Third-party ownership in rooftop solar: A critical review of its structure, performance, and equity implications

Abstract

The third-party ownership (TPO) model for solar photovoltaic (PV) systems has emerged as a pivotal solution to overcome financial and structural barriers to solar adoption, particularly in low-income communities. This paper offers a comprehensive analysis of the TPO model through a structured literature review, synthesizing 70 peerreviewed studies and policy reports. Unlike traditional self-financed models, TPO eliminates upfront costs for end users and shifts technical and financial responsibilities to specialized companies, making solar energy more accessible, especially in the residential sector for households with limited access to credit. However, the model also introduces long-term contracts and regulatory complexities that require careful design. The review discusses how TPO can enable broader access to clean energy by reducing adoption barriers, while also identifying legal, regulatory, and financial constraints that must be addressed. It further explores the role of performance-based incentives and fiscal policies in enhancing the profitability of TPO projects, emphasizing that well-designed subsidy frameworks are essential for sustained growth. The paper concludes by identifying opportunities for future research, including the portfolio approach to managing TPO projects and optimizing contract terms. Expanding the TPO model in developing countries remains a key challenge, requiring supportive policies and innovative market structures. This study assumes that the TPO model is not a substitute but a complement to traditional ownership schemes, tailored to meet the needs of underserved segments. Ultimately, the study highlights the TPO model’s relevance within a broader ecosystem of ownership alternatives, underscoring its potential to support a more equitable and resilient energy transition.