SolarCity 20-year lease too good to be true?

[OCJeff]

Well, it creates jobs and green energy which is the purpose of the incentives.

If an individual or corporation reaps the benefits, they are still going to be reaped. This just passes on a lower cost to me (which is the net net of it all).

I understand that the real issue most people have is that the smaller solar vendors/installers get squeezed out of the process - which I think sucks - but if it means going solar or not going solar to me it's a decision that has to be made (easy or not).

[russ]

Not to worry - All the tax payers in the US are helping pay for the leased system. The leasing company can take advantage of the incentives/subsidies/tax credits that an individual can plus they can depreciate the system over time and I don't know what else.

[OCJeff]

Another thought on this...

I also wanted to genuinely get some additional feedback on this purchase versus lease. I'm hoping not to start a lease bashing discussion, but here are my thoughts.

I know there will always be debate between purchase and own, versus a lease (especially now with so many leasing options), but taken into account just the financial savings of leasing (prepaid) versus buying I don't see how you can loose (unless there is significant value to the SREC that has yet to be known).

Initial savings (my system) = $5000 ~ Year 0 (prepaid lease is generally lower cost than purchase, by about 25%)
Inverter Replacement Savings (my system) = $5K-7K ~ Year 15 or so (may be cheaper as technology improves)

You would then have $5K + 20 Years interest (maybe 5% return so this would yield about $10K conservatively) plus the $5K-7K you save at year 15 (or so) which would yield another $6.25K-8.75K again assuming 5% return. So then you have about $17K savings in your pocket to replace the outdated technology with something new and current (which in 20 years who knows that that would be).

All of this savings comes from leasing and not buying up front. So granted you don't own it, but I do see some significant upside with the lease as well. If one purchases then yes they own it, but they need to come up with the lump some cash to replace the system when the time comes. With a lease you already have the money to buy/lease a new system when the time comes.

Just my .02c

-OCJeff

[russ]

Hi Jeff - Thanks for the analysis!

[OCJeff]

I recently engaged SolarCity for an installation, and while I do understand your concerns my perspective is that the only real gambles are:

1) What will happen at the end of the lease? Within 90 days:
a) They will offer 2 x 5 year renewal terms for $???/month (if prepaid an option is unknown)
b) They will remove the system and replace tiles with tiles provided by owner
c) You request the system be removed and they will replace tiles with tiles provided by owner
d) If they don't want to remove it, and you don't want it removed it will be conveyed to you (not likely)

2) Future value of Solar non-power benefits
a) Current value is not high, but future values are unknown

3) Roof Warranty for installation was only 1 Year, so you need to be on top of the install with the first rainy season to try and verify if there are any leaks or other issues.

The real benefits (again, as I a very much solar rookie see it):

1) Power production guarantee (production figures are low, so likely it will not be an issue but they are in the contract), decrease by 1% a year (panel is estimated to decrease by .5% so you are even more likely no meet these numbers later in contract term).
a) Under production refund is paid @ 19.8 c/ Kwh, to increase by 3.9% per year
b) Over production is free (not true for a PPA, if it produces more you pay more)

2) Insurance is provided by SolarCity
a) No increase in homeowner premium (for me this would have been negligible ~ $7/year)
b) Covers all parts including Inverter(s), so no $5K to $10K replacement in 10-15 years, this is a real value (and really digs into savings with a true purchase)

3) Cost of pre-paid lease was $5K less than estimated purchase (for 6.02Kw system, 2x Inverters (Fronius IG Plus 3.0), 28x Keyocera 215W panels)
a) They would have provided utility rebate off purchase price, but FED tax credit would not come in until April.
b) No need to wait for TAX credit, flat price paid up front

4) Monitoring service provided for lease term
a) I'm not sure if there are services out there for people that purchase (if there is, then this is a wash)

Those were my thoughts, and I compared 2xSunRun Leases (Verengo and HelioPower), SolarCity, American Solar Direct and PeakPower. I created tons of spreadsheets and determined the best bang for the buck for prepaid lease/PPA versus KWH production guarantee versus system cost for my actual usage. All of that pointed to SolarCity as having the most production for lowest cost.

My time line has been 2 months since signing contract and system system is already installed, just waiting for city/utility inspections. Not a long time line for my install.

-OCJeff

[maestroX2]

Specifically where was I talking about a PPA? I was talking about comparing all options.

my bad... it was late night. When you said "My net cost was about 3000 less (for a larger system) for a pre paid lease vs. a purchase.", I was assuming it's PPA since SunRun contract has similar saving too. I didn't want to lease so I canceled all appointments with Solar City and Verengo.

PPA or Lease is another low cost and almost no down option to go solar. Keep in mind though, nobody really knows what will happen when your lease ends after 20 years. You are splitting the saving with leasing company right now.

If you have 20k-30k lying around then good option to purchase solar system outright. However, if you have to finance or using home equity to go solar, you might consider the PPA/Lease option. I still prefer to buy the solar system. It's the same way, I don't like to lease car.

[nate]

nate: you are talking about PPA (power purchase agreement). The person you quote was talking about Leasing.

good place to read

http://solarpowerrocks.com/los-angel...-lease-vs-ppa/

Specifically where was I talking about a PPA? I was talking about comparing all options.

[maestroX2]

nate: you are talking about PPA (power purchase agreement). The person you quote was talking about Leasing.

good place to read

http://solarpowerrocks.com/los-angeles-solar/whats-diff-lease-vs-ppa/

[nate]

Those are some great downsides to SolarCity, they have perhaps the most restrictive conditions of any solar leasing outfit and Sungevity is not far behind. Both companies
are currently flying by their knickers, struggling in key areas as their numbers only make sense when rebates or tariffs are high. Put SolarCity against several other leasing options
and they stack up quite poorly. They truly try to take advantage of their name-status to jump on consumers who don't know any better, if a consumer gets a 2nd or third leasing
quote, SolarCity knows they are flat out of luck. Not to mention that the installs can take forever, anywhere from 3-6 months or longer while other companies are up in finished
in 60-90 days and guarantee that if for whatever reason the system isn't up in 6 months, the homeowner is 100% off the hook for it.



There are other leasing options such as BrightGrid and SunCap who provide far more favorable leasing terms and numbers, and rely on the expertise of pre-qualified local
installers rather than the chaotic environment of trying to do everything in-house, having installers all over the US but all the engineering and actual braintrust being based
in California and overworked to the max.

No matter who you go with, get local references and follow up with them to make sure they are legit and find things out about their experience. By far the slowest part of the process for me was researching and figuring out which company (if any) I wanted to go with. After that things went fast with SolarCity's part. After installation, the final inspections from the city and pg&e were faster than promised from Solar City. I didn't think I'd be online until next month.

[nate]

Someone had said something (Russ?) about wanting to see the SolarCity Lease/contract, and other people are asking if it's too good to be true.

Well, after several months of working with a (perfectly pleasant) SolarCity sales representative, I got the contract ... which prompted me to send a huge list of issues I had, and things I would need them to change in order to sign the contract. Suffice it to say that the contract isn't nice.

The big issues I had were:

--There's a clause in the contract which says SolarCity owns all "Non-Power" benefits of YOUR system, "into the future," and not just for the duration of the lease. This means tax credits, carbon off-sets, rebates, etc. will ALWAYS go to SolarCity, even if your lease is up.

Differs per location, but that's part of comparing the net cost after all available incentive types right?

My advice is to ignore the knee-jerk posters who confuse the subject of net cost with things irrelevant to your location. Research what your best options available to you are. Get multiple quotes from companies that do up front purchases, and if desired, leasing and other agreements. Compare the systems quoted, the upfront cost and the net cost after incentives. Factor in the value of what you can do with the money if there is significant difference in the up front cost difference. Also factor in what you could do with that money if you invested it in something else besides solar. There is no one size solution. For one person's home, they may be best off not doing solar. For someone in one state a purchase for a certain size system hits the sweet spot financially. For someone else in another state a better solution may exist.

Also, get local references from other local customers and call them all. Ask how long the process took, any surprises and see if they'd mind if you even drove by their home to check things out.

--The "Limited Warranty" is so limited it actually doesn't cover any damage; only damage specifically caused by SolarCity is paid for by SolarCity; there's a nasty "Force Majeure" clause that basically precludes any financial responsibility on their part, including basically all damage and theft.

If your car was damaged by another car, an act of war, Tsumami or was stolen would you expect the manufacturer or dealership you bought from to pay for it? Good luck if you do. No installer I got a quote for covered this kind of damage for their systems how about you?

--No option to purchase at the contract's end (this apparently has to do with consumer lease law; since there's no standard way of determining the value of a solar-power system, they can't offer you the option)

Makes you wonder why there is no standard of determining the value of a solar system. Think this only affects a lease? It affects a purchase too -- not just compared to a lease but compared to putting the money toward something else. Its called opportunity cost.

Its one persons word vs. another in terms of what these systems will be worth in 15 or 20 years. The knew jerk people like to dismiss any notion that manufacturing and technological improvements won't change the industry much in the next 15 years. They like to confuse the subject by referencing the really obscure crazy articles out there, so they can dismiss any notion that the cost to produce panels or inverters (of the same capability) won't change.

The value that someones 15 year old system will end up having is truly has is unknown. My net cost was about 3000 less (for a larger system) for a pre paid lease vs. a purchase. Factor in interest on the net cost difference and guarantee that a system I purchased will be worth at least this figure 15 years from now. Really to be fair you need to factor in the interest that you could be earning if you hadn't paid the up front purchase price and are waiting for a larger proportion to come back from the Fed and State (4 years on the state where I live). Willing to back up a contract, in writing, that a system I purchase will hold its value enough to justify its greater cost. I can't find an installer that will.

--You have to continue to pay your monthly payment even if the panels stop working, and even if it takes them months to get a contractor out to fix them, etc.

The month to month deal wasn't as attractive to me vs. a prepaid agreement. To each their own. Regardless, if you "purchased" a system but really had financed it through a traditional loan you think that you wouldn't have to keep making a payment?

--You have to "maintain" a high-speed internet connection, and if you do not "maintain" the connection (though there are no details about what period of outage qualifies as not being "maintained") your "performance guarantee" becomes VOID.

Personally I want a high speed internet connection, and between 2 LTE lines and one cable line I'm covered in this respect. I wouldn't expect them to be able to respond to a problem that wasn't communicated to them. If I was out of town for a few weeks, and there was no data connection back to them, how would they know to come out and correct the situation? Nice distortion of the contract to make it sound like it is void full the full term.

--No option to cancel the contract if it takes them a year to install the system, which some people have reported.

Contract has options to cancel but this was irrelevant as the only thing we were waiting on was the appropriate permits, the process went fast.

There's more, and I can cut-and-paste sections of it if people would like. After this experience I am going to see about getting a loan and just buying the system myself. I'm sure I could get a reasonable monthly rate from a local credit union.

I honestly hope it goes great for you. For your particular location maybe that is your best option - compare several.

[russ]

One problem with having a 3rd party installer in the middle - no one really has control.

You are more dependent than ever on the intentions and good heart of the installer.

1) If he is a good guy and knows the business well - then good.

2) If he is a flaky type - then not so good and can be a real problem.

All installers have the same basic costs and the same payback for a given site - no one can say otherwise.

How efficient the leasing company is determines their profitability.

[KRenn]

Someone had said something (Russ?) about wanting to see the SolarCity Lease/contract, and other people are asking if it's too good to be true.

Well, after several months of working with a (perfectly pleasant) SolarCity sales representative, I got the contract ... which prompted me to send a huge list of issues I had, and things I would need them to change in order to sign the contract. Suffice it to say that the contract isn't nice.

The big issues I had were:

--There's a clause in the contract which says SolarCIiy owns all "Non-Power" benefits of YOUR system, "into the future," and not just for the duration of the lease. This means tax credits, carbon off-sets, rebates, etc. will ALWAYS go to SolarCity, even if your lease is up.

--The "Limited Warranty" is so limited it actually doesn't cover any damage; only damage specifically caused by SolarCity is paid for by SolarCity; there's a nasty "Force Majeure" clause that basically precludes any financial responsibility on their part, including basically all damage and theft.

--No option to purchase at the contract's end (this apparently has to do with consumer lease law; since there's no standard way of determining the value of a solar-power system, they can't offer you the option)

--You have to continue to pay your monthly payment even if the panels stop working, and even if it takes them months to get a contractor out to fix them, etc.

--You have to "maintain" a high-speed internet connection, and if you do not "maintain" the connection (though there are no details about what period of outage qualifies as not being "maintained") your "performance guarantee" becomes VOID.

--No option to cancel the contract if it takes them a year to install the system, which some people have reported.

There's more, and I can cut-and-paste sections of it if people would like. After this experience I am going to see about getting a loan and just buying the system myself. I'm sure I could get a reasonable monthly rate from a local credit union.

Those are some great downsides to SolarCity, they have perhaps the most restrictive conditions of any solar leasing outfit and Sungevity is not far behind. Both companies
are currently flying by their knickers, struggling in key areas as their numbers only make sense when rebates or tariffs are high. Put SolarCity against several other leasing options
and they stack up quite poorly. They truly try to take advantage of their name-status to jump on consumers who don't know any better, if a consumer gets a 2nd or third leasing
quote, SolarCity knows they are flat out of luck. Not to mention that the installs can take forever, anywhere from 3-6 months or longer while other companies are up in finished
in 60-90 days and guarantee that if for whatever reason the system isn't up in 6 months, the homeowner is 100% off the hook for it.



There are other leasing options such as BrightGrid and SunCap who provide far more favorable leasing terms and numbers, and rely on the expertise of pre-qualified local
installers rather than the chaotic environment of trying to do everything in-house, having installers all over the US but all the engineering and actual braintrust being based
in California and overworked to the max.

[DriftSpace]

SolarCity Contract

Someone had said something (Russ?) about wanting to see the SolarCity Lease/contract, and other people are asking if it's too good to be true.

Well, after several months of working with a (perfectly pleasant) SolarCity sales representative, I got the contract ... which prompted me to send a huge list of issues I had, and things I would need them to change in order to sign the contract. Suffice it to say that the contract isn't nice.

The big issues I had were:

--There's a clause in the contract which says SolarCIiy owns all "Non-Power" benefits of YOUR system, "into the future," and not just for the duration of the lease. This means tax credits, carbon off-sets, rebates, etc. will ALWAYS go to SolarCity, even if your lease is up.

--The "Limited Warranty" is so limited it actually doesn't cover any damage; only damage specifically caused by SolarCity is paid for by SolarCity; there's a nasty "Force Majeure" clause that basically precludes any financial responsibility on their part, including basically all damage and theft.

--No option to purchase at the contract's end (this apparently has to do with consumer lease law; since there's no standard way of determining the value of a solar-power system, they can't offer you the option)

--You have to continue to pay your monthly payment even if the panels stop working, and even if it takes them months to get a contractor out to fix them, etc.

--You have to "maintain" a high-speed internet connection, and if you do not "maintain" the connection (though there are no details about what period of outage qualifies as not being "maintained") your "performance guarantee" becomes VOID.

--No option to cancel the contract if it takes them a year to install the system, which some people have reported.

There's more, and I can cut-and-paste sections of it if people would like. After this experience I am going to see about getting a loan and just buying the system myself. I'm sure I could get a reasonable monthly rate from a local credit union.

[russ]

There are salesmen that are great and willing to look out for your interest as well as their company.

It is up to the buyer to learn enough about their planned purchase to have an understanding whether they are being snowed under or being helped.

Every politician or used car salesman are not bad people either. Unfortunately 95% of them are giving a bad name to the good guys.

Russ

[maestroX2]

Lol... I'll take advice from anonymous person who wants to offer "free" help over salesperson any time any day.