SolarCity 20-year lease too good to be true?

[nate]

I've been looking at various solar lease options and the most favorable I've seen come from Sungevity and Centrosolar.

The SolarCity lease typically has a much higher escalator, its going down somewhat but from the quotes I've seen, I get the most bang for my buck from Sungevity because they include everything(warranty, insurance, low escalator) and Centrosolar because although their lease is a bit higher, they do use better quality panels than any other leasing company and as far as I understand it, don't interfere with net metering credits in anyway. Sungevity gets a bonus for ease of use due to their online quoting system.

What do you mean by escalator?

[KRenn]

I've been looking at various solar lease options and the most favorable I've seen come from Sungevity and Centrosolar.

The SolarCity lease typically has a much higher escalator, its going down somewhat but from the quotes I've seen, I get the most bang for my buck from Sungevity because they include everything(warranty, insurance, low escalator) and Centrosolar because although their lease is a bit higher, they do use better quality panels than any other leasing company and as far as I understand it, don't interfere with net metering credits in anyway. Sungevity gets a bonus for ease of use due to their online quoting system.

[Naptown]

Rich,

The website in you sig says on the residential PV page, "Be aware that solar electric (PV) has seen a 30% drop in costs over the last year alone."

Do you know if this is a 30% drop in the system cost itself, or a net cost due to a change in various tax laws? Since the next sentence starts with "Combined with the current incentives..." it seems like it isn't talking about a drop in net cost due to incentive changes. Instead, it seems like it is talking about a drop in the cost of the systems themselves. Is this right? What accounts for the big drop in price from a year ago?

The cost of equipment has come down significantly over the past 2 years. There was a tremendous amount of manufacturing capacity built then and with the world economy going south softened the market. This has led to price drops to stay in business for many manufacturers. Incentives in Maryland have actually dropped by 75% over the past two years. meaning less incentives from the state.

[russ]

Hi Nate,

The OR gov site has some information available. www.oregon.gov/ENERGY/RENEW/Solar/PV.shtml

A NREL info document http://www.statesadvancingsolar.org/...oltaic-systems

Russ

[nate]

Rich,

The website in you sig says on the residential PV page, "Be aware that solar electric (PV) has seen a 30% drop in costs over the last year alone."

Do you know if this is a 30% drop in the system cost itself, or a net cost due to a change in various tax laws? Since the next sentence starts with "Combined with the current incentives..." it seems like it isn't talking about a drop in net cost due to incentive changes. Instead, it seems like it is talking about a drop in the cost of the systems themselves. Is this right? What accounts for the big drop in price from a year ago?

[nate]

Thanks for the tip Russ. I talked to them and will be seeing what they can do too.

For comparing Oregon's Feed in Tariff option vs. doing net metering, what do people think the range that can be expected for ave electrical rate increases per year?

[russ]

Check out SunRun - they are in OR as well. http://www.sunrunhome.com/cost-of-solar

As I remember form years back, in Portland it rains almost constantly from mid December until mid June - then not much at all until December.

The estimated production figures show that too.

Russ

[nate]

I found the fine print about the feed in tariff program.

http://www.portlandgeneral.com/renewables_efficiency/generate_power/solar_payment/solar_payment_qa.aspx#one

From that page,
>>"Small-scale installations up to 10 kilowatts (kW) will receive 46.8 cents per kWh."

Sounds pretty good, considering how much less a kWh currently is. Also, program rates can change but they won't change for the 15 year term that you sign up for to do this program. This protects from if they decide the program is too lucrative and decide to change it, but it doesn't help you if energy cost increases exceed your initial expectation that you based your decision to take join this program (which is a 15 year agreement). Considering this, the lower that utility rates remain the same over the next 15 years the more this program makes sense (due to the cost of the rate you sell your power having a greater difference between what it costs you to consumer it). Likewise, if rates went up significantly the more this is not as attractive as compared to the normal net metering arrangement. Correct?


something else I noticed...
>>"PGE is requiring customers installing systems under this program to have $1 million in liability insurance. This is beyond standard homeowners insurance"

I'm not living / insuring a million dollar home and wonder what the difference in insurance will run over the course of time.

[Mike90250]

Green bloggers troll the university web sites where they are doing very advanced work and come up with something like 'MIT uses virus to increase the efficiency of thin film'....

Wow, they went from 6% to 9% (or whatever) Thats a 30% increase !! Sell stock - pump & dump !!

[nate]

Rich is talking about anything a person might make on the SRECs to get the best ROI.

When I say the lease companies cherry pick I am pointing out that if your annual bill is 1800$ they would be providing the bottom 342$ of that. It does not make much difference in good old western Oregon (the state where I grew up but on the east side of the mountains) due to the lousy sun or maybe a better way to say that is the excessive rain.

I wouldn't plan on the leasing company not bothering to come pick the system up when the lease is over. Worst case - they could easily sell it to a company specializing in that activity for a couple hundred bucks - easy way out for them and one final profit.

The closer you can get the system cost to 5$ per DC watt the quicker breakeven comes - Not considering any income from SRECs

at 4$ per DC watt the payback period for a 3500 DC watt system would be 2.6 years
at 5$ per watt that would be 6.9 years
at 6$ per watt that would be 10.2 years

Russ

I haven't lived in Maryland for more than ten years, and I don't know what the rules and credits are there where Rich is at. Supposedly Portland Metro average rainfall is similar to Baltimore, but it sure seems like a lot more rain here except for in the summers.

Digging around I've found Oregon / PGE does have a "Feed in Tariff" program, which I'm guessing this is similar to what you guys are referring to as SREC. Form the "REC" part I was thinking this was referring to the Oregon Residential Energy Credit ($6000), which I can take advantage of leasing or purchasing. However, if you take the Oregon Residential Credit you cannot do the Feed in Tariff, and neither could Solar City. Same thing goes for the $5250 Energy Trust Rebate. If you purchase a system you can't take this rebate if you do the Feed in Tariff. The lease quote I have from Solar City has them taking the Energy Trust Rebate (to lower my price) so they can't do the Feed In Tariff. Basically if you do the Feed in Tariff you're looking at paying at additional $11,250 up front and hoping to generate enough off the payments to make this $11,250 (plus the interest) come back.

No contractors have recommended this as the best option for me yet. I think I'll specifically ask the one that has my lowest purchase option quote (@5.5/) and seek also seek out an additional quote.

[russ]

Green bloggers troll the university web sites where they are doing very advanced work and come up with something like 'MIT uses virus to increase the efficiency of thin film'.

The writer doesn't know (or probably doesn't care either) that from that stage in the lab to commercial is easily 20 years and maybe 99% of research at that stage is discarded due to any one of a million different problems.

Russ

[nate]

There is no realistic plan for PV to increase efficency in the next 15 years. Some ideas in labs, but no reality. Inverters are at 95%, not much room for growth there.

Inverter lifetimes, I've heard, are about 10 years. Again, it's a high power solid state device, and 10 years is a good lifetime, then another $3K and you are set for another 10 years. Panels, should be good for 20+ years till hail gets them. If they last the first five, you have a winner till a hail storm takes them out.

Thanks, I think this is consistent from what I head from the solar contractors. I think most likely you're right, we just don't know for sure. If I had to bet, efficiency won't change dramatically but production costs will go down significantly. With this in mind, the $3k inverter replacement cost that has to be factored in a purchase scenario could be a lot less than this in 10 years.

[russ]

Rich is talking about anything a person might make on the SRECs to get the best ROI.

When I say the lease companies cherry pick I am pointing out that if your annual bill is 1800$ they would be providing the bottom 342$ of that. It does not make much difference in good old western Oregon (the state where I grew up but on the east side of the mountains) due to the lousy sun or maybe a better way to say that is the excessive rain.

I wouldn't plan on the leasing company not bothering to come pick the system up when the lease is over. Worst case - they could easily sell it to a company specializing in that activity for a couple hundred bucks - easy way out for them and one final profit.

The closer you can get the system cost to 5$ per DC watt the quicker breakeven comes - Not considering any income from SRECs

at 4$ per DC watt the payback period for a 3500 DC watt system would be 2.6 years
at 5$ per watt that would be 6.9 years
at 6$ per watt that would be 10.2 years

Russ

[Mike90250]

....For Solar PV, do we expect technology to not improve in the next 15 years, making the system bought today outdated and inefficient compared to what is available 15 years from now?.
....

Also, do we expect all the parts of the system to work indefinitely? 15 years from now, I were to have purchased, can I expect another 15 years out of my current inverter......

There is no realistic plan for PV to increase efficency in the next 15 years. Some ideas in labs, but no reality. Inverters are at 95%, not much room for growth there.

Inverter lifetimes, I've heard, are about 10 years. Again, it's a high power solid state device, and 10 years is a good lifetime, then another $3K and you are set for another 10 years. Panels, should be good for 20+ years till hail gets them. If they last the first five, you have a winner till a hail storm takes them out.

[nate]

The leasing companies don't explain the various benefits as they do not plan to pass them on to the customer - that is part of their profit. They will make most of their money on this type of thing.

The solar leasing companies have no intention of 'making this (SRECs) work in your favor'. They are in business to make a profit and you are the mark. The contract specifically states that you give up all rights to any such benefits.

The inverter (in the case of a central inverter) can be expected to be replaced in maybe 10 years. Enphase claims and guarantees longer but until more time passes it can not be backed up - the projection is not based on accelerated testing.

Technology changing - the solar PV silicon cell technology isn't changing all that much. If the efficiency goes up it simply means a smaller panel would have the same output as an older and larger one. Panels from 30 years back still work today. Thin film is changing and will change more.

Electronics (inverters) can be expected to constantly be improved. However, if one waits due to that reason it would be the same as not yet having bought a PC because they are going to change. I remember my first computer in 1981 - an Apple 2+ - a bit of an antique by today's standards.

Russ

I'm baffled why no Oregon company has explained the benefits that the leasing company is hiding from me. If someone can explain to me how they can get me the previously mentioned 250% ROI, I'm all ears.