Dive Brief:

• ConEdison Solutions, the unregulated subsidiary of the New York investor-owned utility Consolidated Edison, announced yesterday it will move into the rooftop solar market in the Empire State through a partnership with solar developer SunPower.
• ConEd will own the rooftop systems and offer a 20 year lease that will provide electricity at below the retail rate from a host's rooftop at no upfront cost to the homeowner. ConEd Solutions will handle the financing, installation and any ownership responsibilities associated with the SunPower modules it will use.
• The third party owned (TPO) finance plan was central to the 50%-plus growth rate of residential solar in 2012, 2013, and 2014. Along with low module prices, no-upfront-costs financing allowed for the installation of over 500 MW of residential solar where there were no state incentives in 2014.

Dive Insight:

ConEd's announcement it will enter the rooftop solar market is the second such move by a utility in recent months. In late May, Georgia Power announced it would enter the residential solar business in the Peach State, an opportunity made possible by a new TPO law signed earlier that month. In July, it began offering installation services.

ConEd's decision to expand its unregulated business offerings comes at a time of great upheaval for utilities in New York. On Tuesday, state regulators released a new white paper kicking off the second phase of rulemaking in its Reforming the Energy Vision (REV) initiative. The paper outlines the creation of new utility business models in the state, centering around the creation of distributed system platforms (DSPs), which will effectively function as a customer-facing marketplace to enable two-way flows of energy, services, and value across the distribution grid.

With ConEd's regulated utility division barred from owning distributed resources like rooftop solar under the REV initiative, the company is looking to the budding residential solar market in as a new growth opportunity. In 2014, the state added 147 MW of solar capacity, boosting its total to 397 MW. Of that, 89 MW were residential, 49 MW were commercial and  9 MW were utility scale, according to a solar trade group.

Third party ownership arrangements like ConEd's offering are proliferating nationwide. TPO systems accounted for 72% of the total 1.2 GW of U.S. residential solar installed in 2014, according to a report released this week from GTM Research. 

Three companies financed over half (56%) of U.S. residential solar installations last year. SolarCity led, financing 34% of the installs. Vivint Solar, just acquired by SunEdison, was second at 12%. Sunrun was third at 10%, followed by residential finance sector standouts SunPower, NRG Home Solar, Sunnova, and Clean Power Finance.

The 28% of residential solar that was not installed through TPO leases and PPAs in 2014 was customer-owned, much of it through loans that offered similar year-one savings and other advantages in lease and PPA plans. By 2020, direct customer ownership will likely account for 54% of the predicted 5.2 GW residential solar market.

“The solar loan market has exploded,” according to GTM Research Sr. Solar Analyst Nicole Litvak. “Every TPO financier has introduced or is planning to introduce a loan, and an entirely separate group of pure-play loan providers has emerged.”