Direct ownership of solar power panels will overtake third-party ownership next year as more consumers are choosing to buy, rather than lease, their panels.

According to GTM Research's latest report, U.S. Residential Solar Financing 2016-2021, 55% of all U.S. residential solar capacity installed in 2017 will be purchased by customers paying either in cash, or through a solar loan financing arrangement; that number is expected to grow to 73% of all solar systems installed in 2021.

GTM Research Residential TPO Penetration and Installations by Ownership Type from 2001 through 2021

Third-party ownership through leases and power purchase agreements (PPAs) hit a five-year low of 56% in the first half of 2016. Solar leasing and PPAs, which in 2014 represented 72% of all solar installations, has been declining and is now expected to represent about 45% of all systems installed in 2017.

GTM had previously predicted that direct ownership of rooftop solar systems wouldn't surpass third-party options until sometime after 2021.

From 2017 through 2021, consumers are expected to spend $24.7 billion on purchasing their solar power systems, much of which will need to be financed with a loan, GTM said.

One popular loan comes through the government's property-assessed clean energy (PACE) program; it can be used for both solar and energy-efficiency improvements and is repaid as an assessment on the customer's property tax bill.

Thirty-three states and Washington, D.C. have passed PACE-enabling legislation, according to GTM, but there are active residential PACE programs only in Florida, Missouri and California. California by far has the largest number of residents using the PACE program, which accounts for 10% of residential solar systems financed through a loan.

The Mosaic company has also become an early leader in the loan market, "but we are far from knowing which companies will dominate that space and which will disappear altogether," GTM said.

Vikram Aggarwal, CEO of solar system marketplace EnergySage, has said his company's data shows that consumers are trending away from leasing in favor of owning their solar systems, "either with a loan or with cash."

Founded in 2009, EnergySage is similar to Expedia or Kayak in that it's a free online service that allows users to input their information and retrieve standardized quotes for a service -- in this case, the installation of a rooftop solar system. EnergySage makes money from fees paid by solar suppliers and is part of a nascent industry that includes other, smaller players such as Geostellar Inc.

This week, EnergySage announced its first Community Solar Marketplace, which allows property owners and renters to research and sign up for community solar farms. Like its rooftop panel purchasing marketplace, the Community Solar Marketplace allows consumers to locate and compare costs for multiple community solar projects in their area.

Community solar farms, which parse out clean energy to a group of shareholders, have emerged as the next largest solar market in the U.S.

Over the next two years, community solar is poised to see its market size increase seven-fold, and by 2020 it will be expanding by half a billion watts annually, according to GTM Research.

Not everything, however, is sunny for the solar industry, and the downturn in PPAs and leases has hurt businesses that relied on them.

SolarCity Workers from SolarCity install rooftop photovoltaic panels.

After growing at more than 50% annually four years in a row, the U.S. residential solar market is facing new challenges and is expected to see a slower growth rate of 16% this year.

Growth has slowed among all solar installation companies, but more so for the nation's top three providers: SolarCity, Vivint Solar and Sunrun.

For the first time since 2013, the three leaders will together install less than half the market's solar power systems as their growth slows to just 12%. Growth among the remaining solar power installation market will slow to 36% year-over-year, GTM said.

SolarCity and Vivant Solar -- the first and second largest solar installers in the U.S. -- have relied heavily on PPAs and leases to grow their business.

BlueWave Capital and SunEdison The Raffaele Road Solar Project is a 5.7MW photovoltaic solar project developed by BlueWave Capital and SunEdison at a former sand-and-gravel quarry in Plymouth, Mass. The project is now producing 7.4 million kWh of clean energy every year, with the City of New Bedford as the offtaker.

Until the second quarter of this year, nearly 100% of Vivint Solar's business was through PPAs and leases. But the company began offering Mosaic loans in Utah and has expanded the loan product to all of their markets.

Vivint still installs more solar power than its closest competitor, Sunrun -- but the gap is closing and by 2017, Sunrun is expected to become the second largest installer in the U.S.

Direct ownership by consumers, however, continues to drive a robust market.

"Despite declining costs and slowing growth, the total size of the overall market in dollar terms will be 50% larger over the next five years than it has been over the previous five years," GTM said.