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nate: you are talking about PPA (power purchase agreement). The person you quote was talking about Leasing.
good place to read
good place to read
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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.Comment
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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.
-OCJeffComment
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Hi Jeff - Thanks for the analysis![SIGPIC][/SIGPIC]Comment
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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
-OCJeffComment
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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.[SIGPIC][/SIGPIC]Comment
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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).Comment
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interesting analysis... but if you have money in the bank, you don't have to swallow that 5% loan interest. Your initial saving 25% saving is very generous. Have you compared with various contracts ? The companies that offer prepaid lease normally have the highest quote with outdated technology. Smaller companies normally offer to install for less cost. They'd try so hard to sell outdated technology cause it's cheaper for them since they buy in bulks. Solarcity won't give me a quote on micro-inverters system.
Your lease will be done in 20 years and you can either splurge another money to continue leasing or buy the system from them (don't know how much they'll charge). If you buy system with Enphase m215, you have warranty till 25 years. So you have both panel and inverters warrantied for 25 years. Well, normally your system will work more than warranty period so I'd assume the system will still produce at least 30-40 years but probably degrade the performance. With modular system, you can simply replace certain bad panels or inverters.Comment
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Sorry, I must have miscommunicated the 5%. With a prepaid lease there is no loan (if you have money in the bank). So the 5% is applied to the difference between purchase price and prepaid lease over the term of the lease. I was estimated 5% for a CD or Bonds or something.
That aspect of a micro-inverter solution does sound very beneficial, but can you replace the micro-inverters separately from the panels, or does the whole thing need to be replaced? How does the cost of a micro-inverter system compare to that of SMA or Fronius? Wouldn't they all have just about the same lifetime (all of the separate micro-inverters)?
-OCJeffComment
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hard to find 5% CD right now. But again, why pay the system for 20 years when you know the system will perform for more than that ? It degrades the performance but the system still works. It's the same analysis I use with leased cars. Sure, it's very attractive to lease brand new car for every 3 years but I normally use the car for at least 5 years. Right now, I just buy certified pre-owned or after-lease cars.
You can simply change micro-inverters or panels. My system cost about 2k+ more than traditional central inverters. However, it's really hard to compare since my mind is set with system I want and I ask all installers to give quote based on my desired system. I did the research and I think micro inverters system is the future. I want black n black panels ( aesthetic reason, if I want to look for 20+ years, it better looks good and not eye-sore
) and enphase m215.
IMHO, here is the list of advantage on micro-inverters system:-
1) 25 years warranty instead of 10 on central inverter. We know that central inverter will need to be replace between 10-15 years.
2) lifetime monitoring
3) you only have to replace either panel or inverter. You can easily know which one is bad by system monitoring.
4) panel output/performance is independent than the rest of panels. You'll get maximum production on each panel.
5) less likely your inverter got stolen since it's your roof instead side of your house. Central inverter creates humming sound too !.
6) should be easier to install but I hire someone so no big deal. But in case I have to replace it, I might be able to do it.
Cons
1) expensive but in the long run, you'll still save since you need to replace that traditional central inverter.
2) new technology & basically new company. They are very strong company though.
3) if you need to replace inverter, you have to climb your roof.
Many installers claim we don't need micro-inverters since we don't have shading issue but I can see a lot of pros other than shading issue
There are many thread about micro-inverters vs central inverter.
If you have to get loan to install your solar, I'd recommend to do lease. To have Solar in your home is better than paying utility company. You will still save $$$.Comment
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I just did a purchase lease also, but in AZ, It is for a 9KW system for $10k. Bumper to bumper for 20 years, inverter for 10 years and all with a $1 buy out. Nothing odd in the contracts I found, really straight forward commonsense stuff. Perfect power Solar is the outfit.Comment
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