Recent industry memos indicate that the 30% Investment Tax Credit (ITC) for residential solar may be jeopardized in the new budget bill proposed by the House of Representatives. The emails from Roth Capital, an investment company that tracks solar industry policies, point to various unnamed sources for this information.
“The latest updates suggest that the commercial ITC/PTC could remain at 30% until 2028. However, the homeowner Solar ITC (25D) faces elimination by the end of 2025 under the House bill. Whether it survives will depend on the Senate. If 25D is cut, it could significantly harm the residential solar market, as over 50% of US residential solar relies on this credit.”
It’s worth noting that this memo comes with a significant caveat: nothing is confirmed, and changes are still possible. However, the House needs to finalize its proposal soon. Losing the 30% ITC for residential solar would strike a heavy blow to small businesses in the sector, which are already struggling. If this prospect concerns you, consider contacting your local representatives and exploring third-party owned (TPO) funding options, as commercial ITC (48E) appears unaffected, allowing solar lease transactions to remain viable through companies like Sunrun and Sunnova.
Configuring TPO Finance
What’s essential when beginning to sell your lease? According to industry sources, TPO can be a valuable tool that enables you to tap into a broader customer base. Many homeowners may hesitate to incur debt or take on loans, preferring instead to limit their expenses.
This financing model offers lower payments compared to traditional utility bills, which can be quite appealing. It also provides a reliable revenue stream for businesses targeting cost-conscious consumers.
Why Offer TPO Financing?
Tinaglia notes that TPO financing adds another option in your toolbox. It allows businesses to engage homeowners who might otherwise refrain from going solar due to financial concerns. This sector can benefit from systems that lead to lower monthly bills.
Understanding Right Financing Options
Tax credits significantly influence financing choices; it’s not just about offering low payments. Understanding a customer’s ability to benefit from tax credits complicates things. A TPO provider typically owns the system and handles tax credit benefits, transferring advantages to the homeowner. However, if sellers lack knowledge about TPO and financing options, they might face challenges in effectively promoting these choices.
Your sales team should grasp key aspects like how financing is structured and the advantages for homeowners. It’s vital to avoid placing customers in unsuitable financial products, which could lead to adverse reviews and lost referrals.
Fundamental Differences with TPO Financing
Operations and maintenance (O&M) play a crucial role in distinguishing TPO from other financing methods. If your business receives queries from homeowners whose installers have closed up shop, it presents an opportunity to monetize and diversify your offerings.
Having an O&M plan, whether already established or set through a TPO provider, is essential for long-term sustainability.
Approval Process with TPO Providers
Is there more to the approval process with TPO providers? Yes, indeed. It can be more complex, but ultimately, doing it well will enhance customer service and profitability.
TPO providers are dedicated to ensuring installations meet their specifications over the lifespan of the system, which often involves additional verification steps. While it may seem daunting, adapting to these requirements can lead to greater success and better customer relationships.
