Solar quote for Pre-paid lease/purchase in SoCal

[GoGreen2013]

Hi all,
I just received quote for 20yr pre-paid lease from Sungevity.

4 kW system
16 panels (Chinese manufacturer ET)
Full prepay lease option $9550 (Sungevity receives the rebate)
Purchase option $17430 (rebate $5229)
1st yr production 6230 kWh

Current monthly electric consumption avg ~530 kWh (Mostly in Tier2, occasionally in Tier3 for SDG&E)

I am in the process of getting quotes from others. Wondering if this quote is in line with what others are receiving? Any gotchas I need to watch out for? Also how is quality of solar panels from Chinese manufacturers?

Thanks for your time.

[Naptown]

I have used many ET panels and no problems yet.
I will let others closer to the market chime in on price

[J.P.M.]

Hi all,
I just received quote for 20yr pre-paid lease from Sungevity.

4 kW system
16 panels (Chinese manufacturer ET)
Full prepay lease option $9550 (Sungevity receives the rebate)
Purchase option $17430 (rebate $5229)
1st yr production 6230 kWh

Current monthly electric consumption avg ~530 kWh (Mostly in Tier2, occasionally in Tier3 for SDG&E)

I am in the process of getting quotes from others. Wondering if this quote is in line with what others are receiving? Any gotchas I need to watch out for? Also how is quality of solar panels from Chinese manufacturers?

Thanks for your time.

1.) Price seems a bit high to me. Going rate ~ $3.40-3.60/nameplate Watt for non Sunpower. You can buy Sunpower for $4.50/Watt if cramped for space.

2.) Your bill at 6,360 kWhrs./yr., depending on location w/in SDG & E service area likely to be ~ $1050-$1,200/yr. after 09/01/13 rate increase. I'd respectfully suggest that replacing your entire load may not be cost effective at this time. Even at $3.40/Watt, moron payback = ($3.40)/((1.5kWhr./Watt)*($.17/kWhr.)) = ~ 13 yr. payback.

3.) AB 327 will impact you. I'd also suggest reading the bill before you commit.

J.P.M.

[silversaver]

1.) Price seems a bit high to me. Going rate ~ $3.40-3.60/nameplate Watt for non Sunpower. You can buy Sunpower for $4.50/Watt if cramped for space.

2.) Your bill at 6,360 kWhrs./yr., depending on location w/in SDG & E service area likely to be ~ $1050-$1,200/yr. after 09/01/13 rate increase. I'd respectfully suggest that replacing your entire load may not be cost effective at this time. Even at $3.40/Watt, moron payback = ($3.40)/((1.5kWhr./Watt)*($.17/kWhr.)) = ~ 13 yr. payback.

3.) AB 327 will impact you. I'd also suggest reading the bill before you commit.

J.P.M.

care to share the AB327? I haven't yet see the clear path

[J.P.M.]

care to share the AB327? I haven't yet see the clear path

Text of bill is all over the net. plug in AB 327 to a search engine and hit enter.

J.P.M.

[SunEagle]

4000 watt system costing $17430. Rebate of $5229. Prepaid Lease = $9550

Initial cost: $17430 / 4000 watt = $4.36/watt

Cost of purchase after rebate: $17430 - $5229 = $12201 / 4000 watt = $3.05 / watt

Prepaid lease: $9550 / 4000 watt = $2.39 / watt

If the prepaid lease price includes all maintenance and replacement of hardware during the lease term, the $2.39 / watt seems pretty good to me. And the ET panels which according to Naptown are no issue.

Lets also say conservatively the system will save you about 6000 kWh/year. At say $0.17/kWh that comes to about $1020/year. With the prepaid cost of $9550 that is less than a 10 year payback.

[J.P.M.]

4000 watt system costing $17430. Rebate of $5229. Prepaid Lease = $9550

Initial cost: $17430 / 4000 watt = $4.36/watt

Cost of purchase after rebate: $17430 - $5229 = $12201 / 4000 watt = $3.05 / watt

Prepaid lease: $9550 / 4000 watt = $2.39 / watt

If the prepaid lease price includes all maintenance and replacement of hardware during the lease term, the $2.39 / watt seems pretty good to me. And the ET panels which according to Naptown are no issue.

Lets also say conservatively the system will save you about 6000 kWh/year. At say $0.17/kWh that comes to about $1020/year. With the prepaid cost of $9550 that is less than a 10 year payback.

I stand corrected. I left out the tax credit. However, I'm quite certain good systems can be had for purchase of $3.40/Watt less 30% = $2.38/Watt net. I saw one last nite. Also, w/ AB 327 adding uncertainty, I'm not sure a lease, prepaid or not for virtually the same price is a good way to go. Finally, that "payback" is only a rough guess, depending on one's circumstances and preferences.

J.P.M.

[SunEagle]

I stand corrected. I left out the tax credit. However, I'm quite certain good systems can be had for purchase of $3.40/Watt less 30% = $2.38/Watt net. I saw one last nite. Also, w/ AB 327 adding uncertainty, I'm not sure a lease, prepaid or not for virtually the same price is a good way to go. Finally, that "payback" is only a rough guess, depending on one's circumstances and preferences.

J.P.M.

I agree with your $3.40/watt estimate on purchased systems. There is a lot of cost differences depending on the panel make and inverter type. I just ran the numbers on his quote to put it in $/kWh for comparison.

As for the payback. Again I agree with you that it all depends on the circumstances. I tried to be conservative by only using the 6000 kWh per year savings since the first year was advertised as 6230 kWh. Also the cost of $0.17 / kWh may be low if the Utilities in CA get their rate increases.

If the OP has the money to purchase it out right and then wait on the Tax rebate the $3.05/watt still isn't bad but any repairs and maintenance would have to be added to the purchase price.

I might be wrong but the lease price still looks better to me.

[Ian S]

I might be wrong but the lease price still looks better to me.

I agree. Purchase is about 28% higher out of pocket. That's a lot. IMHO, with the uncertainty over net metering, the less you have invested, the faster the payback and less chance for getting screwed by the utilities.

[GoGreen2013]

I agree. Purchase is about 28% higher out of pocket. That's a lot. IMHO, with the uncertainty over net metering, the less you have invested, the faster the payback and less chance for getting screwed by the utilities.

I am leaning towards pre-paid lease option as well. It includes all maintenance (including cleaning) and replacement of hardware during the lease term. They provide performance guarantee as well. If the system falls short of guaranteed production, Sungevity pays the property owner at pre-determined rate. If there is surplus in any year, its carried over and used to offset any future deficits.
At the end of the lease, the owner has option to either 1. extend the least by another 5 yrs 2. buy the system at fair market value 3. ask Sungevity to remove the system 4. if none of these 3 happen, system will be automatically transfer to owner.

[J.P.M.]

I am leaning towards pre-paid lease option as well. It includes all maintenance (including cleaning) and replacement of hardware during the lease term. They provide performance guarantee as well. If the system falls short of guaranteed production, Sungevity pays the property owner at pre-determined rate. If there is surplus in any year, its carried over and used to offset any future deficits.
At the end of the lease, the owner has option to either 1. extend the least by another 5 yrs 2. buy the system at fair market value 3. ask Sungevity to remove the system 4. if none of these 3 happen, system will be automatically transfer to owner.

I've seen a lot of "production guarantees" in solar contracts and leases, including those from the named company. The threshold to be met by the panels for most or all of them is so low you will probably trip over it. That also means an unrealistic, high surplus in most years that will accumulate year/year, further decreasing the slim chance of any payoff. Production guarantees are mostly a sales tool, not an assurance of performance. Most homeowners have no clue what a reasonable performance expectation might be or how such a thing is determined. I'd also wager the "predetermined rate" is QUITE low as well. Read the fine print. If it sounds or reads too good to be true it probably is too good to be true.

J.P.M.

[J.P.M.]

I agree. Purchase is about 28% higher out of pocket. That's a lot. IMHO, with the uncertainty over net metering, the less you have invested, the faster the payback and less chance for getting screwed by the utilities.

I'd agree with you that the purchase price is 28% higher if you pay $4.39/Watt to purchase. My contention is that $4.39/Watt is much too high and can easily be beaten ($3.40/Watt), thus making the prepaid lease and a realistic purchase price virtually the same. No maint. w/ the lease I'll admit, but the future maint. requirements are unknown, short of hitting the panels with a hose once in a while in the early A.M. With a purchase, you don't drag the lease anchor behind you into the future. It's a free country, I'd only suggest raising all the points, and decide based on all the information.
Also, I'm no fan of utilities, and I don't think I fell off a turnip truck last week, but the statement about fast payback improving the odds of not getting screwed by utilities implies that rates will always increase. This is not a foregone conclusion. Depending on circumstances, many ratepayers in SDG & E's service area have seen their rates decrease over the last few years. Honest. Depending on usage, some years, bills for some users have decreased based on the same usage year over year. Finally, depending on how the CPUC interprets AB 327, large residential users may also see some rate relief. No one knows at this time. I'm only suggesting here that rate increases, while very likely, are not cast in stone. For example, If the CPUC does smooth out the rate structures and increases lower tier rates some while decreasing higher tiers a fair amount (as some, although certainly not all would interpret one intent of AB 327), large users could see a decrease in their bills, thus INCREASING payback times. No one knows, and I'm a cynic by nature, but sometimes it's best to think outside the box. You can always get back in it after the thought experiment.

J.P.M.

[GoGreen2013]

I've seen a lot of "production guarantees" in solar contracts and leases, including those from the named company. The threshold to be met by the panels for most or all of them is so low you will probably trip over it. That also means an unrealistic, high surplus in most years that will accumulate year/year, further decreasing the slim chance of any payoff. Production guarantees are mostly a sales tool, not an assurance of performance. Most homeowners have no clue what a reasonable performance expectation might be or how such a thing is determined. I'd also wager the "predetermined rate" is QUITE low as well. Read the fine print. If it sounds or reads too good to be true it probably is too good to be true.

J.P.M.

Their Guaranteed energy cost per kWh is $0.1627 and it goes up 3% every year. Performance Guarantee kWh is 95% of Estimated Annual kWh. So for 1st year, estimated annual output is 6230 kWh, their system is guaranteed to provide 5919 kWh o/p. JPM, which Solar provider do you recommend? Do you recommend purchase or pre-paid lease option?

[Ian S]

See comments in bold.

I'd agree with you that the purchase price is 28% higher if you pay $4.39/Watt to purchase. My contention is that $4.39/Watt is much too high and can easily be beaten ($3.40/Watt), thus making the prepaid lease and a realistic purchase price virtually the same. The system being quoted is a rather small 4 kW. Can you guarantee that a small system like that can be purchased for $3.40/watt? No maint. w/ the lease I'll admit, but the future maint. requirements are unknown, short of hitting the panels with a hose once in a while in the early A.M. Actually, if they are quoting a string inverter, then he will have to replace that within the 20 year timeframe With a purchase, you don't drag the lease anchor behind you into the future. What exactly is the "lease anchor" you're talking about? It's a prepaid lease. In fact, if he goes to sell the house in 10 years, the maintenance on the prepaid lease system will be transferable and I would suggest a reassuring selling advantage. It's a free country, I'd only suggest raising all the points, and decide based on all the information.
Also, I'm no fan of utilities, and I don't think I fell off a turnip truck last week, but the statement about fast payback improving the odds of not getting screwed by utilities implies that rates will always increase. There is more than rate increase risk as we've seen from the efforts to eliminate net metering. The fact remains: longer payback time for any investment means more risk.

[J.P.M.]

See comments in bold.

1.) Since I don't sell anything, I can't guarantee any price. I can state I've seen a contract for a 4,680 watt system for $3.40/Watt w/ a 5 kW SMA sting inv. for $3.40/Watt on a concrete tile roof as of last Tues. evening, and other systems larger for $3.50/$3.60 or so recently. There's no guarantees in life. I'm merely suggesting that shopping around may get something less than $4.30-$4.50 by a fair amount.

2.) Lease anchor. Everyone assumes that solar electric systems will be a selling point in the future. I'm not convinced that a today's modern solar system will have as much value in 10 years as it does today. Technology changes/improves. A prospective buyer may want newer/better/cheaper 10 years from now, or may not want solar at all, in spite of what we all here may think is desirable. They may even want old systems removed. Not a good selling point. They may not want the old system at all, in which case the anchor turns into an albatross around the seller's neck as far as selling price is concerned. Solar panels are becoming a commodity, like big screen TV's and cell phones. A lease may be transferable (provided the buyer wants it and has good credit, neither one of which is a lock) but the buyer very likely may not want it - and may ask for price relief from the seller, hence the anchor holding progress into the future and limiting options. IMHO, leases limit future options. But, like I said opinions vary.

3.) Granted, current inverters will likely need replacement probably after something like 10-12 yrs. However, I can't predict the future and many posters here seem to treat the future as a forgone conclusion as to which mfgrs. will be around to cover warranties and how soon panels/inverters will fail. My point is that the future is not certain. Assume the worst, hope for the best and ALWAYS keep your options as open as possible. IMHO only, for me only, no one else, leases seem to offer fewer options for future adjustments. For the same/similar price, I'll take more options and gamble on the inverter prices dropping. But, opinions vary and I respect those other opinions.

4.) Longer paybacks and time frames do indeed involve more risk. I'd suggest considering that a 20 yr. lease may involve more risk than a 10-13 yr. payback on a purchase.

Respectfully,

J.P.M.