Sunpower lease sounds too good to be true?

[pfp]

Long story short, I've wanted to do a solar system for many years but have not because it has looked to risky on the ROI - waiting 15+ years for a payback and lots of assumptions.

I was recently asked to look at a lease proposal for my parents and it seems to look way to good to be true.

This is the proposed system in Phoenix AZ
Year 1 estimated production: 18,777 kWh
10.46 kW (DC), 9.21 kW (AC) SunPower System
32 x Sunpower E30/327 Solar Panel
Solar Mount Mounting System
1 x SPR-10001f (240V) 9.995kW

Zero down and $124/mo for 20 years with no increase in payments. Option to buy out at year 7 for the remaining value (appears to be $9,800) or FMV.


The utility (APS) rate plan they are on costs 0.14515/winter and 0.17866/summer during peak hours (9am-9pm).
Solar power generated works out to a monthly average of 1,564 kWh (18,777/12)
Just looking at the winter rate (0.14515) * generated solar power (1,564) = $227.
The $124/mo lease payment replaces $227/mo in energy costs from the utility.
That's a savings of $103/mo with no money down.

Does this seem right? I've got to be missing something.

The only real issue I see is in the numbers is that the conversion from DC to AC seem to be too high at 88%. Isn't this typically 78%?


The other big mystery for me is how can this system cost just $124/mo. I understand that the leasing co gets all the tax incentives and rebates but still a 10kW system (especially Sunpower) should cost 40K+ after all the tax incentives and rebates.

Could someone please clue me in to what I'm missing.

Thank you

[Naptown]

Long story short, I've wanted to do a solar system for many years but have not because it has looked to risky on the ROI - waiting 15+ years for a payback and lots of assumptions.

I was recently asked to look at a lease proposal for my parents and it seems to look way to good to be true.

This is the proposed system in Phoenix AZ
Year 1 estimated production: 18,777 kWh
10.46 kW (DC), 9.21 kW (AC) SunPower System
32 x Sunpower E30/327 Solar Panel
Solar Mount Mounting System
1 x SPR-10001f (240V) 9.995kW

Zero down and $124/mo for 20 years with no increase in payments. Option to buy out at year 7 for the remaining value (appears to be $9,800) or FMV.


The utility (APS) rate plan they are on costs 0.14515/winter and 0.17866/summer during peak hours (9am-9pm).
Solar power generated works out to a monthly average of 1,564 kWh (18,777/12)
Just looking at the winter rate (0.14515) * generated solar power (1,564) = $227.
The $124/mo lease payment replaces $227/mo in energy costs from the utility.
That's a savings of $103/mo with no money down.

Does this seem right? I've got to be missing something.

The only real issue I see is in the numbers is that the conversion from DC to AC seem to be too high at 88%. Isn't this typically 78%?


The other big mystery for me is how can this system cost just $124/mo. I understand that the leasing co gets all the tax incentives and rebates but still a 10kW system (especially Sunpower) should cost 40K+ after all the tax incentives and rebates.

Could someone please clue me in to what I'm missing.

Thank you

The system at 10KW should cost about 40K BEFORE tax incentives utility rebates etc.
So take the 40K - 30% federal = 28K after federal
Deduct the utility rebates what ever they are.
This gives you the net cost of the system.
Get a hard number on the buyout, FMV leaves too much open to speculation unless it is an either /or and which ever is less. (not likely)

Conversion could be that high Run your own PVWatts calculation there is a link on the forum home page.

[Ian S]

Option to buy out at year 7 for the remaining value (appears to be $9,800) or FMV.

My Sunpower lease does not mention FMV in connection with its "Early Buyout Option Price" rather it's a set price in Exhibit B of the lease document. I was beginning to think the Sunpower lease was too good to be true as I've waited over six months for my installation to begin. However, it appears that the workers will be at my Phoenix home Wednesday to start the installation by installing the mounting brackets. Then my roofers will be coming Thursday and Friday to get the roof in shape and foam in the mounts. The solar installers will be back next week to put the panels on and get the electrical work done. My fingers and toes are crossed at this point.

I went with a prepaid lease so I have no opinion on the deal you were offered. Also, the utility rebates have been halved this year IIRC which makes a comparison with my lease more difficult. But you ought to get a copy of the lease before signing up for anything. Read it very carefully - it's reasonably easy to understand. I went with the prepaid lease because I did not want the additional hassle of selling my home at some point with the buyer having to take over a lease payment. Also, you ought to carefully consider the size of the system: I'm not sure it makes sense to try to cover all your power requirements with solar. With APS, your peak and off-peak production are separately tracked and over-production in one category can't be used to directly off-set under-production in the other. If there is over-production at the end of the year, APS credits your account at a low rate per kWh.

[russ]

With monthly payments normally the utility will have to accept the potential home buyer's credit (for selling the home) - if not the only way to sell would be to buy out the system - should be clearly stated in the lease document.

Like Ian says - get an exact copy of the lease before signing and study the thing for a few days at least.

[pfp]

I'm not sure it makes sense to try to cover all your power requirements with solar. With APS, your peak and off-peak production are separately tracked and over-production in one category can't be used to directly off-set under-production in the other. If there is over-production at the end of the year, APS credits your account at a low rate per kWh.

Hmmm, that's definitely good to know. With my parents current rate plan putting peak between 9am-9pm it would seem they will be paying APS for almost everything they use off peak since very little would be generated before 9am or after 9pm. Not much sense sizing the system for the off-peak use too if they can't use the peak credits to offset it. Suppose they could just switch rate plans though.

I think I also read somewhere that APS requires the system to stay connected to the grid for the 20 years too, correct?

[orchid]

Hmmm, that's definitely good to know. With my parents current rate plan putting peak between 9am-9pm it would seem they will be paying APS for almost everything they use off peak since very little would be generated before 9am or after 9pm. Not much sense sizing the system for the off-peak use too if they can't use the peak credits to offset it. Suppose they could just switch rate plans though.

I think I also read somewhere that APS requires the system to stay connected to the grid for the 20 years too, correct?

I am still staying on the 9am-9am time advantage plan after my sunpower solar gets installed this month. Though I may change later the many solar people I talked to said this is the best plan for solar with APS and it is frozen so if I changed now I couldn't get back on it. According to the aps rates at http://www.aps.com/_files/rates/epr-6.pdf the payout for excess production for on peak kwh is about 6.590. While the cost for my off peak use on this plan is .05565 for winter and .05774 for summer. My approx cost per Kwh with the lease is .03 so I still come out ahead if I produce a little more on peak then I need.

What you should do is have your parents log into their account. Go to "My account" and click on the "Download usage history". This will give you a better picture of how much of there usage is on peak versus off peak and what size system they will want. Also I used this information to better help me calculate what my savings would be with my lease.

Yes you have to stay connected to the grid for 20 years which is why these are 20 year leases. Otherwise a prorated portion of the utility rebate would have to be payed back.

[Ian S]

Hmmm, that's definitely good to know. With my parents current rate plan putting peak between 9am-9pm it would seem they will be paying APS for almost everything they use off peak since very little would be generated before 9am or after 9pm.

Don't forget that all day Saturday, Sunday and Holidays are also off-peak. I looked into it extensively last year and did an detailed analysis using a friend's Sunpower account showing actual production in Scottsdale. I concluded that the time of day rate plan (7PM to noon only one available now unless grandfathered) was the best deal for my situation. That rate plan yields significant off-peak solar production. You can always start on the grandfathered plan then switch after you have a year of data if it makes sense to do so. Of course, you can't go the other way.

Halleluyah! The workers are here installing the standoffs!

[Ian S]

I am still staying on the 9am-9am time advantage plan after my sunpower solar gets installed this month. Though I may change later the many solar people I talked to said this is the best plan for solar with APS and it is frozen so if I changed now I couldn't get back on it. According to the aps rates at http://www.aps.com/_files/rates/epr-6.pdf the payout for excess production for on peak kwh is about 6.590. While the cost for my off peak use on this plan is .05565 for winter and .05774 for summer. My approx cost per Kwh with the lease is .03 so I still come out ahead if I produce a little more on peak then I need.

What you should do is have your parents log into their account. Go to "My account" and click on the "Download usage history". This will give you a better picture of how much of there usage is on peak versus off peak and what size system they will want. Also I used this information to better help me calculate what my savings would be with my lease.

Yes you have to stay connected to the grid for 20 years which is why these are 20 year leases. Otherwise a prorated portion of the utility rebate would have to be payed back.

I think you're right about the rate plan. It wasn't an option for me since I've been on a demand advantage plan for many years. With the information you'll have at the end of a year, you should be able to compare and see how good the plan actually is in comparison to others.

[pfp]

What you should do is have your parents log into their account. Go to "My account" and click on the "Download usage history". This will give you a better picture of how much of there usage is on peak versus off peak and what size system they will want. Also I used this information to better help me calculate what my savings would be with my lease.

I setup a logon for their APS account last night so I could look into their usage. I just haven't had time to look at it yet. I'm very familiar with this as I've done it with my own account for a long time now - even down to hourly with the new smart meter they installed a couple years ago.

[pfp]

Don't forget that all day Saturday, Sunday and Holidays are also off-peak. I looked into it extensively last year and did an detailed analysis using a friend's Sunpower account showing actual production in Scottsdale. I concluded that the time of day rate plan (7PM to noon only one available now unless grandfathered) was the best deal for my situation. That rate plan yields significant off-peak solar production. You can always start on the grandfathered plan then switch after you have a year of data if it makes sense to do so. Of course, you can't go the other way.

Halleluyah! The workers are here installing the standoffs!

Considering this leasing option I'm actually looking at solar again for my own home. I happen to be on the 7-noon plan as well but I also have the demand charge too. I was able to rework my usage such that this has been the most effective plan for me and approx 82% of my power usage is off-peak. As you noted the 7-noon time looks to provide significant off-peak solar production. My gut tells me that the demand charge is something I would not want is using solar though. I need to take another looks at my own numbers to see what might make the most sense going forward if I were to install solar.

[Ian S]

Considering this leasing option I'm actually looking at solar again for my own home. I happen to be on the 7-noon plan as well but I also have the demand charge too. I was able to rework my usage such that this has been the most effective plan for me and approx 82% of my power usage is off-peak. As you noted the 7-noon time looks to provide significant off-peak solar production. My gut tells me that the demand charge is something I would not want is using solar though. I need to take another looks at my own numbers to see what might make the most sense going forward if I were to install solar.

I think the demand charge in the summer would be a killer between 5 and 7 PM when solar output falls off dramatically but the heat is still intense and your AC is working hard. Even if that only happened once during the monthly cycle, you'd still get socked with a high demand charge. Time of day 7PM to noon rate plan seems the only practical option for those of us who aren't grandfathered on the 9 to 9 plan.

[pfp]

I think the demand charge in the summer would be a killer between 5 and 7 PM when solar output falls off dramatically but the heat is still intense and your AC is working hard. Even if that only happened once during the monthly cycle, you'd still get socked with a high demand charge. Time of day 7PM to noon rate plan seems the only practical option for those of us who aren't grandfathered on the 9 to 9 plan.

Yep, I think that would be the killer. For some reason I thought the 7-noon plan was also discontinued but jest checking and it's still available. I suspect this would be the best plan for me with solar.

[pfp]

According to the aps rates at http://www.aps.com/_files/rates/epr-6.pdf the payout for excess production for on peak kwh is about 6.590.

Any chance you have links to the same document for other rate plans?

[KRenn]

The Sun power lease seems to very legitimate, I would check pricing carefully as the pricing between one dealer and another seems to vary widely. But yes, the lease is actually legit, my neighbor has it installed, seems to be pretty happy with it, out of all the leases out there, time and time again I hear that it is the most price-effective by far, additionally you're getting pretty much the top quality solar panels on the market, the only downside seems to be frequent equipment delays, which could be due to shortages due to high demand or maybe some installers are just having a hard time getting organized.

[KRenn]

Any chance you have links to the same document for other rate plans?

6.590 is the standard payout if you have credits left over.

Essentially when you get solar you have a choice of 2 rate plans, one is an EPR-6 and the other is an EPR-2(12-7 TOU) the EPR-6 is a true net metering plan with true-up at the end of the year, the EPR-2 is basically an average-rate compensation plan that pays the same rate for on and off peak production.