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The largest U.S. residential PV financiers are vertically integrated firms that provide in-house financing, installation, asset management and O&M, as do SolarCity and Vivint Solar.
But the market landscape includes a host of non-integrated third-party financing firms, called “partner-model financiers” by GTM, which offer leasing or power-purchase agreements to homeowners while relying on a network of partners for system installation and maintenance. Such financiers include firms like Sunrun, Clean Power Finance, Sunnova, and many more.
Partner-model financiers typically handle asset management and fleet operations in-house (from customer service to fleet supervision to dispatch and oversight of O&M crews). They also tend to outsource all maintenance activities to the installer partner that built the PV system -- the most convenient model for a financier, because the installer is also the provider of the workmanship warranty.
For this reason, there is no need for potentially complex bill-back scenarios, and the risk of finger-pointing is lower.
Figure: Residential PV O&M and Asset Management Landscape
Source: U.S. Distributed PV O&M and Asset Management
But all the partner-model financiers interviewed for GTM Research’s new report, U.S. Distributed PV O&M and Asset Management: Services, Markets and Competitors, acknowledged two significant issues with this approach.
- Inevitably, a share of installers will go out of business, so financiers have to rely on third parties or internal staff in order to maintain the systems built by now-defunct partners.
- Even among installers that are still in business, some are not motivated to perform maintenance and warranty repairs because their revenue comes from building new systems. As such, response time and quality of maintenance work vary greatly.
In order to mitigate this challenge, partner-model financiers give installers the ability to either accept or refuse to perform warranty work. Upon refusal (or lack of response) for a given work order, the financier gets the work done by a third party or internal staff, and bills the installer back. But this process is cumbersome and may delay actual response to customer issues.
Several financiers even state that they prefer sending their own maintenance crew rather than dealing with the original installer. Even this scenario is not trouble-free: complications and finger-pointing scenarios may arise in which installers deny workmanship warranty coverage of certain issues after a third party “touches” a system they built.
Given these factors, a pattern emerges in partner model financiers’ maintenance sourcing strategies. Initially, they tend to rely on the installer (mostly for cost reasons), then as some installers go out of business and others prove either unreliable or unmotivated to perform maintenance, financiers contract with independent maintenance providers such as SunSystem, Sunup, and Next Phase Solar (recently acquired by Enphase Energy).
As portfolios grow to a level of scale and density that makes insourcing economically viable, they evaluate bringing maintenance in-house. This process happens at the local level, which explains why some financiers have different sourcing approaches in different parts of their territories.
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For more information on U.S. residential and commercial PV O&M and asset management, including market size and 5-year forecast by segment and state, competitive landscape, vendor categorization, market trends, budgets/prices, sourcing strategies, and key vendor profiles, please refer to the new report recently published by GTM Research: U.S. Distributed PV O&M and Asset Management: Services, Markets and Competitors.