Utility solar business models

Published: February 1, 2010

By Mike Taylor, Director of Research and Education, Solar Electric Power Association

To date, the United States’ photovoltaic markets have largely been driven by net-metered residential and commercial customer projects, in large part due to federal, state, and utility incentives (see Fig. 1). The rapid growth of the commercial market in particular can almost entirely be attributed to the development of the well-known ‘solar-services’ business model, also known as the solar performance or the third-party solar model, which began in the early 2000s. In short, the commercial solar market surpassed the residential sector, and in 2008 represented only 10% of the number of installations but well over two-thirds of the annual grid-connected megawatts in the U.S. PV market [1]. This article will provide background information on the U.S. solar markets, and define what a utility solar business model is and the drivers of different model types.

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