Small loan provider Plenti will start offering buy-now pay-later finance for the installation of rooftop solar and residential battery storage after deciding to join rather than fight the expansion of the credit services in the solar industry.
Australia has seen a rapid expansion of buy-now pay-later services, which have emerged as a popular alternative to credit cards and personal loans for retail purchases, but have also raised concerns about the potential to lump consumers with higher levels of debt.
The ASX listed Plenti, which has provided low interest loans for renewable energy installations since 2017, said that it would offer the buy-now pay-later finance, after deciding it would need to directly compete with providers already operating in the solar energy space.
Plenti said that it would offer the buy-now pay-later financing more widely after completing a 3-month trial with a selection of solar providers, finding that there was an 80 per cent increase in solar finance applications when buy-now pay-later finance was offered.
“The performance of the pilot has far exceeded our expectations and gives us confidence in future demand from our total network of referral partners. Our expansion into BNPL finance marks an exciting development in our plans to be the Australian consumers’ funder of choice for the purchase of renewable energy technology,” Plenti CEO Daniel Foggo said.
“By offering a simple zero interest payment plan, differentiated by customer-focused technology and term flexibility, we believe we can help more households enjoy the benefits of affordable renewable energy while helping Australia achieve its emissions reduction goals.”
Credit provided to solar customers through Plenti’s expanded buy-now pay-later service will be repayable through monthly payments over terms of up to 72 months, with customers being charged a $5 per month fee to access the service.
The bulk of the cost of providing the finance will be covered by installers.
The company said that buy-now pay-later options will be offered alongside the company’s existing low interest loans.
The provision of loans and credit to prospective buyers of rooftop solar and battery storage can help enable more households to access the financial benefits of installing solar. While solar panels can generally help households achieve substantial reductions in their energy costs, systems can still represent a significant upfront cost.
Using loans or credit to purchase a system can become an attractive option, with households effectively using their energy cost savings to pay off the loan.
Plenti, which was formally known as RateSetter and established itself as a lender of low interest personal loans, had previously sought to ensure any expansion of the buy-now pay-later model into the solar industry would still be subject to the same regulatory requirements imposed on small lenders, arguing during proceedings brought before the Australian Competition Tribunal that buy-now pay-later providers to implement the same responsible lending checks as applied to loan providers like Plenti.
The Australian Competition and Consumer Commission (ACCC) had agreed with Plenti’s position and had sought to make changes to the New Energy Technology Consumer Code (NETCC), a voluntary code of conduct that applies to providers of solar and storage products.
The Australian Competition Tribunal largely ruled in favour of buy-now pay-later providers, that the formal responsible lending checks were not required for finance provided for the installation of rooftop solar and battery storage and lifted a prohibition on buy-now pay-later finance being offered in unsolicited
Responding to that decision at the time, Plenti said that it still believed its zero interest loans would be a competitive option for households looking to install solar and storage and would compete alongside the buy-now pay-later alternatives.
However, Plenti has now extended its product offerings into the buy-now pay-later space, so as to directly compete with established providers, including Brighte and Humm, which have already started offering such finance for solar and storage installations.
Plenti has served as a key financing partner for a number of government solar and storage loans program, including that of the South Australia Home Battery Scheme and the pilot of the NSW Empowering Homes Program, providing finance for more than 13,000 installations.
The company partnered with the Clean Energy Finance Corporation to provide zero interest loans under the South Australia Home Battery Scheme to help households cover the upfront costs of battery storage installations.