GE Financing Residential Solar Systems
SACRAMENTO, Calif,--(BUSINESS WIRE)--March 28, 2005--Derek Parker's electric meter has become a neighborhood attraction.
Residents on Camborne Way in Rocklin, Calif., are stopping by the Parker house regularly these days to watch the electric meter spin backward. Parker and his wife, Kimberly, recently installed a photovoltaic power system on their 3,700-square-foot house and are now enjoying electricity bills that often read "zero" in the "amount due" column.
"The people who installed the system told me the meter would run backward on sunny days and it's true," said Parker, a firefighter with the Sacramento Fire Department. "My electric bill used to be around $130 to $150 per month. Over the winter we actually produced more electricity than we used."
A lot of California homeowners may have considered alternative power sources but were discouraged by the cost of installation and the difficulty of obtaining financing. A residential solar electric system can range from $20,000 to $60,000 in unsubsidized costs, depending on the size and type of system. That price would be manageable for many people if financed over time, but until recently, financing for a solar electric power system was not readily available.
"In the 1970s and '80s a lot of solar-thermal power systems were sold by small, fledgling businesses and financed through traditional home improvement loans," explained Dean Marks, president of Premier Power, a company that designs, engineers and installs solar electric systems for homes and businesses. "A lot of those companies quickly went out of business, and some customers were unprepared for the maintenance involved and ultimately defaulted on their loans. As a result, some banks have been very reluctant to finance residential solar power."
The new photovoltaic systems, according to Marks, are extremely reliable. Unlike solar-thermal technology, solar energy systems have few moving parts, require little maintenance and will last for decades. Nevertheless, past experience with residential solar power made banks wary about financing new installations.
All that has changed recently as new lenders have stepped into the solar electric power business. GE Consumer Finance's Retail Sales Finance unit began offering credit to homeowners last year for PV systems. Marks said his company has built or retrofitted almost 500 homes with the technology.
"GE Consumer Finance looked at us very carefully to make sure the product was reliable," said Marks. "We actually sell solar electric power systems that are made by GE Energy. We believe that being able to see how another division of their own company was involved in solar manufacturing helped GE Consumer Finance decide to get involved in financing out customers."
Before financing was available, Marks said the typical customer for solar power was someone with more disposable income. Now that financing is easily available, more average homeowners are plugging into the sun.
Mike Pryde of GE Consumer Finance said the potential market for PV systems is enormous, both in California and across the country.
"Solar electric power makes good economic sense for consumers. We've seen interest growing exponentially across the U.S. over the last few years and expect that to continue," said Pryde. "Financing a solar electric system enables consumers to budget for a fixed, monthly financing payment for a limited period of time. This is offset by their reduced electric bill, which will always be substantially less with the solar system as long as the sun continues to shine."
Federal and state tax credits, along with a rebate from the power company, make PV systems even more affordable.
"Our solar electric system originally cost about $49,000," said Parker. "With the rebates and tax credits, the actual cost to us was $29,000, which we financed. And the financing process was really easy. The financing company (GE) got back to us super quick and there was no hassle."
Making solar electric systems affordable and easy to finance will no doubt lead to many new solar-powered homes in the near future. California Governor Arnold Schwarzenegger recently announced his support for a state senate bill to create the "Million Solar Roofs Initiative," a framework to help promote residential and commercial solar energy use. If approved, homeowners who install PV systems would earn an additional 7.5 percent tax credit above and beyond the rebate received from state and federal sources.
The state of California alone is already the third-largest consumer of solar equipment in the world behind Germany and Japan.
Solar Electric technology has been around for years. It has been used to power satellites since 1958. Solar cells are made of a semiconductor material, typically silicon, which is chemically treated to create a positive charge layer and a negative charge layer. When sunlight strikes a solar cell, an electron is dislodged. The loose electrons are gathered by wires attached to the cell, forming an electrical current. The more cells, the greater the current and voltage.
How the technology works is of little interest to most consumers. They simply want to know if they can afford a solar electric system and will it really work. The answers are "yes and yes."
For proof, you can watch the Parkers' meter spin backward.
About Retail Sales Finance and GE Consumer Finance
Retail Sales Finance, based in Kettering, Ohio, is part of GE Consumer Finance and provides private label credit card programs, marketing, installment lending and financial services for national and regional retailers in key industries: outdoor equipment, automotive/recreational vehicles, consumer electronics and appliances, furniture, floor covering, jewelry and health care. With $151 billion in assets, GE Consumer Finance, a unit of General Electric Company, is a leading provider of credit services to consumers, retailers and auto dealers in 41 countries around the world. GE Consumer Finance, based in Stamford, Conn. (USA), offers a range of financial products, including private label credit cards, personal loans, bank cards, auto loans and leases, mortgages, corporate travel and purchasing cards, debt consolidation and home equity loans and credit insurance. More information can be found online at www.geconsumerfinance.com. GE (NYSE: GE) is a diversified technology, media and financial services company dedicated to creating products that make life better. For more information, visit the company's Web site at http://www.ge.com
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