H.R. 4489: Sunshine on Solar Lending Act

This bill, known as the Sunshine on Solar Lending Act, proposes to amend the Truth in Lending Act to enhance the disclosure requirements for solar financing transactions. Here’s a breakdown of what the bill would do:

Purpose of the Bill

The primary aim of the bill is to ensure transparency in the financing of solar energy systems by requiring creditors to disclose dealer fees and other associated costs more clearly to consumers. This addresses concerns that consumers may be unaware of all costs involved in financing these systems, which can lead to increased financial burdens.

Key Findings

• More homeowners are installing solar energy systems and related products to save on electricity costs and manage energy during outages.
• The high initial costs of these systems often necessitate financing through loans or leases.
• Third-party creditors, often working with solar installers, provide financing but may include undisclosed dealer fees, leading to higher financing costs.
• The existing regulation called the "Seller’s Point" exemption is sometimes misused, causing confusion over how dealer fees are treated in solar financing.
• These amendments to the Truth in Lending Act are necessary to clarify the treatment of dealer fees and promote better consumer protection.

Disclosure Requirements

The bill mandates the following disclosures in solar financing transactions:

• Creditors must clearly disclose any fees charged to a third party related to the solar financing.
• Any fees that consumers pay directly or indirectly must also be disclosed by the creditor.
• Creditors must identify all third parties involved in the transaction.
• A comparison must be made between the total amount financed by consumers and the total cash price for products or services linked to the solar financing.
• For in-person transactions, creditors must provide a paper copy of these disclosures to the consumer.

Arbitration Restrictions

The bill explicitly prohibits including arbitration clauses or any nonjudicial procedures in solar financing agreements, which means that any disputes between creditors and consumers must be resolved through litigation.

Definition of Solar Financing Transaction

Under this bill, a “solar financing transaction” is defined as any consumer credit transaction meant to finance the purchase, installation, or associated expenses of a solar energy system. This includes solar panels, inverters, battery storage systems, electric vehicle charging stations, and necessary infrastructure.

Effective Date

The provisions of this bill would take effect no later than 60 days following its enactment and would apply to solar financing transactions entered into after that date.

Relevant Companies

• Sunnova Energy International Inc. (SUNE) - As a provider of residential solar services, this company may face new compliance requirements under the amended lending disclosures.
• Square, Inc. (SQ) - This company offers financing solutions and may need to adjust its offerings to comply with new transparency standards.