residential leasing

[lesyl]

Greetings,

I'm afraid maybe posting a question that's been addressed ad nausea. I did a search and found some, but not a lot of information of this subject. Please feel free to let me know if I missed something...or to move this to a different thread...

We've got two companies, Sungevity and SolarCity coming to our city. We've gotten quotes from each for a 20 year lease. We're looking at prepay plans so we would pay one price up front and then we're done. The costs would basically be in the $4K to $6K range. One system would meet about 75% of our usage. Another would meet nearly 100%. Maintenance, repairs and insurance are included in both plans.

I've always avoid leases like the plague, but in this case I honestly don't see the downside. But maybe I'm missing something. At this point, the cost of purchasing a similar system makes it a no-go. And frankly with these plans, purchasing doesn't make financial sense for looooong time anyway.

So, thoughts?
And does anyone have any experience with either company?

Thanks.

[BB.]

Here is a thread discussing SunRun's solar leasing program and a few of us read the contract that was posted last year.

SunRun had the customer paying, roughly, for the system output at a few cents discount wrt to utility power whether or not they used the power...

It appeared, for example, if you kids moved out of the house in year 10--you would still be responsible to pay for 100% of the power generated (there is actually a range of power estimated/generated) through the end of the contract on year 18.

The other thing I have seen is that there is an inflation adder to the kWH pricing in some contracts. The SunRun was 2.9% (we think)--But interestingly, the last 14 years for my utility in Northern California was around 2.4% increase in average rates for all customers--and my actual power costs went down in that time frame instead of up (California, historically, has kept prices down for small users of power (<300 kWH per month)--the poor?--and increases were jammed on the larger users (>1,000 kWH per month)...

That is now changing because business and others are leaving the state because of the extremely high power costs for those that use a lot of power... And they are raising the lower tier rates at a higher rate...

Anyway, you are betting on your 20 year energy usage (and if you sell the house--are the new people going to want to take that bet?) and what happens with rates.

And, if you pay to your leasing company for your power--your local government may be able to add utility taxes and fees to your bill (possibly even proper taxes--varies greatly by state/locality)--which you will be responsible for.

The SunRun contract looked pretty fair and reasonable (to non-lawyers and even to the poster's lawyer). You just need to see if the terms and conditions are ones that you will want to sign up for or not. The leasing companies appear to be getting their monies from tax credits, rebates, and probably green tag--as well--I am sure--from investment and depreciation credits which are not typically available to a home owner. And the SunRun company was responsible for system maintenance, repairs, and parts.

However, the customer was responsible for shading on property (trees, additions, etc.). And if, for example, you took a 3 month period to rebuild/remodel your home, with SunRun the customer would still have to pay for the "lost power" that would have been generated (as well as still buying power from the utility).

One thing I will caution you about adding solar PV system to your home... I would not count on it adding any value to your home... Perhaps you might be able to justify $0.30 on the dollar in the sales price to a potential buyer--but many folks are afraid of solar PV and it may actually decrease the value of your home (unless you remove it).

If the affect on your home's price is important--check with a local real-estate agent to get better guidance.

-Bill

[lesyl]

Thanks Bill for the long and thoughtful response. I had already read through the thread you provided. If I understand SunRun program correctly, there are some differences between them and Sungevity and SolarCity.

For example, we'll still be paying our local utility for any electricity when the system can't keep up with our demand.

Under the plans we're considering, we make one payment upfront and then we never have to pay either company again. The estimates show we would save approximately $15K over the 20 years.

If we were to sell, the lease (since it's already been paid for) would be transferred over to the new owners, if they want it or removed if they don't. Things change, of course, but we have no plans of moving, possibly ever, so what happens if we sell the house isn't too much of a worry.

At the end of the lease, we have the option of either renewing the lease, purchasing it at fair market value, starting all over with a new lease or either company will take off the system for free and we're done.

We live in Tucson in a house with a new roof and a 20 degree pitch facing south. And except for one youngish tree, shade shouldn't be an issue....

Obviously, we would save more buy purchasing a system, but there's no way we could do for several years. We can do this now albeit a bit painfully. So far anyway, we're still not seeing much of a downside.

[nvyseal]

Hi lesyl,

Are you absolutely sure you do not have to pay anything for the power you use? Normally on these leases, you pay a lower kWh amount than what the electric company would charge for the first year, then it gradually increases over the term of the lease. If you use more than it generates then you pay the utility charge.

There is some missing ingredient here we dont know about. got a link to an online contract we can look at?

[lesyl]

Thanks nvyseal for the response.

I don't have the contact yet. At this point, the best I can do is point you to sungevity.com or solarcity.com.

But...I'll see if I can answer your question...

These companies each offer a $0 down lease. On those, you pay a fixed amount each month for the lease. That amount increases by 2.5% each year. And then you pay the utility for any usage above what the system produces. With these plans, you don't really save much over the life of the lease.

So under one company's $0 lease plan we would pay $51 a month for the lease + any usage above what the system produces. That comes to $12,700 for just the lease itself at end of 20 years.

However, they both offer "prepaid leases," which is what we would do. Under these you pay one price up front and that's it for the 20 year lease. Again, you pay the utility for any usage above what the system produces. For us, one quote is $4,000 and the other is $5,900.

Does that answer your question or am I way off base?

[FreeWatts]

that sounds pretty good

[nvyseal]

things that bug me:

What are the estimated savings by going with a Sungevity Solar Lease?

Savings will vary depending on how much energy you use, where you live and who your utility company is. A typical customer will save about 15% on electricity in their first year, and the savings will increase every year as grid electricity rates rise. Your iQuote will tell you what savings you can expect based on your historic energy usage and custom-designed home solar system.

I think your going to be paying a lower price per kWh than what your power company would charge

Will solar help lower electricity bills?

Yes! Becoming your own power source by installing solar panels is a giant step towards gaining energy independence and freedom from rising electricity rates. You can lower energy costs and reduce your bills immediately when you install solar. When electricity rates in your state climb, you’ll be largely protected because you will only be buying a small amount of electricity from the utility.

They dont say anything about the amount of electricity you'll be buying from them.

From Huffington post http://www.huffingtonpost.com/david-..._b_108956.html

Sungevity's 1.5kW starter system is around $8,000 installed.

That seems like a lot, and its not going to give you much! What is the size of your system, and just how much are your power bills a month, Average for a year?

I'm sorry if i ask way too many questions, but i really want you to be happy with your decision. I have solar, and im truly happy with my decision and i am generating just about what i use over a year.

[lesyl]

I really appreciate the questions, nvyseal. I want to make sure we're doing the right thing. I'll take a crack at responding to your questions.

To be clear, unless there's something fundamental I don't understand, we won't be paying either Sungevity or SolarCity (haven't decided which company yet) for electricity. Anytime we need to pull power off the grid, we'll pay the power company at regular rates for it -- minus any built up credits we may have from net metering. Does that answer that question?

Both quotes we have are for 4.2kWh systems. The Sungevity system would produce approximately 6,300 kWh/year. The SolarCity system would produce 7,000kWh/year (apparently they use higher quality panels). We use about 6,700 kWh/year.

If we were to purchase the Sungevity system is would cost $15,024 after all the various rebates and incentives.

I don't have the purchase price for the SolarCity system, but my guess is that would probably approach $17K or so.

That's why a 20-year lease with Sungevity for $4K or $5,900 from SolarCity seems like such a good deal.

Unless, I'm missing something...Which is why I appreciate the questions...

[nvyseal]

Well, if there is nothing lurking that you haven't been told about, I'd say thats a great bargain even if you bought it outright

[lesyl]

I appreciate the input.