PV finance is on everyone's lips at the moment, and despite being perpectualy sunburnt, it's on the lips of Australians, too.
Because it hasn't really existed in our market, which has historically been driven by vote-driven, residential-sized rebates. But this is changing rapidly.
A recent survey by SolarBusinessSevices reached around 2.5 percent of all the PV companies in Australia; a small but reasonable little sample group.
Here is what the statistics tell us about the past (2010,2011) and what respondents predicted for 2012 when it comes to PV finance demand in Australia.
Residential Finance Demand
Let's start with who doesn't need finance. Predictably, the demand increases, but 19 percent (2010) and 21 percent (2012) of PV companies said finance isn't applicable in residential applications — at all. So we know the demand is increasing, although slowly, according to respondents.
In terms of who does need it, interestingly the majority of respondents (between 63 percent and 55 percent) said less than 25 percent of the market utilised finance. The demand is thus predicted to rise by 7 percent over the period, but the vast majority say finance works in less than a quarter of the market.
Around a fifth of respondents said that between 26-50 percent of their customers will demand finance in 2012, which is an increase of 10 percent over 2010. Importantly it is this segment that sees the biggest quantum of change in residential. To put this in context, it represents a residential finance market potential of between 21 MW and 42 MW in 2012.
This segment is an important one to watch because it is in the realm of what's happening in the U.S., where around 40 percent of residential PV is financed. Clearly, we aren't there yet; remember only 21 percent of respondents agreed that this segment needed finance, but we are clearly heading towards an increasing demand for financed residential systems.
Interestingly when we get to the ">50 percent of my customers need finance in 2012" segments, the data drops off markedly. Only 3 percent of respondents said more than half the market desires finance.
In a nutshell, what the residential data tells us is:
Commercial Finance Demand
Looking at commercial PV, and again starting with who doesn't need finance we start to see the market skewing our data. Clearly, in 2010 the commercial market barely existed so demand for finance would logically not exist either. However, 47 percent of respondents said that no demand for commercial PV finance existed in 2010 — so there was some demand.
By 2012 however, this has changed dramatically with only 29 percent saying there is no demand for finance. Although this is 8 percent higher than the same segment in residential, it is the single largest change in our data set; demand has grown by 18 percent in two short years and the majority of change was in the last year.
In terms of who does need it, the story is very different in commercial and residential PV.
As we would expect at such an early stage in market development, (and knowing that 47 percent aren't interested at all), in 2010 only 36 percent of respondents said less than 25 percent of the commercial market needed finance, compared to 63 percent in residential. And by 2012 only 40 percent of respondents saw demand for commercial PV finance for less than 25 percent of the market.
It has to be noted however, that this is the largest single majority of respondents in commercial, so this demand segment is important.
The spread is the interesting story in commercial. 31 percent of respondents said demand for commercial PV finance would exist for more than 25 percent of their customers, with almost 10 percent saying the majority would demand it, which is far stronger than residential demand at only 3 percent.
In a nutshell, what the commercial data tells us is:
What does it all mean?
Although this is not a definitive study, it does provide a great snapshot of what's happening according to those who responded.*
Finance matters in the PV market — and it matters more each year.
A variety of factors are undoubtedly effecting the demand for finance products, including how hard it's marketed, how easy it is to access, system sizes, system prices and changing demographics. And we know these factors are positively influencing demand for finance.
This means you must have finance in your portfolio of offers, and it should be considered a "ticket to the game" in commercial PV.
However, it is evident that particularly in residential, finance is not required by the majority of the market in Australia, just yet.
Residential PV finance demand could be best described as an important and rapidly growing niche.
I suspect based on the trends we have seen in this small study and International experience, that we are just seeing the tip of the iceberg for PV finance in Australia. We have yet to truly tap into the commercial PV market, where it is most desirable so chances are, the demand will grow significantly and quickly.
*It is important to highlight that being an anonymous survey, we can't analyse the types of companies who responded; we can only speculate about the reflection of normal variation. However, its reasonable to assume with our good sample size that we have a somewhat representative spread.
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