Earlier this year, the Independent Equipment Company (an Alta Group, LLC company), with help from the ELFA, set out to determine what’s hot and what’s not for the equipment finance industry in 2015.
While the final results shed some serious light on the popularity of certain equipment markets in the eyes of operating lessors (and also yielded a fifth consecutive year of positive survey results), solar energy (“Solar”), despite being a bright spot in the emerging renewable energy industry, saw its popularity drop from a second place tie in 2014 to thirteenth this year.
But maybe Solar is getting a bad reputation by hanging around with the wrong group of commodities. The study puts Solar, as well as wind energy, alongside oil and gas to form the Oil/Gas/Energy category. The study (less than favorably) notes that this category:
- plunged in popularity and is currently viewed in a negative light.
- also finished second to last in residual value (reflecting pessimism in the oil industry worldwide).
- has been negatively affected by the values of oil and gas production, and operating cash flows.
Yet, when all was said and done, the study added, “meanwhile, solar and wind power had good years.”
Solar’s inclusion in the study, and subsequent grouping in the “Energy” category alongside oil and gas, could have more to do with how little we know about its possibilities in our industry than its actual performance to date.
If we take a look at Solar without the filter of the equipment finance industry, we get a different forecast. Here are some quick facts from Solar in 2014, compiled by the Solar Energy Industries Association (SEIA):
- The Solar industry enjoyed another record year in 2014, with 34% overall growth from 2013.
- Solar was responsible for 32% of all new electricity generating capacity in the U.S. (second to only natural gas).
- While residential costs have dropped 45% since 2010, utility-scale costs have dropped even more significantly (below $0.05/kWh).
- Utility-scale growth for 2013 was 38%.
It’s clear that opportunities exist to capitalize on this energy boom, as corporations and schools look to invest in something that will ultimately benefit themselves, their communities and the environment.
Who knows, maybe we’ll be talking about the impact of alternative energy sources in equipment finance in the near future, much like we are talking about the impact of alternative finance right now.
Regardless, I’d keep the sunscreen handy.
