First Solar has been selling hundreds of millions of dollars worth of solar panels made at its plants in Ohio, Germany and Malaysia, but nearly all of them have gone to build huge solar-power plants in Europe and Asia.

The company said it inked a deal with Foster City, Calif.-based SolarCity Corp. to sell the residential-installation company enough panels for 25,000 homes in the next five years.

The deal represents not just an entirely new market for First Solar but optimism that U.S. homeowners will increasingly turn to solar energy as utility rates increase.

"We talked for 18 months with SolarCity and are convinced they are the most efficient and capable integrator," First Solar CEO Mike Ahearn said. "And that we had the ability, if we combined our (solar) modules, to really drive affordable solutions and expand the market."

SolarCity offers household solar systems in Arizona, California and Oregon for sale and through a 15-year "no money down" lease program.

SolarCity officials said that, in many cases, with a $1,000 down payment to lower the monthly fee, the lease payments and lower utility bill combined will be less than customers’ old electric bills.

“The major barrier for homeowners considering solar power has been the high upfront cost required to install the equipment,” said Jim Arwood, director of the Energy Office at the Arizona Department of Commerce, who has run solar energy programs in Arizona since the late 1980s.

“Leasing removes that barrier. Is it the right approach for everyone? Not in all cases, but it does allow more people access to solar energy.”

He said that if customers can afford to buy the systems, they get a better value, but leasing gives those who can’t afford to buy a way to use solar.

SolarCity offers a calculator on its Web site that estimates monthly utility savings for customers, and differentiates between ZIP codes.

First Solar and SolarCity hope to break into new states, including the East Coast, Ahearn and Rive said. First Solar also invested $25 million into SolarCity to fund its expansion.

First Solar’s panels are less expensive to produce than traditional solar panels because they don’t use as much of the expensive semiconductor material. But they do require more roof space than traditional panels.

Officials said cost is a larger concern for customers than roof space. First Solar should be able to meet the demand for its panels with the expanding capacity at its Ohio plant, but could look to expand its U.S. manufacturing, Ahearn said.

“We are thinking, hoping we will have some opportunity to build some more production facilities in the U.S.,” he said 

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