Finance / Solar Ownership

“When you can access your solar wealth….you have access to the most vital source of energy.”

I was fortunate to have the opportunity to speak to an individual with a comprehensive view of the energy industry: Travis Bradford.  He is the founder of the Prometheus Institute and a Professor at Columbia University School of International and Public Affairs.  Travis also has extensive hands-on experience in the world of finance and has had the benefit of advising many corporations on strategy and execution.

Q: Tell us about yourself.

After a career in corporate acquisitions and structured finance, I started the Prometheus Institute in 2003.  It is a not for profit organization that provides information that is useful to accelerate the adoption of sustainable resource technologies.  I turned this information into a book “Solar Revolution,” a market research institution, and the foundation for Greentech Media.  I also helped found the Carbon War Room.  I am currently a full-time professor at Columbia University, focusing on energy and natural resources and innovation.  Over the last 10 years, I have spent a lot of time working in the solar industry.

Q: Do you believe that solar ownership is important?

Almost everybody owns solar in some way or another. Solar is the most ubiquitous, most evenly distributed resource available to us.  If you’re standing in the sunshine, you are a solar owner.  The question is: are you able to take advantage of this ubiquitous resource?  Do you have the right physical and financial technology to convert this resource into an economic opportunity?

Q: Do you think that solar can be a smart investment for a homeowner?

I think people increasingly realize that solar is going to provide them a benefit over a long period of time.  These assets are robust; they lock in today’s energy prices, which will be increasingly valuable to them over time.  And, as an owner, you will save more than as a renter.  However, to get comfortable that you will reap that benefit, you have to know that you’re going to be around for a while, at least 3-5 years, and you need to have confidence in the technology.  Once you cross that threshold, you’ll wind up with a better return by owning rather than renting.  I think that as people see that solar is for real, and does have all of these good characteristics, more and more people are going to be willing to own.

Q: What does Solar Wealth mean to you?

It is the ability to use your natural endowment in solar energy to save money and create other economic opportunities. You get energy that’s increasingly cheap versus than the electricity it’s displacing.  You also get a tremendous amount of peace of mind that you will have reliable access to vital energy resources and nearly no risk that the price will go up.  And wealth, at its root, is desirable because it protects you from unknown shocks and provides peace of mind about the future.  That is why solar energy really is wealth.

Q: You mentioned having access to the right financial technology, can you elaborate on that?

When it comes to solar, there are either loan or lease products.  Basically, both take the upfront cost and spread it over the lifetime of the asset.  Ask yourself: do you want to be the owner of the system at the end?  Which one has a cheaper all-in cost?  Take into account the cost of the capital that you borrow.  Leases tend to be more expensive than a secured loan.  The implicit interest rate that you have to pay tends to be higher.

Q: Is ownership important to the solar industry?

It is an interesting question, because historically ownership was the only way that the industry developed. Leasing only developed in the last 5-7 years, and 3-5 years in the residential market.  To me, the leasing innovation is nice and it brings some customers into the market.  It helps bridge the uncertainty that some people feel in adoption over time.  I believe ownership represents a very powerful economic target.  It will continue to be a primary driver, for the economic reasons that we have already discussed.

Q: Any last thoughts around solar?

The cost of solar has come down 100 fold in the past 30 years.  It will continue to get cheaper and it will continue to provide an economic advantage for people.  The thing that solar displaces, the cost of electricity, is not getting cheaper.  The economic activity for solar is going to keep getting better and better.  More and more people are going to do it, which is only going to make more people comfortable and make the economics better still.  This is not going to stop.  It’s going to save us money and give us peace of mind.

You also have to think about what impact solar is going to make in the world.  When you can access your solar wealth, the solar that falls on your home, you have access to energy that is vital to your life and livelihood.  No one can take that away from you.  It is the most democratized source of energy of our generation, more than the internet.  Limitless energy available at a cheaper price is the innovation of our generation.

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