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Sungage, DCU to provide $100 million in solar loans

Digital Federal Credit Union is partnering with Sungage Financial, Inc. to provide $100 million in loans for homeowners to install solar panels on their roofs and save money on rising energy bills.

The loans from the Marlborough bank will become available to Massachusetts, New York, Connecticut and New Jersey residents over the next month and then expand to other parts of the country in 2015. Sungage, a Boston company that helps homeowners find solar financing, said it expects the program to fund 4,000 installations. There are currently about 13,000 residential solar installations in the state.

The announcement was made as residents brace for substantially higher energy bills this winter. Last month National Grid predicted that electric bills could top $150 a month for typical Massachusetts households and NStar, the region’s other dominant utility company, also warned that its prices could climb over last winter.


RELATED: Electric rates in Mass. set to spike this winter

Sungage was started in 2011 and created the industry’s first solar-secured loan, where the energy system serves as collateral and the homeowner owns the equipment. That model deviates from typical solar financing.

For years homeowners either had to pay the full cost of the equipment and installation, a hefty $25,000 or more, upfront, or have outside solar companies pay for the installation. In the latter option, homeowners receive a reduced rate on their electric bill, but the companies own the equipment and reap most of the benefits.

The DCU and Sungage program allows homeowners to secure a loan with no money down, and also receive financial incentives for green power. Sungage chief executive Sara Ross said most solar customers will likely still have to buy some electricity from their local utility, but those bills will be much smaller.

By her calculation, the monthly cost of the solar system—including loan repayment—will be less than what homeowners typically pay to the utility. Consumers who, for example, spend $161 a month at the utility could expect to pay only $126 under the Sungage program, Ross said, after factoring in incentives.


“You put no money down, you’re saving money right away and the big savings come when you pay off this loan after 20 years and you get free electricity for the next 20 years,” Ross said.

And for those who don’t plan on staying in their homes that long, Ross argued the solar installment will make their properties more valuable at resale.

A former policy analyst, Ross said she co-founded Sungage after her bank wouldn’t lend her money to build a solar roof on her 100-year-old farmhouse in Amherst. So, she paid for it in full, but the realization that many other homeowners couldn’t afford it to led to Sungage.

A big part of Sungage’s work is educating banks about the value of solar systems.

“We frame it as this discounted utility bill,” she said. “We say, you know this homeowner is going to pay their utility bill, with very low default rates?’ When you explain it to them that way, they understand it.”

The Patrick administration lauded the project and said it intends to soon launch a similar solar loan program.

Taryn Luna can be reached at taryn.luna@globe.com. Follow her on Twitter @TarynLuna.