Financing Solar Photovoltaic Transitions

From Utility to Residential Market Adoption in Emerging Economies
  • Ranaporn Tantiwechwuttikul
  • Masaru YarimeEmail author
Reference work entry
Part of the Sustainable Development book series (SD)


Solar photovoltaic (PV) technological leapfrogging greatly enhances energy accessibility, yet energy affordability remains a critical challenge. Traditional financing options, categorized as the solar-as-asset model, usually favor utility-scale PV projects, whereas the investment growth in smaller-scale PV systems is far behind, particularly in emerging economies. To further untapped PV potential, we need to promote technological adoption in non-utility markets. That requires alternative financing approaches, such as the solar-as-service model. This chapter examines the advantages and disadvantages of different financial schemes for introducing PV facilities in terms of the suitability of funding vehicles and investment mechanisms. Given the government curtailment on subsidies, owing to the gradual PV competitiveness, our analysis particularly focuses on the emerging market for PV installations for self-consumption. As the main obstacle is the high up-front cost of PV systems, we examine the new financial models in which customers buy the service rather than a PV system per se. We consider what conditions would be necessary to facilitate the third-party ownership models and alternative financing schemes. Finally, this chapter discusses what policy measures and instruments can be deployed to foster further PV adoption in the context of emerging economies. This study also provides implications for corporate strategy and financial institutions.


PV investment models PV price competitiveness Distributed PV system (DPV) Solar-as-service Solar third-party ownership (TPO) 

JEL Classification

O16 O33 Q48 


  1. ACE (2015a) The 4th ASEAN energy outlook. Accessed 10 Oct 2015
  2. ACE (2015b) ASEAN Centre for Energy. Accessed 10 Oct 2015
  3. Asia Clean Energy Forum (2016) Gearing up for the post-COP21 era of implementation: showcasing clean energy innovations. Accessed 10 Jun 2016
  4. Barbose G (2017) Putting the potential rate impacts of distributed solar into context. Accessed 15 Feb 2017
  5. Barbose G, Miller J, Sigrin B, et al (2016) On the path to SunShot: utility regulatory and business model reforms for addressing the financial impacts of distributed solar on utilities. National Renewable Energy Laboratory, Golden. NREL/TP-6A20-65670Google Scholar
  6. Bolinger M, Barbose G, Wiser R (2009) Full steam ahead for PV in US homes? Renew Energy Focus 9:58–60. Scholar
  7. Breyer C, Gerlach A (2013) Global overview on grid-parity event dynamics. Prog Photovolt Res Appl 21:121–136CrossRefGoogle Scholar
  8. Cameron BG, Crawley EF, Loureiro G, Rebentisch ES (2008) Value flow mapping: using networks to inform stakeholder analysis. Acta Astronaut 62:324–333. Scholar
  9. CEA (2017) All India installed capacity of power stations.
  10. Crawley E, Cameron B, Selva D (2016) System architecture: strategy and product development for complex systems. Pearson, LondonGoogle Scholar
  11. Drury E, Miller M, Macal CM et al (2012) The transformation of southern California’s residential photovoltaics market through third-party ownership. Energy Policy 42:681–690. Scholar
  12. EIA (2014) International energy statistics 1980–2013. Accessed 29 Jan 2015
  13. Feldman D, Margolis R (2014) To own or lease solar: understanding commercial retailers’ decisions to use alternative financing models. National Renewable Energy Laboratory, GoldenCrossRefGoogle Scholar
  14. Hobbs A, Benami E, Varadarajan U, Pierpont B (2013) Improving solar policy: lessons from the solar leasing boom in California. Climate Policy Initiative, San FranciscoGoogle Scholar
  15. IEA PVPS (2013) Pico solar PV systems for remote homes. International Energy Agency: report IEA-PVPS T9-12:2012Google Scholar
  16. IEA PVPS (2017) Snapshot of global photovoltaic markets (1992–2016). International Energy Agency: report IEA-PVPS T1-31:2017Google Scholar
  17. IEA PVPS, CPVS (2016) National survey report of PV power applications in China. Accessed 25 May 2017
  18. IEA PVPS, DEDE (2016) National survey report of PV power applications in Thailand 2015. Accessed 25 May 2017
  19. IET (2015) From scenarios to policy and market development. Accessed 22 Apr 2017
  20. Indiegogo (2018) Indiegogo for entrepreneurs. Accessed 28 Feb 2018
  21. IPCC (2014) Fifth assessment report (AR5). Accessed 25 Nov 2015
  22. IRENA (2012) Cost analysis of solar photovoltaics. IRENA work pap 1. Scholar
  23. Ismail AM, Ramirez-Iniguez R, Asif M et al (2015) Progress of solar photovoltaic in ASEAN countries: a review. Renew Sust Energ Rev 48:399–412. Scholar
  24. Kickstarter (2018) Kickstarter: about. Accessed 28 Feb 2018
  25. Lighting a Billion Lives (2017) Lighting a Billion Lives: technologies. Accessed 7 Feb 2018
  26. Liu X, O’Rear EG, Tyner WE, Pekny JF (2014) Purchasing vs. leasing: a benefit-cost analysis of residential solar PV panel use in California. Renew Energy 66:770–774. Scholar
  27. MacKay DJ (2009) Sustainable energy—without the hot air. UIT Cambridge, CambridgeGoogle Scholar
  28. Mosaic (2018) Home solar panel loans—affordable financing. Accessed 28 Feb 2018
  29. Moungchareon S (2015) Solar crowdfunding handbook. Energy Research Institution, Chulalongkorn University, BangkokGoogle Scholar
  30. Överholm H (2013) Alliance initiation by technology-intermediary ventures in the US solar industry. University of Cambridge, CambridgeGoogle Scholar
  31. Överholm H (2015a) Collectively created opportunities in emerging ecosystems: the case of solar service ventures. Technovation 39–40:14–25. Scholar
  32. Överholm H (2015b) Spreading the rooftop revolution: what policies enable solar-as-a-service? Energy Policy 84:69–79. Scholar
  33. Potisat T, Tongsopit S, Aksornkij A, Moungchareon S (2017) To buy the system or to buy the service: the emergence of a solar service model in Thailand. Renew Energy Focus 21:1–10. Scholar
  34. REN21 (2016) 36 Renewables 2016: global status report. Accessed 12 Mar 2017
  35. RENAC (2016) Bankability of renewable energy projects. Accessed 12 Sept 2016
  36. Schleicher-Tappeser R (2012) How renewables will change electricity markets in the next five years. Energy Policy 48:64–75. Scholar
  37. Strupeit L, Palm A (2016) Overcoming barriers to renewable energy diffusion: business models for customer-sited solar photovoltaics in Japan, Germany and the United States. J Clean Prod 123:124–136. Scholar
  38. Taghizadeh-Hesary F, Yoshina N, Inagaki Y (2018) Empirical analysis of factors influencing price of solar modules. ADBI working paper 836. Asian Development Bank Institute, TokyoGoogle Scholar
  39. Tantiwechwuttikul R, Yarime M, Ito K (2019) Solar photovoltaic market adoption: dilemma of technological exploitation vs technological exploration. In: Hu A, Matsumoto M, Kuo T, Smith S (eds) Technologies and Eco-innovation towards Sustainability II. Springer, Singapore. pp 215–227. Scholar
  40. UN (2017) World population prospects: 2017 revision. Accessed 9 Sept 2017
  41. World Bank (2017) Statistical data for Germany, China, Malaysia, Thailand, India. Accessed 12 May 2017
  42. World Energy Council (2013) Energy trilemma index. Accessed 7 July 2016
  43. Zopa (2018) simple loans. Smart investment. Accessed 28 Feb 2018

Copyright information

© Asian Development Bank Institute 2019

Authors and Affiliations

  1. 1.Graduate Program in Sustainability Science – Global Leadership Initiative (GPSS-GLI), Graduate School of Frontier SciencesThe University of TokyoTokyoJapan
  2. 2.Division of Public PolicyHong Kong University of Science and TechnologyHong Kong SARChina
  3. 3.Department of Science, Technology, Engineering and Public PolicyUniversity College LondonLondonUK
  4. 4.Graduate School of Public PolicyThe University of TokyoTokyoJapan

Personalised recommendations