The third quarter of 2016 was the largest quarter ever for the solar industry, with 4.1 GW installed — or, about 1 MW every 32 minutes! According to the latest Solar Market Insight data presented by the Solar Energy Industries Association (SEIA) and Greentech Media, this monster quarter also officially saw 2016 become the biggest year for solar ever, surpassing 2015’s previous record of 7.3 GW with a full quarter of installations still to come. Not only that, but the Energy Information Administration estimates that solar will be the largest source of new electric generating capacity this year with over 11.5 GW (including residential solar), surpassing natural gas for the first time.

Despite this extremely positive big picture, the SMI report also describes slowing growth in the residential solar sector specifically, where installations this quarter only grew 2% compared to the third quarter of 2015. Part of this is due to the incredible residential solar boom of the past few years — since growth comparisons are starting from a larger installed base, relative growth rates will tend to be lower compared to the early, pre-boom solar industry. And after an unprecedented four years of annual growth of 50% or more, it’s not unexpected to see the market cool off a bit.

However, in order to realize our dream of a 100% clean energy future for every homeowner, we need to keep growing faster, not slower. Happily, the SMI report also points the way towards massively scaling this industry over the next few years.

Geographic Expansion

Traditionally leading solar states like California have seen growth begin to slow as they mature and the industry seeks to expand to customers outside of the early adopter market. However, at the same time, a number of new markets emerged this year in states like Utah, Texas, and South Carolina — all of which have historically been less policy-friendly to renewables but are being won over through solar’s appeal as a money-saving, job-creating engine of economic growth.

Solar’s long-term success will require a real 50-state strategy for the industry, and this pathway will only get easier as costs continue to fall. While the economics of solar are hampered by utility-friendly regulations in some states, the steadily improving value proposition for solar — and increasingly, the combination of solar plus storage — is helping to unlock new state markets every year. This geographic expansion will be a big story in the years ahead, and Mosaic is working hard to keep up by steadily expanding the states in which we’re providing financing. Speaking of which…

Move to Solar Ownership

The SMI report also notes that demand for solar loans (instead of solar leases or PPAs) has “picked up quicker than expected,” resulting in some installers lagging behind this shift in customer preferences. Indeed, GTM Research expects solar ownership via cash or loans to account for 55% of the residential market in 2017, outpacing PPAs for the first time since 2011. This share for solar ownership will increase steadily to 73% by 2021 according to their projections.

This growing preference for solar loans makes intuitive sense. As with owning vs leasing a car, or owning vs renting a house, ownership of your solar panels allows you to yield the greatest return on your investment. According to the CEO of the solar marketplace EnergySage, going solar via lease or PPA typically results in homeowners keeping only 10% to 30% of the financial savings, whereas solar loans allow 40% to 80% of these savings to be realized. Similarly, a 2015 study by the National Renewable Energy Laboratory indicates that solar loans result in levelized energy costs up to 30% cheaper than PPAs and leases.

Mosaic’s Financing Mission

So, just like cars and houses, the ready availability of affordable loan financing will be key to making the ownership opportunity accessible to the majority of customers. That’s why providing accessible solar loans with a streamlined, frictionless customer experience is at the core of Mosaic’s mission to create a 100% clean energy future. We are the leading solar loan provider in America, and we’re thrilled to be on track to originate $1 billion in residential solar financing — but as the latest market data shows, we’re just getting started on realizing this opportunity.