Solar works at the intersection of right size equipment, energy efficient buildings, transparency, consumer education and protection. The correct financing and funding Mechanism will have a sustainable and cost-effective solar model.
These are the words with which our guest begins this numbers-driven, exciting episode of Insiders Guide to Energy. This time, we dive deep into the world of home solar systems, consumer education, and the intricate dance of financing and sustainability with Tom Myers, Vice President of Partnership and Brand at Concord Servicing.
Concord Servicing, under Tom's leadership, stands at the forefront of innovative financial solutions tailored for the renewable energy sector. The company's dedication to consumer transparency, education, and the provision of cost-effective financing models is reshaping how homeowners approach solar investments.
Throughout our discussion, Tom elucidates the nuanced differences between various financing options available to homeowners, emphasizing the importance of fixed interest rates and the implications of escalating power rates on solar investments. He stresses the necessity for homeowners to be well-informed about their contracts, the financial tools at their disposal, and the long-term cash flow implications of their solar energy systems.
One of the focal points of our conversation revolves around the challenges consumers face when navigating the solar market. Tom shares his perspectives on consumer advocacy, the vital role of education in making informed decisions, and the significance of transparency in the financing process. He candidly discusses the common pitfalls and the proactive measures needed to safeguard consumers from potentially predatory practices within the industry.
We also venture into a forward-looking discussion on the future of residential solar financing amidst fluctuating interest rates and market dynamics, where Tom offers his expert predictions, touching upon the potential for market correction, the importance of aligning consumer expectations with financial realities, and the ongoing efforts to improve industry standards for the benefit of homeowners and the environment alike.
Whether you're considering solar power for your home or seeking to understand the broader implications of energy financing, this episode promises to enlighten and inspire. Tune in now!
Solar works at the intersection of right size equipment, energy efficient buildings, transparency, consumer education and protection. The correct financing and funding Mechanism will have a sustainable and cost-effective solar model.
These are the words with which our guest begins this numbers-driven, exciting episode of Insiders Guide to Energy. This time, we dive deep into the world of home solar systems, consumer education, and the intricate dance of financing and sustainability with Tom Myers, Vice President of Partnership and Brand at Concord Servicing.
Concord Servicing, under Tom's leadership, stands at the forefront of innovative financial solutions tailored for the renewable energy sector. The company's dedication to consumer transparency, education, and the provision of cost-effective financing models is reshaping how homeowners approach solar investments.
Throughout our discussion, Tom elucidates the nuanced differences between various financing options available to homeowners, emphasizing the importance of fixed interest rates and the implications of escalating power rates on solar investments. He stresses the necessity for homeowners to be well-informed about their contracts, the financial tools at their disposal, and the long-term cash flow implications of their solar energy systems.
One of the focal points of our conversation revolves around the challenges consumers face when navigating the solar market. Tom shares his perspectives on consumer advocacy, the vital role of education in making informed decisions, and the significance of transparency in the financing process. He candidly discusses the common pitfalls and the proactive measures needed to safeguard consumers from potentially predatory practices within the industry.
We also venture into a forward-looking discussion on the future of residential solar financing amidst fluctuating interest rates and market dynamics, where Tom offers his expert predictions, touching upon the potential for market correction, the importance of aligning consumer expectations with financial realities, and the ongoing efforts to improve industry standards for the benefit of homeowners and the environment alike.
Whether you're considering solar power for your home or seeking to understand the broader implications of energy financing, this episode promises to enlighten and inspire. Tune in now!
00:00.00
Tom Myers
Solar works at the intersection of right size equipment, energy efficient buildings, transparency, consumer education and protection. The correct financing and funding Mechanism will have a sustainable and cost-effective solar model.
08:48.39
chrissass
You mentioned that, there's a difference between the kind of contracts that someone has from home solar or perhaps alone and the advantage they get so in your opening you talked about how I get a fixed interest rate. So I take advantage as long as the power rates continue to go up which as of this week I think California just approved a 13% increase in power rate, rate payer rates.
09:07.57
chrissass
Um, they continue to do that. That's advantage for the customer is that how these things are performed out typically?
09:13.54
Tom Myers
Well, yeah, so when that installer comes and talks about the contract and talks about the financing tool and you kind of put the the model together as to how that thing is going to you know Cash flow for the Consumer. You have to take into consideration. What those rate increases look like you know and you also have to take into consideration. What regulatory policy is in place at the time and what the future looks like you know there is the opportunity to grandfather. When you get a system What those you know utility rates are in terms of an interconnection agreement and so Forth. Um, but most definitely you do take into account escalators that are inevitable.
10:01.50
chrissass
Now the the 1 thing that I find a bit challenging is as a homeowner and as someone in the energy industry. Um I thought it'd be fun just to call some of these solar companies up and just see what kind of response I gave him my address told them my power bill.
10:15.34
Tom Myers
Right.
10:17.56
chrissass
And boy I could buy a timeshare in Las Vegas for about the same level of effort is is dealing with the sales teams on these guys here. How does the average homeowner supposed to know what to do because I don't want to go learn all the policy if I'm a homeowner. All I want is cheap electricity.
10:31.60
Tom Myers
Yeah I do talk quite a bit about consumer advocacy and education and there really has to be a balance because I do think that the consumer has to take it upon themselves to a understand the tax credit structure right. So if somebody comes in and says you have the potential for a 30% tax credit. The cash outlay is this your credit is that your net is is the balance that has to be. Something that the consumer goes to their tax advisor or they're educated enough on tax to understand you know am I going to qualify for that credit am I going to be able to actually pay down that principal when I get that tax credit and play that all together. So yeah, should the. Installer and or person that you're working with that's trying to sell you the equipment sell you the financing and so forth. Um, educate to the best of their ability. Yeah absolutely I want consumer transparency. You know I I want that transparency in this market. And anytime you have transparency and people understand what their Apr is they understand those other variables that exist out there. Um, you know the better off the the end game is going to be especially from our position as a third party loan servicer. We don't want products on our books and manage those assets.
11:58.80
Tom Myers
Where there's going to be a greater potential for delinquency or default because they just don't know and understand those things and you know from the contractor perspective who's typically the person that's going to interact with you to try to um, sell you this equipment and or the financing model with it. If They don't completely educate you. They should at least point you in the right direction to where you can get that information.
12:27.45
chrissass
Tom it the way you're talking about this. It sounds like any other major financial purchase. So a home solar system might be 20 or $ 30000 if you throw in batteries maybe more if there's a. Home energy retrofit that's included. That's basically on the order of ah a car a new car and what you're describing sounds like the way anybody would go about shopping for a car you need to understand the equipment that you're buying you need to understand how long it's going to last. And yeah, if you go into a dealership There's generally an understanding. You can get ah ah a loan or a lease. Um, and there's there's different financing options and if you go into a dealer you might get people who are aggressively trying to upsell you into a more expensive model or something that maybe you you can't afford. So. Do you think that comparison is apt. Is there something different about solar as a finance purchase when compared to a car or some other major home renovation.
13:26.20
Tom Myers
Yeah I think that's a great analogy but the difference being is that it's it's new to them I think that the majority of folks have been buying cars and or understand financing on those vehicles for a longer period of time. But at the end of the day. It is a similar purchase. You know, um, a few different. You know you can't emmortize your car loan for 25 years but you know that you know that goes to the understanding of you know. What's the the life of that equipment. What's the degradation of that equipment during the life of that equipment and how does that affect and play into the whole thing. There's probably a few more nuances to solar for folks to understand compared to and auto but to your point Jeff you can get a car lease. You can get dealer financing. You can get dealer financing and consider is the dealer financing from Ford and gmac better than the rebate you know somebody. You're yourself included. You know, need to put the the pencil to the paper and do the math on that and figure that scenario out.
14:37.19
chrissass
And of course you know, solar in many ways is much much better than a car. The it's not a safety risk in the way that ah a car is and it's not a depreciating asset I mean solar for most homeowners.
14:42.80
Tom Myers
Um, man you.
14:52.63
chrissass
Almost all of them I would imagine is saving the homeowner money if you go solar, you're doing so because it's going to save you money a car is a depreciating asset. It's been called the worst financial investment you'll ever make in your life because it doesn't really pay back unless you're buying it for work. So I think in a lot of ways. Solar is is much better, but the complexity of the financing is something that that people still need to be still need to be aware of and to your point it's it's New. So What are moving into the the public discourse right now I don't want to name specific names. But there's a lot of noise out there about residential solar in particular that the companies who are providing these loans or providing the the turnkey solar development are not doing well themselves or that there's a risk that the loans are not doing well and that this is some sort of indication of. Ah, decline in the residential solar industry is there Any truth to that Where are these ideas coming from and can you introduce? Ah maybe some some sanity and some on the ground perspective as to what's really going on on these finance systems.
16:04.19
Tom Myers
Yeah I think what's most important to understand is that the interest rate increases that we saw saw throughout the course of 2023 kind of exposed a few things right and had the interest rate stayed low I think the consumer would have had you know. A little bit more of ah a purchase power and there would have been um, ah you know a lot more systems installed which kind of led to you know and unfortunately for some of the companies that have sun in front of it today. You know their balance sheet at the end of the year wasn't very good and you know. Their their shares are you know decreasing and what it really kind of boils down to was a ah ah slow in the growth of the market because of the interest rates.
16:57.10
Tom Myers
And then that turned into excessive capital and or inventory sitting in-house and you report that at the end of the year the stocks drop you know it kind of snowballs and then it gives folks an opportunity to go aha. What's wrong with that market. How did this thing unravel. Ah, really don't think it's much more complicated than the the hike in the interest rates but at the end of the day doesn't every reset in any kind of a market kind of create an opportunity for it to be better. The outcome to be better at the end of the day.
17:34.46
Tom Myers
I can share with you personally that our clients the folks that we're working with that are onboarding their own captive finance program. Their specialty finance program. Their piece ppa lease program. They're very concerned about bad actors. They're very concerned about betting the contractors. Every single one of them has said without fail. We want great actors especially in the third party own segment right? The third party own that equipment you own and so when you're installing that you own that asset you're borrowing the roof if you will. Most certainly want that thing to perform and perform at the level that you know is expected to satisfy all of the the capital stack and including the tax equity partners but nonetheless. Um I think every market. You talked about auto we've we've seen we've seen predatory um ah type of ah sales in auto for you know, an extended period of time right? So it's it's not new that a a market. That has opportunity and then has a high growth rate um has a lot of people that are interested in making money and selling. So so I think from that perspective. Um, you know again, it really just kind of comes down to that interest rate it expose some things.
19:09.95
Tom Myers
And by exposing those things you create an opportunity to correct them and to make the market better faster stronger and and I'll end with this on that comment or on that topic is that you know some of our clients today were there were bad actors that were in there overselling equipment overselling the loan and the product. There is definitely an initiative by our clients to right? Those wrongs.
19:37.00
chrissass
So how do we go about'm gonna change that sorry um I guess I see that there potentially are bad actors. There's news stories about bad actors going on people selling the product. Talked initially in my first question about education right? and I said look and they're opening comment. It felt like I was buying a time share where I got overwhelmed by very aggressive sales techniques now I'm in the industry I quickly went to a number of site state websites opened up the state website and. Basically contradicted pretty much everything that my Instagram feed tells me that that I'm going to get for free. Um, so what I kind of wonder is how do I get smart on these things and what's the best education. So. You made a strong argument that the consumer owns this, you're taking debt Jeff talked about this being significant investment in your your future. You're going to make a a long term I think you said you're amortizing this over twenty Plus years so that's a pretty long commitment. How does the consumer get smart.
20:42.34
Tom Myers
Yeah I do think that there is an obligation from local state federal agencies to put as much information out there as available to educate the consumer. Um. Part of my previous life. You know I worked in sustainability and I worked for a nonprofit that was an energy efficiency implementer implementer and loan originator and you would be surprised how many folks don't really understand what these rebate programs are or. What the utility is providing that is subsidized by the state or subsidized by the ratepayer funds that they've been paying unfortunately, most people don't even understand that there is a portion of their utility bill that goes to a ratepayer fund. To actually help buy down the costs of energy efficiency. Clean energy generation solar and so forth. So there is a lagging play in this from the consumer in in really understanding a lot of these things and on 1 hand maybe this is contradictive of myself. Think the government needs to play a better role in educating people to understand what these programs mean and what these um opportunities are um but I also think that they need to regulate the market.
22:06.41
Tom Myers
Smartly regulate the market I don't like overregulation i't like underregulation but regulate it correctly or adequately and so that there is some more consumer protection. You know apr disclosure when we talk about transparency. There's an opportunity there. Um, sharing and understanding what your local utility company is providing with that interconnection agreement. Um like you Chris you know I'm currently building a new home. We're putting solar on it. Um and not storage at the time. But. Ah, just it just doesn't pencil out for us. But we are doing solar and so I I did the same thing I actually called around you know I lived near Madison Wisconsin I got some of the you know, local brands and folks and even some referral folks I'm a. Bit more at an advantage because I'm in the energy financing space too. So I called around what a vast difference between what people want to sell you and tell you so I think there needs to be some oversight from a government perspective as to how these things are sold. To you and what is being shared with you from that transparency perspective.
23:22.18
chrissass
In your answer you said something interesting and in our preca We talked about this you said look we don't have battery. You didn't ask for that there because you're qualifying your system out help understand how having the right size system for your home applies to the financing.
23:40.77
Tom Myers
Yeah, and I will um, probably beat on this until I'm no longer in this industry or taking nourishment you have to have the right size equipment and you have to vet. Contractors to make for sure that you have a trusted contractor that's giving you the right answer. There's so many different apps and opportunities out there today for these contractors through satellite imaging or other imaging to really hone in on the size of your roof. Placement of the solar app you know compared to the trees compared to all other aspects that affect production and um, ah sorry lost train of thought. Um.
24:29.72
chrissass
And know good hey when we're going through reignions we're breaking for a second and there's gonna be some editing if we could tighten your answers to be just a little more concise and let us pivot more I think we'll get. We'll get a better result from that because like right now we're gonna have to edit some of those down.
24:37.46
Tom Myers
Okay.
24:43.34
Tom Myers
Um, yep.
24:45.66
chrissass
And as tex and Jeff we know we need to pick this up just a little bit in pace so that might be good I know you're nodding if you agree with that. But you know just just hit on the the key point and a little bit of follow up and then let Jeff or myself hit the fall up to get you to their second part of your answer. Okay, but you were you were talking about the importance of rights right? sizing which was a big a big theme.
25:00.50
Tom Myers
Um, okay yeah I mean thank you? Yeah so from right sizing the equipment.
25:05.57
chrissass
Yeah, so let's go back to right side because that was important on the pre-call as well. So.
25:12.37
Tom Myers
You know we have to consider those energy efficiency measures right? make for sure that the building envelope is appropriately you know airduc ceiling hvac all those other types of things windows and so forth and then you get the right modeling that comes into play and you right size the equipment. There's a lot of app. Opportunities out there Aurora Blue Banyan yada yada they go on in terms of um, measuring monitoring putting in the the parameters of your usage your consumption. How many people live there and you can right size that equipment.
25:43.91
chrissass
In terms of customers shopping around I also want to give a plug for energysage which allows you to go through that process. They've got a lot of great educational materials. Get multiple quotes from different qualified vendors see reviews. So. There are increasing tools out there and on the energy efficiency side repowering sorry Rewiring America has some tools to understand what options are out there and what rebates individuals may qualify for. So. It's great to see there's more going on in terms of ah customer education. To navigate through this process since it is pretty new but you and you you guys both said 2 things differently in your subtlety Jeff just talked about rebates and you talked about incentives. Um, so as a consumer what I want is but it's less. Least money down is possible and have the cash flow work I suppose depending on what your finances are like if it's cash flow or if it's capital. Um, maybe explain how that impacts tom.
26:45.59
Tom Myers
Yeah, so from the energy efficiency side. There are a lot of you know utility rate payer funds out there that come in the form of a rebate they'll come in the form of a check tax credits are tax credits right. So the consumer really needs to understand that so from a Pv perspective. You're just getting a credit on your income tax based on eligibility and so that comes in the form of many months later as a tax credit does come you know hopefully in the form of a check. But um, nonetheless it's not an upfront contribution to late stage contribution which creates an opportunity again for the consumer to be wise and disciplined.
27:39.41
chrissass
Yeah, but it it is a complex landscape utility rebates tax incentives then there's other financing programs in Massachusetts we're fortunate to have a seven year zero interest heat loan for hvac retrofits but it's it's confusing and top to your point.
27:53.32
Tom Myers
Yep.
27:57.78
chrissass
Ah, often when homeowners are going solar. They might want to do energy efficiency either in advance or at the same time to do that right? sizing and if they don't the the horror stories that are out there if somebody signs up for a much bigger system than they should have or that that makes sense. Now we talked about interest rates but there's additional pressure on some of the largest markets in solar in California with evolving nem regulations. So. It's not just interest rates. There's other storm clouds on the horizon in terms of you know are these systems going to be ah given the legacy. Program treatment or are they going to get the new one. There's some uncertainty there but the the question being do you foresee a wave of defaults on you know, a large amount of the existing or near term solar finance systems that are out there in securitizations.
28:53.10
Tom Myers
No, not necessarily and I think the right measures in the right approach equal you know all of these things that we talked about really can equal a a cash flow opportunity to where it just doesn't make sense that you would have high delinquency or high default. To consider that the borrower is a homeowner. The homeowner has a mortgage they qualified for the mortgage because they have a good fico and they have a good dti and they're also now compensating production with what they would have. Used or you know spent through the utility company I think we we've touched on this in the past and that you know it doesn't um, it doesn't do anybody any good. That's already committed to the loan obligation to not pay that back have the system shut down. Therefore having the production shut off and having 2 obligations. You're then going to have a utility bill and you're still going to have that debt obligation.
29:58.87
chrissass
So to to restate here if the system is sized right? solar and energy efficiency are credit enhancing. It's not that car. That's just an obligation. It's actually something that saves the customer money if it's sized right? If it's financed correctly. There's a strong incentive for homeowner or any counterparty to pay that back because if they stop paying it their costs go up with the conventional grid supply and as Chris as you mentioned before those rates especially in some of the largest markets like California continue to go up and up and up so this is.
30:35.69
Tom Myers
Um.
30:37.22
chrissass
Continues to be a ah sound investment. So what are you worried about when you think about the future. Are there legitimate concerns. You've talked about need for changing behavior should we be worried about the future of the residential solar industry.
30:54.13
Tom Myers
Um, no, but you know like any industry There's always opportunity for failure and I do think that you know as we talk about government enhancements incentives and so forth and in involvement good intentions sometimes have. Bad outcomes I think the tax credit is a great incentive to continue to push and drive the market because it mathematically makes it make more sense for more folks. But at the end of the day if that tax credit is built into your financing model. To the consumer for this thing to um, have the ah you know the appropriate cash flow and keep saying that. But it's important then the consumer really has to be disciplined and really has to account for I'm going to get that tax rebate check back or credit. But to credit you've overpaid. Um, and you've got this, you know incentive built into that that has to go towards that principle if in 6 twelve eighteen twenty four months from now because these things are deferred people say my gosh I have to pay the credit card Bill. It mounted over the last two years and do not pay down that principle that loan will ream dating back to the first date of a much higher dollar amount. Now you're upside down on that cash flow. Potentially so there is.
32:24.50
Tom Myers
Concern from my perspective from our perspective from ah from a loan servicing side of things that you know we have to continue to make for sure that we are informing the consumer again to that consumer education and we do that in notifications in conjunction with our clients to say hey. Been six months you're doing great on your loan. Got your tax credit coming. Please remind yourself to put that towards your principal so that this thing is what it was originally set up to be.
32:55.55
chrissass
Boy you you are optimistic on the american public's ability to do finances I think the credit card industry built on a different premise. Um, but having said that as we're sitting here talking to the. Problem statement you you and I both talked about calling solar installers I live in the mid-atlantic and we have this thing called hail that happens fairly often and hail is not necessarily a solar panel's best friend. It. It can be devastating to a solar system.
33:19.12
Tom Myers
Nope.
33:21.86
chrissass
How does insurance weigh into and what kind of cost does it add to these these homeowners putting this in is that a significant cost to add to my homeowner's policy to have my my asset on my roof now covered.
33:36.28
Tom Myers
Ah, Chris will be honest with you I don't have a lot of background and insurance cost. Um I should know this for my future investment here at home. But um I I really ah I apologize I don't really know what the additional cost.
33:51.23
chrissass
That's okay, we can take that out. We're not trying to I'm not trying to ambush you I just but I just figure that there's a lot of articles. Yeah, but I don't want to put you on the spot right? I don't know the answer either. It's a good. It's a good question. Yeah.
33:52.97
Tom Myers
That Asset is. But yeah, now it's a great question. It's a great question but it it's yeah, but it it could lead to.
34:06.80
chrissass
But if I was creating the cash flow out and I now have to carry in charge for the next twenty years yeah
34:10.37
Tom Myers
Yeah, but I think maybe is important though. Chris if you want to lead into performance of the system over the twenty years now hail is an outlier because it's going to damage the panel but operation and maintenance and. Making for sure that that system is performing at the level that it's supposed to be performing. It's obviously very critical to production and the financial benefits.
34:36.49
chrissass
No, no, no so you' not during the interview right now. But I mean I would assume that the cost if if rates if rates go up 13% and I made a deal that that have more than 13% wiggle room on this even if I'm paying you know 5% increase or some incremental increase. The the finance will work out.
34:54.94
Tom Myers
Um, right.
34:54.97
chrissass
On it right? and insurance will will do that. It's probably not continuity insurance though. It's probably to replace the Panels. So worst case scenario is I get hit by a hailstorm. My panels are down for three months during a peak air condition or eating system. You know, then then I have. Exposure they wouldn't normally have but it's it's it's a corner case I just in the Mid-atlantic it's less of a corner case. We get a lot of hail. Um, and so you know roof and at home and our insuranceance calculates it in but let's get back to the interview I said I did. It's just as we're talking about it and I'm looking at the finances.
35:19.50
Tom Myers
Um, yeah.
35:28.67
chrissass
And like okay well you you're talking about hey I've got to save my tax incentive to pay the man later so I don't get more amortization or more interest charges because I got greedy and used my money elsewhere. Yeah um, insurance is another one that would be on my radar. Yeah I want to emphasize this point Tom because it's it's really important and it's a little subtle. So. Let's say that there's a $30000 total cost install system. There is a um, a tax credit of 30% so 10 k and that comes back to the customer in 6 to twelve months let's say and what you're saying is that the.
35:51.50
Tom Myers
And.
36:07.31
chrissass
Cost effectiveive financing the the benefit for the customer assumes that that $10000 doesn't benefit goes back to pay down the loan principal and you're raised in a flag and saying hey if the consumer. Gets a $10000 check and all of a sudden thinks of 6 other things. They'd rather use that money for than the responsible thing of paying down the loan then that's going to result in a less cost-effective system especially if there's a decent interest on that loan and that's an easy decision to make in the moment. But actually undermines the cost effectiveness of solar in the long term even for a well-designed system is that the the takeaway.
36:49.99
Tom Myers
What is and so there's definitely a concern something that we need to measure monitor as you know these things start to hit those twelve eighteen month promotional periods and really kind of take a look at what is the payback on that you know on that tax credit down. You know, paying down the principal and you know then that's something that the installers need to need to consider in terms of future planning for promotional periods. So yeah, it's definitely something we need to monitor pay attention to um I do think though and we've seen this you know with the exception of. Covid era or supply chain and we all know what that was about but the cost of this equipment continues to go down for the most part right? It's considerably cheaper today than it was five years ago ten years ago so I think as those costs of utilities and inflation increase. But. Cost of the equipment right size and the equipment comes down I think you can eventually wean yourself off from the tax credit and the thing would still make sense.
38:00.61
chrissass
Tom you're in a unique position of being a servicer for many of these loans being a part of the securitizations and there are public securitization reports. There's reporting on default rates when I look at the the default rates. And the reasons for non-payment. It's not that people are deciding not to pay or they're defaulting in the the way that you might think of a credit card. It's something much more simple which is they move or they unfortunately at some point people pass away. And and their their home still exists the the loans still exist but those are actually salvaged by just being reassigned to the next occupant of that home. What are the main reasons that you do see for default and if you can speak to. Recovery rates on the asset class going to are there are there major sources of charge off or are the ultimate losses on these systems after default relatively low.
39:04.21
Tom Myers
Yeah, so to answer the question directly. It is bankruptcy and death right? Those are the 2 big reasons why these things go into default. Um, so from an asset perspective. We consider this an unsecured consumer loan right? That's what it's considered. Out into the abs world from all of the forward flows. It's an unconurd unsecured consumer loan. That being said, we apply a Uc one to these and it has security. So. It's a lien that is placed on the property because of an equipment. Purchase and when there is a sale and there or a refinance if that loan is in a rear ager in default it has to be satisfied prior to the sale or the refinance of that home. It can be subordinated on a refinance and then add it back on if you want to go down that path. But again back to the interest rate dilemma that we've been in one of the big kind of. Issues I guess from a capital perspective in the end of 2023 was the prepays went away and people weren't buying new homes people weren't doing helocks and they weren't prepaying some of these and so it actually tied up a lot of the liquidity in the market. But.
40:29.36
Tom Myers
Think that's temporary in hopefully throughout this year and I don't know if there's a fed report coming out this week maybe yet and so we'll see what mortgage rates do and um if they continue to go down or Freddie and Fannie start buying up some of these and ah you know brings that mortgage rate down. Get those prepays but um, there is that security interest with that ucc.
40:56.27
chrissass
Now going back to your auto analogy. Um, when autos have spare inventory on the lot I get 0% interest or 2% interest or some sort of deal to move the inventory. Are we seeing that kind of changes in the finance for a solar rooftop since you said there's an inventory kind of buildup and that's what's driving share prices down for some of these public companies.
41:16.22
Tom Myers
Yeah, but the problem there though. Chris is that they're getting a warehouse line of credit to reissue that debt to somebody and that cost is not 0 so. If they were to absorb that cost. They'd have to pass it back on to the consumer and the cost of the installation and now you're teetering on that you know is is the math right? is ah you know is what the consumer needs out of this deal financially. Um, the right fit and you know when we saw you know warehouse lines at 3% and mortgages at two point eight three point one three point two you know over the last several years I know it's not free, but a lot of folks said look. Cash was free for about 20 years right when it's at those rates there is a little bit more flexibility from that installer to be able to create some incentive financing today. Not the case.
42:19.13
chrissass
Now we're talking about financing is basically an unsecured loan will I get a better deal if I do a second mortgage or do a line of credit on my home is that a better option for people.
42:30.44
Tom Myers
Not necessarily because today helock rates are eight and a half to nine and a half percent so and today's um you know some of our clients are offering 4.9 to nine point nine on on their solar loan. So no, not necessarily.
42:47.19
chrissass
Awesome! 1 of the things we like to do on the podcast is ask our guests about crystal ball. So we've been focused more I suppose on the negative I think you're opening you were actually pretty bullish on solar and you were just talking about where we are in the state at the moment if I understood you correctly. So if you had your crystal ball out where is the home solar industry twelve months from today.
43:12.46
Tom Myers
Um, probably at a marginal growth. So I say you know if you say that I'm bullish. It's just because I'm confident that it works you know I've kind of hit on that Jeff and Hugh and I've had this conversation solar works right? and when it's done correctly. All those things intersect that I talked about it works and interest rates will settle out probably slightly decrease over the course of 24 and then it becomes a. Ah, new market familiarity right? You're you're familiar with five point Nine Six point Nine Nine Point Nine those rates you know when you're familiar with and used to for the last twenty years if everything's 2.9 or you go to home depot and at 0% for twelve months you know those kind of things are you know. And to be maybe not the new norm right? So when people get familiar with comfortable with and pencil out the new norm and if it's stable I think it'll be all right and I do see um you know that steadiness occurring today and I think we'll at the end of 20 2024 see a ah slight growth in the in the industry.
44:24.53
chrissass
Awesome! Well want to thank you so much for being on the podcast today. It's been a pleasure Tom to have you on.
44:32.90
Tom Myers
Yeah, Likewise! this has been a lot of fun, appreciate it.