44% of U.S. residential solar is owned by third parties

The U.S. Department of Energy’s Energy Information Administration (EIA) has come a long way. Just more than one year ago the agency announced that it would begin reporting the output of distributed solar in its popular Electric Power Monthly publication, among its data of electricity output by source.

These days EIA is tackling such issues as third party ownership of distributed solar. Earlier this week the agency published a brief article which reported that roughly 30% of solar PV plants smaller than 1 MW are owned by third parties, meaning through leases and power purchase agreements wherein the provider or financier retains ownership of the system. The report also found that 44% of residential solar is contracted through this model.

Image: EIA
Image: EIA

This should not come as a surprise, given that third-party ownership has been the dominant business model in the residential segment for several years. EIA reports that this model is much less popular in the commercial and industrial (C&I) segment.

The article also charts the relative popularity of third-party ownership in different states, finding that while roughly 1/3 of California’s distributed solar – both residential and C&I – third-party solar represents more than half the distributed solar capacity deployed in both Maryland and Arizona. In New Jersey and Massachusetts the model is decidedly less popular, with home and business owners directly owning a higher portion of systems or taking out loans.

EIA’s data comes as the third party model is on the decline. GTM Research has predicted that direct purchases will overtake third party solar as the dominant business model in 2017, after two years of declining market share.