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Thread: So let me get this straight... (lease vs purchase)

  1. #11
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    ealefeld:

    I'm very intrigued by your statement that the prepaid and purchase quotes I have are overpriced. This is because I Googled your phone number and found that it's the number for OnForce Solar. Kind of surprising, since it was an OnForce Solar representative that gave me these SunRun lease and purchase quotes.

    An explanation for why your company's agents are providing overpriced quotes would be most welcome.

  2. #12
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    Quote Originally Posted by snic View Post
    ealefeld:

    I'm very intrigued by your statement that the prepaid and purchase quotes I have are overpriced. This is because I Googled your phone number and found that it's the number for OnForce Solar. Kind of surprising, since it was an OnForce Solar representative that gave me these SunRun lease and purchase quotes.

    An explanation for why your company's agents are providing overpriced quotes would be most welcome.


    [Mod note - repeating, animated images deleted. ]
    Last edited by Mike90250; 04-03-2012 at 09:16 PM.

  3. #13
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    Snic-

    I found your proposal and spoke with the rep who was helping you. The prepaid amount is accurate and is NOT overpriced. The purchase price you are referring to is NOT our purchase price. It is SunRun's estimated value of the equipment and it is inaccurate to our current pricing model for the new york city area. I apologize about this confusion and would be happy to discuss your purchase options. I encourage you to reach out with your rep or myself to help you continue your process.

  4. #14

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    Quote Originally Posted by snic View Post
    SunRun Solar is trying to sell me a lease for a 4.3 kW solar system. The lease costs $8,240 prepaid for 20 years of power (nearly 5,000 kWh produced per year, "guaranteed"). Or, I could pay $64 monthly with a 2.9% annual escalator. At the end of the term, I could buy the system at its "market value" (whatever that means); if I decide not to buy it, SunRun will remove it for free.

    Here's what SunRun says the exact same system would cost to buy:
    Gross cost: $27,000
    NYSERDA incentives: -$6,480 (I live in New York; NYSERDA is the state agency that collects a few bucks in monthly fees from each electric utility customer and uses the money for these incentives)
    Federal tax credit: -$4,956
    State tax credit: -$5,000

    Net cost: $10,564

    So, let's say I didn't have $10,564 lying around. I could borrow it (as a home equity line or loan) at 5 to 6% for 20 years, and my monthly payment would be a few bucks more than the $64 monthly that SunRun wants for the lease - and unlike SunRun's lease payments, the loan payments wouldn't go up. And unlike SunRun's lease, I'd own the system free and clear in 20 years.

    So what, exactly, would be the benefit of a lease? The only thing I can think of is that they will maintain the system, but how much maintenance, really, is the system going to need over 20 years?

    (One other lease "advantage" is that they "guarantee" the system will produce as much electricity as they state, and if it doesn't they will pay me $0.13 per kWh that it didn't produce. Not terribly generous, given that the going rate is $0.18 and expected to increase.)
    Hi SNIC,

    I loved your post. I think you've seen the light on leasing. It isn

  5. #15
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    Quote Originally Posted by SolarFan2008 View Post
    utility prices in many utilities throughout the Northeast are leveling off.
    That seems to be correct. I happen to have saved every single power bill for the last 5 years. My packrat habits drive my wife crazy, but for once they proved useful. It turns out that we are paying exactly as much per kWh this year as we were paying 5 years ago. There has been some fluctuation, of course, but the average price each year has been 15 to 17 cents/kWh.

    Of course that's no guarantee that rates won't start going up tomorrow, but it does put Sunrun's assumption of a 5% annual increase in perspective.

    So, for me, leasing is out. Although I like the idea of purchasing a solar system because I like the idea of increasing the amount of green power being produced, it would mean that, by essentially paying for 10 years or so worth of power upfront, I'm taking the risk that the system will reliably produce as much as predicted without unexpected additional costs. For instance, I have a number of trees that are still growing, which could start to shade the system. Or, as you mention, the roof could start leaking, and fixing it with solar panels on top will be more expensive than fixing it without.

    One alternative would be to simply start buying power from a green power supplier. I've hesitated with this as well, because I'm not convinced that my purchase of 1 kWh from these companies would necessarily translate into 1 additional kWh of green power being produced. There seems to be a lot of opacity in how utilities are regulated in New York.

  6. #16
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    Quote Originally Posted by snic View Post
    That seems to be correct. I happen to have saved every single power bill for the last 5 years. My packrat habits drive my wife crazy, but for once they proved useful. It turns out that we are paying exactly as much per kWh this year as we were paying 5 years ago. There has been some fluctuation, of course, but the average price each year has been 15 to 17 cents/kWh.

    Of course that's no guarantee that rates won't start going up tomorrow, but it does put Sunrun's assumption of a 5% annual increase in perspective.

    So, for me, leasing is out. Although I like the idea of purchasing a solar system because I like the idea of increasing the amount of green power being produced, it would mean that, by essentially paying for 10 years or so worth of power upfront, I'm taking the risk that the system will reliably produce as much as predicted without unexpected additional costs. For instance, I have a number of trees that are still growing, which could start to shade the system. Or, as you mention, the roof could start leaking, and fixing it with solar panels on top will be more expensive than fixing it without.

    One alternative would be to simply start buying power from a green power supplier. I've hesitated with this as well, because I'm not convinced that my purchase of 1 kWh from these companies would necessarily translate into 1 additional kWh of green power being produced. There seems to be a lot of opacity in how utilities are regulated in New York.


    My advice would be to locate some SunPower dealers in your area and get a few quotes. Based on pricing, SunRun usually winds up as one of the most expensive leasing options, their numbers seem unusually expensive, even for NY.


    Go here, type in your zipcode and get some updated quotes from a couple dealers and see what the numbers come out to be.

    http://us.sunpowercorp.com/homes/how...ar-installers/

  7. #17
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    Quote Originally Posted by SolarFan2008 View Post
    Hi SNIC,

    I loved your post. I think you've seen the light on leasing. It isn’t an attractive model when you break the numbers down.

    The lease pitch gives people the impression that savings are significant when year 20 finally comes around. When you look at the fine print of your contract the savings are not guaranteed nor are they even close ownership savings. It is all potentials and maybes.

    Actually most contracts do guarantee a certain amount of production, albeit conservative, but its a guarantee that you won't get with a purchased system.


    The lease/PPA solar model survives on utility escalators.
    Most leases no longer have escalators, SunRun is just behind the times.

    However, utility prices in many utilities throughout the Northeast are leveling off. In some cases they’ve even decreased by nearly 2 cents (my own utility). If these utility trends continue (or the leasing escalators were too aggressive) there will be tens of thousands of lease customers saving a fraction of what they were told they MIGHT save. Just last week a story broke on a Federal government installation in Nevada that had signed a solar PPA in 2009. This government site is now paying more for their solar PPA electricity then they would have buying it from their utility. Scary.
    Which is why escalators make no sense and it would be foolish to sign on to a lease with any sort of escalator.

    What if you have to or want to sell your home in a few years?
    Be prepared for an early termination fee that can be thousands of dollars before year 5. It’s in most of their contracts.System owners wont have this problem.
    This is incorrect. This was the rule of thumb a few years ago but the vast majority of leases have an out for anytime you sell your home now, period.



    The 20-year warranty from leasing companies is not all encompassing. Here is an example:
    In year 11 your roof has a leak under the solar array long after the 5-year workmanship warranty expired. What happens?
    This goes for any solar installation, purchase OR lease. Most companies give you a 5 year roofing warranty within 3-6 inches of of all contact points, a leak 10+ years down the road generally won't be related to the solar install, if the installer does shoddy work, you'll know within 5 years.

    If it wasn’t a warranted material failure you will potentially foot the bill to remove and install all/part of the system and you don't even own it. Those marginal annual lease savings forecasted to you at the kitchen table 11 years ago vaporize in one repair. At lease ownership savings will buffer these types of things because they are so much greater.
    The "marginal savings" you are talking about can vary greatly. There are monthly leases which can result in annual savings of over $800 a year or better. It all depends on the area and the type of lease that is being utilized.

    In conclusion, I think leasing benefits are being overhyped. The savings are mediocre or non-existent compared to ownership. The contract risks are just not worth it. New York State has such an exciting solar program and solar system ownership will full leverage all those perks.
    By buying, you also take all the risks. You're presenting the rosy upside of buying and all the downsides of leasing, so let me throw in a few for you here.


    By buying you get

    -No power production guarantee

    -No system insurance

    -Once 10 years is up and that inverter starts tweaking out on you, that entire replacement cost is coming 100% out of your pocket. If its micro-inverters, removing the micro-inverter and replacing it is on you and the cost is coming out of your pocket.

    -If your local installer goes out of business, you're screwed. Typically a solar leasing company is much more well capitalized than a small-time local installer. Take SunCap, which was basically just absorbed by its big brother, NRG Energy, a Fortune 500 company. I'd rather count on their warranty, even for just the first 10 years than a local installer that probably hasn't been in business for 10 years.



    There's pro's and con's to buying and leasing, it makes sense to get several quotes and see which fits your lifestyle and financial situation the best.

  8. #18
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    [QUOTE=SolarFan2008;43836]Hi SNIC,

    I loved your post. I think you've seen the light on leasing. It isn

  9. #19
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    Quote Originally Posted by Ian S View Post
    There's so much misinformation in this, it's hard to know where to start. KRenn hits most of the issues. You completely ignore the prepaid lease which can be a great bargain. My prepaid lease is under a buck a watt completely installed. No more payments no escalators. Plus I have a one time buyout opportunity after year 7 which will cost me another $0.12 per watt if I want to exercise that option.

    BTW, my Sunpower panels are finally in and the installation should be completed over the next couple of weeks. The delays I've encountered have been frustrating but I'll be a very happy camper assuming the install goes well. I'm coordinating flat roof recoat with the panel installation - the standoffs will be installed then the roof will be recoated then the panels will be installed last. I will have more to say in a future post.
    How big is your system? A 5 kW system for around $1/watt sounds attractive, especially with no escalator. Is the buy-out really $0.12/watt? As in, $600 for a 5 kW system? Seems too good to be true.

    Does the leasing company guarantee power output? What happens if the system does not produce as expected?

  10. #20
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    Quote Originally Posted by snic View Post
    How big is your system? A 5 kW system for around $1/watt sounds attractive, especially with no escalator. Is the buy-out really $0.12/watt? As in, $600 for a 5 kW system? Seems too good to be true.

    Does the leasing company guarantee power output? What happens if the system does not produce as expected?
    This is for a 6.9 kW system (30 Sunpower 230's; Sunpower 7000M inverter). Because you prepay the lease, there is only the single upfront payment after the system is installed so an escalator is meaningless. That upfront payment in my case is $6728.89. The early buyout option is available on 4/7/2018 and the price to exercise is $843.73. Production guarantee is pretty conservative: starting with a range of 11,768-13,006 kWh in year one and declining slightly each year until the range is 10,698-11,825 in year 20. A range is used so that if your production is more than the maximum, that excess is used to reduce any under performance. Realistically, I think there'd have to be massive climate change - a distinct future possibility - or extended downtime for me to get a payout ($0.03/ kWh) under this plan.

    Caveats: I am in Phoenix, AZ. The utility rebate that the lessor had me sign over to them is $6,900. That was last year's rate. This year it's been cut in half with further drops anticipated. I have no idea what the current leases are looking like. I did all my background work last summer before opting for the Sunpower lease last fall. I really think that here in Arizona, PV solar is a no-brainer. I expect to save $1400-1500 a year in my electric bills based on a calculation I did using a local friend's similar Sunpower installation and the optimum utility rate plan for my situation. While some areas of the country are seeing stable electric rates, that doesn't appear to be the outlook for Arizona. Already SRP is eyeing a rate hike for the fall and APS has agreed to a complicated deal that will likely see increases next year.

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