Solar's failure to spread across the United States, according to renewable energy advocates, lies not with flaws in technology or lack of sun, but in the scarcity of financing.

On Wednesday, the nation's largest provider of rooftop solar systems, SolarCity, tackled that problem head-on, announcing it will now act as direct lender to customers and offer low-interest loans to finance solar energy installations.

The company's new financing option, MyPower, lets homeowners own the solar panels without the upfront costs that can top $30,000 for a mid-sized home system. SolarCity puts its financing plan on par with solar leasing, an innovation it helped to pioneer and that has driven the majority of rooftop installations in the past few years.

Dominating the market
Especially important: The funding scheme comes from SolarCity, the company that dominates the U.S. market. Started by Elon Musk, the PayPal billionaire who also is behind the Tesla electric vehicle, SolarCity has more than 80,000 customers and has found extraordinary success through arrangements in which it retains ownership of solar panels while customers lease them.

SolarCity boasts that it signs up a new customer every minute of the workday; it installed more residential solar in the second quarter of 2014 than its next 50 competitors combined. 

MyPower is meant to appeal to customers who prefer to own their solar panels yet are looking to reduce the upfront costs of a switch to renewable energy.

Important for growth
"There have been [loan] products out there already, but because SolarCity is the largest residential installer in the U.S., this is further indication that it's more the mainstream," said David Feldman, senior financial analyst for the U.S. Department of Energy's National Renewable Energy Laboratory.  "It's further validation of what SolarCity has said historically: They're not in the business of owning solar; they're in the business of selling systems. And if they need to be the financier to do that, they'll do it."

MyPower customers will be able to obtain loans with a fixed annual percentage rate as low as 4.5 percent for 30 years, the company said. Some banks offer loans of up to $40,000 for solar installations, with financing rates starting at 4.99 percent.

It's hard to overstate how important leasing has been to the growth of the solar industry in the United States in the past two years: More than 90 percent of the residential solar market in New Jersey, the No. 2 U.S. solar state, has consisted of leased systems since the middle of 2013. And in the No. 1 solar state, California, more than two-thirds of installed systemswere leased. 

Drawbacks to leasing
But leases have drawbacks. Homeowners give up a variety of benefits, such as a federal tax credit of 30 percent of the cost of a system. Ownership locks in lower-cost electricity for 20 or 30 years while utility electricity rates go up. In contrast, homeowners leasing panels typically agree to an escalator clause of a 1 percent or 2 percent rate increase per year – meaning that leasing could be a higher-cost option in the long run.

"The ownership model provides a hedge against rising energy costs because you're locking in your electricity rates for the next 20 to 30 years, and any energy analyst can guarantee you that electricity rates will be going up," said Rhone Resch, president of the Solar Energy Industries Association, an industry trade group.

SolarCity's financing option may also help to make solar affordable in certain states – ironically, many of them in the sunny U.S. southern states like Florida – where laws have made it difficult for rooftop solar to gain a foothold. Longstanding rules meant to protect monopoly utility companies restrict or limit certain types of third-party arrangements in those states. 

But to start with, SolarCity will offer MyPower only to customers in Arizona, California, Colorado, Connecticut, Hawaii, Massachusetts, New York and New Jersey.

This article originally appeared at The Daily Climate, the climate change news source published by Environmental Health Sciences, a nonprofit media company.