Is $20 savings a month worth getting into a 25-year leasing contract with Sunnova?

[Lunatique]

I just had a guy from a local solar installation company (Unisun/Syntrol) talk to me for almost three hours about a 25-year lease contract with Sunnova (well, technically, we're paying by the kWh to Sunnova for using their solar-generated electricity). Prior to this guy, I have had a few other competitors come and talk to me about their products and services, but it always seemed like it wasn't worth the trouble, since my wife and I are frugal to begin with, so the savings we'd get compared to households that use a lot more energy is quite meager.

Basically, our average monthly electricity spending is about $134 (Lincoln, CA, with PG&E), and according to Sunnova, we'd save about $20 a month at first, and then when PG&E raises their rates, we'll start to save more down the line. While Sunnova will raise their rates too, the rate increase is a lot lower than PG&E. The chart the guy showed us shows that our roof can accommodate about 12~13 panels, and will generate roughly 67% of our electricity, while the rest 33% will come from PG&E. When the 25-year contract is up, we own the panels. During the 25-years, they will be responsible for all maintenance and repairs and upgrades, as well as provide a 2-million dollar insurance.

From the research I've done, it's common wisdom that buying the panels outright will result in more savings in the long-term, but at the same time, the money can be invested with our financial advisor instead and likely get higher returns. In comparison, the lease contract costs me nothing upfront and I'm at least paying a little less for electricity, so even if the savings isn't significant, it at least causes no harm. However, I've read horror stories of people who felt cheated and ripped off and ignored by the solar power company after installation, where calls for maintenance and repairs were routinely ignored or other unpleasant experiences. So in my mind, I'm wondering if a $20 per month of meager savings is worth the risk of possibly dealing with that kind of unpleasantness. Could it be because our electricity bill isn't high to begin with, solar doesn't seem all that compelling? In the past, we even had solar companies not bother getting back to us after they got permission to pull our meter numbers--probably because they didn't seen any potential to make good money off of us, so they never bothered following up with us.

So what do you guys think? Should we go for the lease contract? Should we wait and see how much better the technology/contracts gets later as competition heats up?

[pleppik]

So in my mind, I'm wondering if a $20 per month of meager savings is worth the risk of possibly dealing with that kind of unpleasantness.

I think the fact that you are phrasing these questions in these terms means that you should wait and learn more before committing to anything.

If that's the answer you'd been hoping for, then you're welcome.

In the meanwhile, there are lots of resources to help you learn more about the costs, benefits, and reliability of solar, and a lot of homeowners on this forum ready to chime in. Just do your own homework, don't take anyone's opinion at face value, and remember that the loudest voices often aren't the ones you should be listening to.

[tatumjonj]

I can't think of much I'd do to save $20 a month the last possible thing being signing a 25 year lease. For the size system it appears you're talking about, assuming that 12-13 standard panels can product 67% of your yearly usage, I would think that you could probably own a system that would cover all your usage for somewhere around $17k installed. The math based on the few things you've wrote tells me that your payback on a purchase would be in the 10-11 year neighborhood, so take that into consideration as well. If I'm in your shoes, the only reason I do solar is to become more green, the cost benefit doesn't really seem to shake out at all.

[Amy@altE]

I'm betting it's about a 3000W system they are proposing. At the going rate of about $3.50 a watt, that's about $10k installed. Minus 30% federal tax credit, minus local incentives, minus possible SRECs. (Check out www.dsireusa.org for incentives). I would advice you to run as fast as you can away from the lease, and look into possibly financing for buying the system if you don't have the money up front. Admirals Bank has a decent finance deal for solar, if you have good credit they'll even give you an 18 month kicker that can be repaid within 18 months with the tax incentives with no interest.

[Lunatique]

Okay, so my gut instinct was perhaps right--that maybe it's not such a great deal.

Just out of curiosity, if $134 per month on average of electricity bill before installing solar, and then $20 saving per month after installing solar, is not really a compelling scenario in favor of choosing to go with the 25-year lease, then what bare-minimum do you guys think is a sweet spot that tips things in favor of going with a lease situation? How much savings per month would be enough of a benefit to agree to a lease?

Also, if my house's roof can only hold about 12~13 panels and yield about 67% of my overall electricity, does that mean my house is inherently not very solar-friendly in terms of the roof design, and I shouldn't really bother with solar at all?

[tatumjonj]

You really need to do your own research on leases to understand why for most people they're just a terrible idea. Bottom line is you typically don't get the tax credit, you aren't producing your own electricity you're producing it for the company to sell back to you, typically escalating rate for the electricity you're producing and they're selling back to you, hard to sell your home without you buying out the lease for the new owner, paying 2-3x the cost of something that you'll never own, etc, etc, etc. To save $20 a month? Really?

[Lunatique]

You really need to do your own research on leases to understand why for most people they're just a terrible idea. Bottom line is you typically don't get the tax credit, you aren't producing your own electricity you're producing it for the company to sell back to you, typically escalating rate for the electricity you're producing and they're selling back to you, hard to sell your home without you buying out the lease for the new owner, paying 2-3x the cost of something that you'll never own, etc, etc, etc. To save $20 a month? Really?

Not only that though. When I think about the alternative, which is to just purchase solar panels upfront so I can own it and get all the savings right away, I can't help but also think about the higher return I could get with that money if I were to invest it with my financial advisor using risk-minimized strategies of leveraging options. Which means, investing the money is a smarter move. But of course, this is only considering finance and not green energy.

[silversaver]

Not only that though. When I think about the alternative, which is to just purchase solar panels upfront so I can own it and get all the savings right away, I can't help but also think about the higher return I could get with that money if I were to invest it with my financial advisor using risk-minimized strategies of leveraging options. Which means, investing the money is a smarter move. But of course, this is only considering finance and not green energy.

I don't think your financial advisor is working when you come in asking for $20 saving per month vs. 25 yrs lease agreement.

A $20 saving per month can be done without solar, and a 25 yrs contract which might hurt you down the road.

[Amy@altE]

Also, if my house's roof can only hold about 12~13 panels and yield about 67% of my overall electricity, does that mean my house is inherently not very solar-friendly in terms of the roof design, and I shouldn't really bother with solar at all?

Leasing companies have been pushing the idea of filling up every square inch of your roof with solar and try to offset 100% of your power. That's completely unnecessary. Most people I deal with who buy their systems are getting 12 - 28 panels, and just offsetting some of their usage. Offsetting 67% of your power is a great target. I don't know if they gave you the projected output for your system they proposed, but I'm guessing with round numbers, it is probably about 400kWh a month. I'm also betting that will drop you down a tier or 2, and you'll get cheaper electricity (until they restructure their rate system). So, again, guesses, averaging $.18 per kWh x 400kWh a month = $72 dollar savings a month. $10k minus local and federal incentives, I think you will end up about $5k for the system. That's about 6 years to pay for itself, then it's $72 a month in your pocket for the rest of the life of the system. My 401k hasn't been performing that well in a looooong time.

[Alisobob]

A $20 saving per month can be done without solar

Yup.....

[Ian S]

I would avoid a monthly lease especially one with an escalator. There has been discussion here of cases where a homeowner is selling a home with a solar lease and it doesn't look pretty from the seller's perspective. Having to take over a lease is easily construed by a purchaser as a negative used to leverage a price reduction of some sort. Or the buyer eventually just walks away as recently chronicled in this thread.

Changes are in the wind for Cali utility rates. These are not finalized but from what I gather, the lower tier(s) cost will likely increase and the highest tier(s) decrease. So you probably would see an increase as you don't appear to use a lot of electricity in the higher tiers.

If I were you, I'd look into making sure all possible energy conservation measures had been exhausted first. Then, use PWwatts to get an idea of what kind of production you can expect from a solar system in your area and play around matching it up to your monthly consumption but note that offsetting all your electricity consumption is rarely the best bang for your buck and if roof space is limited, you might do quite well offsetting only 2/3 or so of your usage. A smaller system may make outright purchase more feasible with many ways to finance the system or even pay cash upfront. When you're comparing returns with a financial investment, don't forget that the savings on your utility bill represent essentially a tax-free return.

[bberry]

A lease will likely hurt the resale value of your house. An unattractive solar install will too.

If you have a good house for solar, consider eventually buying a system. If the terms of a Sunnova lease turns out bad for them, they will be out of business.

No one should be entering into a of very long term legal agreement with a corporate entity except out of necessity.

[tatumjonj]

I can't help but also think about the higher return I could get with that money if I were to invest it with my financial advisor using risk-minimized strategies of leveraging options.

If you have a financial adviser recommending risk-minimized strategies using leveraging, I'd run away from that faster than this lease. There's two concepts that don't belong together.

[jimindenver]

Have they told you about the lien they will place on your house yet? Around here that is becoming a issue for the homes that had solar installed and they tried to refinance, get a line of credit or even sell.

[rhedayi]

This lease to save $20 sounds like a headache. If your average bill is 140, you must have some low months and some high months, I wonder what those look like. Give us your monthly usage, use habits, pool ? I also wonder if you have done anything to save electricty at this point. Pool pump ? CFL or LED lights? attic insulation upgrade / check?