Why Solar Leasing Is Financially More Attractive for A Rapid Increase of Distributed Solar Power in Developing Countries?

Abstract

A substantial decline in the cost of solar PV power plants (80% reduction since 2008) has enabled solar energy to compete with other power generation options in some developed markets. Other driving forces of PV boom in developed countries (Japan, USA) have been attractive policies together with innovative financing mechanisms. For homeowners lacking the financial capacity to purchase a solar home system, third party ownership particularly (solar leasing or power purchase agreement) has enable them to avoid high up-front costs. Through the review of journals, reports, case studies, the experience of USA over third party ownership has been studied. Further hypothetical examples have been used to explain how the lessons learnt from developed countries can be transferred to developing countries in order to increase their households’ access to modern energy.

Keywords: Distributed solar energy; Third party financing; Solar leasing; Power purchase agreement (PPA); developing countries;