment tax credit (ITC), which is set to expire for residential systems at the end of 2016 (find out more about SEIA’s new campaign to save the ITC here), is a huge market driver.

“If you can capture the full ITC and apply that as a rate payment on our loan, it can get customers 40 percent below the utility rate, especially in California,” said Bass. “If you don’t have that tax appetite and you can’t capture the tax credit, leases are still going to be great options — customers still pay 20 percent less for solar electric through a lease, and it’s a shorter 20-year term, which some prefer.”

In addition to a loan offering, SolarCity announced last week that it would offer $200 million in bonds to the public. Bass said that this money will only help raise funds for SolarCity and continue to prove that solar is a stable asset, but also allow more people to participate in the solar market.  

They are corporate bonds that are paid through thousands of distributed solar systems. One-year bond rates start at 2 percent, while seven-year bonds go up to 4 percent. “It is very comparable to what banks are doing in the debt market, but the major difference is that instead of a $100 million buy-in, the solar bond buyer can invest as little as $1,000,” said Bass.

With these types of offerings, more and more people will be able to with go solar or at least participate in the market, creating numerous benefits, said Bass.

“As we lower the solar kWh rate and retail electricity rates rise, we will see more and more markets go solar. SolarCity offers service in 15 states today, but I think within the next 12-36 months, you’ll star to see the cost of solar electricity go below the cost of retail power and we’ll be able to enter more markets, so its really exciting,” said Bass. “But the fact is that we’re at less than 1 percent adoption even in states that are big solar adopters today, so there’s a tremendous amount of growth potential in the residential market.”