Last week, RenewEconomy broke news that Macquarie Group has obtained an electricity retail licence in Australia and that it intends establishing a solar leasing business.
We have also seen in the last few months reports that various companies, including Sungevity, Infinity Solar, Zero Cost Solar, and others have all brought out leasing packages aimed at customers who want to install solar but cannot afford the up-front cost. This is brilliant news and will provide an opportunity for many who thought solar was out of their reach to gain the benefits of solar.
The next big step for the solar leasing market is to incorporate storage into the lease packages, similar to Vector Energy offer in New Zealand. Such a package would provide long term revenue for the provider and enable a customer to utilise more of the solar energy their leased system generates.
A leasing package which combines storage with solar will appeal to a great many households throughout Australia and will provide an opportunity for these households to take charge of their electricity usage more effectively and provide certainty within their budget as they will have a set monthly payment for their system. They would have the potential to substantially reduce, or ultimately eliminate, the cursed quarterly electricity bill shock.
For months now the argument for the electricity companies to provide storage with solar to their customers, in an effort to restructure their business models and provide financial security into the future, has been progressively getting stronger. Now with all these new providers coming into the game and offering long term leases for solar it won’t be long before one of these providers makes the investment in storage and secures a market leading position.
Where things will get interesting is when one of these lease provider’s comes out with a package aimed at the existing solar customers in Australia. There are already over 200,000 households and small businesses in NSW with solar, and throughout Australia the number of premises with solar installed would easily top 1 million. Consider for a minute what the monthly revenue would be from 500,000 storage leases would be? The question is whether the lease could be provided at a competitive price which would be attractive to the customer at this time.
Yes there would be a high up-front cost in establishing the business but with the demand for storage the cost of producing the batteries should full dramatically due to the volume of batteries required, i.e. mass production (as what Tesla proposes to do with their new factory), and as better technology comes onto the market lifespans should increase thus providing much better returns on investments.
The other issue with regard to such leasing packages is what happens to the electricity companies. How does their business model hold up if 500,000 of their existing solar customers take out leasing packages and more and more of their non-solar customers take up solar?
One avenue for them to consider is to go into joint ventures with lease provider’s to secure their customer base and provide a single billing system for their lease package and power supply from the grid.
Once again I put this squarely at the feet of the solar industry. If you think this has merit then you need to take the first steps. Your customers want this – build it and they will come!