Improving Solar Policy: Lessons from the solar leasing boom in California

The report analyzes the shift in California's residential solar market from purchasing to leasing, where leased systems grew from less than 10% of new installations in 2007 to over 75% in 2012. It finds that leasing reduces consumer barriers by eliminating up-front costs and simplifying complex processes, and that declining state incentives (CSI) helped lower prices and reduce the cost of federal tax incentives to taxpayers.

• Residential solar deployment in California shifted dramatically toward leasing, with leased systems accounting for over 75% of new installations in 2012, compared to less than 10% in 2007.
• Solar leasing addresses four primary barriers to adoption: lack of information, limited access to finance, long payback periods, and permitting/interconnection delays. It specifically eliminates the payback period for customers by providing immediate bill savings with little to no down payment.
• The decline of the California Solar Initiative (CSI) up-front incentives contributed to the rise of leasing because as these incentives covered a smaller fraction of project costs, the relative burden of financing increased, making leasing more appealing.
• While leased systems initially cost federal taxpayers more than purchased systems due to higher reported prices, this price premium disappeared over the last two years as the market matured and became more competitive.
• Declining state incentives (CSI) exerted pressure on installers and leasing companies to implement cost reductions, which helped lower prices for customers and subsequently reduced the cost of federal tax incentives to taxpayers.
• The report recommends that policymakers use incentives that decline with deployment to drive price reductions and suggests replacing expensive tax equity finance with taxable cash grants to lower financing costs.

APA

Hobbs, A., Benami, E., Varadarajan, U., & Pierpont, B. (2013). Improving Solar Policy: Lessons from the solar leasing boom in California. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2013/07/Improving-Solar-Policy-Lessons-from-the-solar-leasing-boom-in-California.pdf

Chicago

Hobbs, Andrew, Elinor Benami, Uday Varadarajan, and Brendan Pierpont. Improving Solar Policy: Lessons from the solar leasing boom in California. Climate Policy Initiative, 2013. https://www.climatepolicyinitiative.org/wp-content/uploads/2013/07/Improving-Solar-Policy-Lessons-from-the-solar-leasing-boom-in-California.pdf.

Wikipedia

{{cite report |last1=Hobbs |first1=Andrew |last2=Benami |first2=Elinor |last3=Varadarajan |first3=Uday |last4=Pierpont |first4=Brendan |title=Improving Solar Policy: Lessons from the solar leasing boom in California |publisher=Climate Policy Initiative |date=July 2013 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2013/07/Improving-Solar-Policy-Lessons-from-the-solar-leasing-boom-in-California.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{hobbs2013improving, author = {Hobbs, Andrew and Benami, Elinor and Varadarajan, Uday and Pierpont, Brendan}, title = {{Improving Solar Policy: Lessons from the solar leasing boom in California}}, institution = {Climate Policy Initiative}, year = {2013}, month = jul, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2013/07/Improving-Solar-Policy-Lessons-from-the-solar-leasing-boom-in-California.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }