Solar Contract Signed with Sunpower

[Mr. Vegas]

It sounds like you should lease if your lessor covers any kind of catastrophe and you can't get your homeowner insurance to cover your solar system for hurricane.

Oh I definitely plan to lease, I was more interested as to how other members that have purchased large systems 10kw+ have insured the systems.

[Volusiano]

It sounds like you should lease if your lessor covers any kind of catastrophe and you can't get your homeowner insurance to cover your solar system for hurricane.

[Mr. Vegas]

1.) It's still a free country, thank goodness and most people will support your right to do what you want, including me. But - opinions do vary.
2.) If a piece of equipment fails, it may likely at least be partially covered by a manufacturer's or installer's warranty. My opinion, FWIW, is that events such as that have a small, but admittedly non-zero probability. If they were high, we'd probably find out about it here. My experience is that big problems often, but not always surface at, or relatively quickly after startup. As I wrote before, I believe your fears of equipment failure(s) may be a bit larger than warranted. But, again, - opinions do vary, and there are no guarantees in life.
3.) As for instability in the job market - I cannot remember a time before, during or after my working life when a common and universal mantra didn't go something like: "Well, you know how hard jobs are to find these days...." Anyone else hear that ? The job market and our security in it will always be a consideration for most of us. I'm not sure it's a reason to lease or not lease. Seems a bit of a red herring to me.
4.) If you do find yourself out of a job, you will still have the lease payment. I believe that monthly outflow of cash to the outfit that owns the lease (probably not who sold the system BTW) has some bearing on cash flow and just how free it is.
5.) Some folks consider a lease as limiting their options - kind of like dragging a financial anchor into the future. Some don't.
6.) You can always conserve and save more $$'s. You'll always have the lease payment that you can't control and can't lower.

JPM:

If I buy a system, what type of insurance is out there to cover damage to the panels/system from hurricanes? From what I understand, some homeowner policies cover it and others don't. After we suffered through hurricane Sandy, a lot of homeowner policies were denying certain types of claims. I would hate to own a system to only fight with an insurance company for coverage. That is also one of my considerations for leasing because they cover damage to the system even from inclement weather events. With something on my roof for the next 20 years, there is a very high likelihood that we are going to see another impactful weather event on LI, especially with the varying weather systems we've been experiencing.

[silversaver]

not really russ, lets look at it dollar for dollar.
$130 a month x 12 months = $1560 , $1560 x 20 years for lease is $31,200 total. After 20 years i say either take it off my roof, and hopefully something better out at that time. or continue my lease for an additional 5 years. IF u purchase the system u may have an outdated system that u just sank in approx $35,000 and its gone . Now u need another system for who knows how much..
Purchase system for say around $32-35k , after waiting for rebates to come thru so initial layout is $58k out of pocket. Plus another $4k two times for new inverters so u maybe investing $40k-45k after 20 years vs my non escaltor lease payment of $31,200. So can u still say buying it is the better option ?

Hmmm, I don't want to say that but you just sounds like solar lease sales rep...

On the purchase, there is no sunch thing as 32k to 35k. When you buy something, you get a fix price. When you mention 32k to 35k, I think you really don't know what is your purchase price or you just have no idea at all.

Your calculation is very simple for $130 per months X 12 months = $1560 then X 20 years = $31,200. That is for $0 down and $130 per month right?

Ok, great deal. So you are tell us that your solar company will let you lease the solar system that will cost you net of $32k but let you pay them for the next 20 years for less?

Here is a link for someone been quoted at NY:

http://www.solarpaneltalk.com/showthread.php?12908-Quoting-our-first-system-NYS&highlight=york

This is what he wrote:

22 SunPower SPR-240ACPV modules split over two roofs
Unirac mounts
5.28KW nominal
5.4kW actual annual usage
About 80% solar access before I get off my arse and have some trees trimmed

Installed cost: 24,2k
NYSERDA rebate to installer $6.864k (@$1.3 per Watt)
Total after rebate: $17.336k
NY Tax credit 25% $4.334k
Fed Tax credit (30%) off gross $7260
or
Fed Tax credit (30%) off net $5200.8

[Volusiano]

Actually, I think most leases offer the opportunity to purchase the system at lease end. Usually, the price is "Fair Market Value." That's almost certainly not going to be a lot of money because it requires a de-installation of some kind. See this discussion of what FMV might be.

Yes, it's probably not going to be a lot of money, and there's been speculation that the lessor may even opt to "give it away". But it's uncertain what it's going to be, and after all that's said and done, if you add the cost of buying it at the end (albeit a smaller cost) plus the cost of a prepaid lease or monthly lease, you may or may not come out ahead vs an upfront purchase.

Let's say you come out about even between a purchase up front, vs a monthly lease plus a purchase price at the end. You may argue that it's better to do monthly lease because you don't have to front the purchase cost up front. True, but you're forgetting that if you need to sell the house, you'll need to find a buyer who's willing to assume the solar lease. A purchaser doesn't have this problem. After the payback period, the purchaser doesn't have to add the solar cost to the cost of the house if he needs to sell because he already recovers the cost. So there are pros and cons either way.

Let's say it's a prepaid lease and you opt to purchase at the end, and it costs the same as an up front purchase. Then yes, a prepaid lease is a better deal because you pay less up front. But you have to live with the unknown factor of what the end purchase cost is going to be, while you would know the total/final price of an up-front purchase without having to guess. So now it depends on how good of a prepaid lease deal you'll be able to strike with the lessor. If you can get a good deal, then you'll be more likely to come out ahead. If you can't get a good deal, then it's less certain. In this case, the purchaser kinda pays a premium to "lock in" a fixed price up front. The prepaid lease owner takes a risk assuming that the final purchase price will be very low or next to nothing, gambling on what they think the lessor will demand. If not gambling, then we can also call it an educated guess. But you live with the uncertainty of what the fair market value will be until the end of the lease.

So there are trade-offs to everything. The whole point I want to make is there's no clear cut answer to conclude that leasing is a no-brainer so why would anybody want to buy?

At the AZ APS hearing last Fall on imposing a service fee to be fair to non-solar customers, local solar lessors were telling the AZ Corporate Commission how tight the margin is on the saving between a solar monthly lease payment and the electricity cost/bill. They were saying that the average saving is only about $7-$10 a month (if I remember correctly, correct me if I'm wrong). So any increase in service fee in that range for solar customer will probably wipe out the solar lease business in AZ easily because there's no incentive left for customers to lease anymore.

[Ian S]

The flaw of your assumption here is that all systems are worthless after 20 years. Well it is for leases, because your time is up after 20 years.

Actually, I think most leases offer the opportunity to purchase the system at lease end. Usually, the price is "Fair Market Value." That's almost certainly not going to be a lot of money because it requires a de-installation of some kind. See this discussion of what FMV might be.

[Volusiano]

not really russ, lets look at it dollar for dollar.
$130 a month x 12 months = $1560 , $1560 x 20 years for lease is $31,200 total. After 20 years i say either take it off my roof, and hopefully something better out at that time. or continue my lease for an additional 5 years. IF u purchase the system u may have an outdated system that u just sank in approx $35,000 and its gone . Now u need another system for who knows how much..
Purchase system for say around $32-35k , after waiting for rebates to come thru so initial layout is $58k out of pocket. Plus another $4k two times for new inverters so u maybe investing $40k-45k after 20 years vs my non escaltor lease payment of $31,200. So can u still say buying it is the better option ?

The flaw of your assumption here is that all systems are worthless after 20 years. Well it is for leases, because your time is up after 20 years. But for purchases, the system can still keep going for another 10-20 years where the solar owner can reap the reward of more free electricity (albeit at slightly reduced capacity - industry standard is warrantied capacity of 80% after 25 years) while you'll have to shell out more money for a new lease or an extension.

Sure, that's a very long-term outlook, but most owners who purchase don't plan for a 20-year payback period. Usually their payback period happens between 5 - 15 years, depending on how they size their system w.r.t. their usage. So if they recover their investment after 10 years and everything after that is free energy, for up to 30-40 years, their logic isn't so flawed now, either.

I'm not saying leases don't make sense. If it makes sense for you, then great for you. But if you say purchase is a dumb decision for everyone else, that's not necessarily true. Sometimes lease companies artificially inflate the purchase price to make homeowner think that lease prices are more attractive. But if you go shop around for real competitive biddings on purchase prices, you may find that you can purchase for much less than the lease company say you can.

W.r.t. having to replace the inverters every 6-10 years like you said, it's more likely to be around 10-20 years, because most inverters are warrantied for 10-15 years. In the case of SMA inverters (which I have), most installers in my areas offer 15 year warranty because that's the warranty the mfg gives them. In my case, my installer offers 20 year warranty parts & labor for the whole system, inverters included. Maybe they paid a little extra to buy an additional 5 year warranty from SMA? But I've seen SMA warranty to range anywhere from 5 years to 20 years. It's just a matter of paying extra to SMA to extend the warranty.

If inverters truly only last 6-10 years like you said, no inverter company would in their right mind offer a warranty of more than 5 years. Also keep in mind that by the time your inverter fails after the warranty period, new inverters may be less expensive and more reliable than your original inverter. It's not always going to be $4K a pop every time like you said. The new trend already taking place is transformer-less inverters that are much lighter, run cooler and more quiet, and hopefully last longer than transformer-based inverters because there's less heat generation inside the inverter.

[kad153]

Every situation is different. You seem pleased and that's what counts. Questions: Was reducing your electric load and/or conservation measures any part of your decision ? How much are SREC's going for in NJ these days ?

We looked at ways to conserve before deciding to go solar, but the house is fairly new so wasn't too much to do insulation-wise. We have looked at our electric usage (e.g., turning off lights, cable boxes, etc.) however have not had to worry much about timing as electric here in NJ is the same price at all times (no peak versus off-peak, as I know some states deal with).

SRECs in NJ are at $170ish now. We used $100 for our financial calculations and decision, so anything over that is just bonus.

[J.P.M.]

Not to disagree with the experts here, but after spending a lot of time looking at options, I found that financially a pre-paid lease where you get to keep the SRECs is actually the better option than buying in many circumstances, depending on your state's specific rebates. I'd imagine this is because leasing companies can pass along the benefits of accelerated depreciation that only they can take.

In my case specifically, I could have bought my system outright for $45-46kish, or done the prepaid lease with SRECs for $25k. My system is a 14.5k system with 58 250w LG black mono panels and 3 Sunnyboy inverters (a 5000TL, 4000TL, and 3000TL) here in NJ. Advantages of buying would have been the 30% tax rebates, so after my refund it would have been a total cost of $31500-32200, and the fact that I own forever. With the pre-paid 20 year lease, I save 6-7k and don't have to lay out a bunch more and wait for the refund, I have maintenance and monitoring for 20 years (so in years 10-20 if those inverters go I get free replacement), plus I get a guarantee of my production each year. And I also get an option to make them take it off my roof after 20 years in the event new technology makes this obsolete. The downside is potential difficulties in adding to the system, and obviously after 20 years I do not own. However, as long as the FMV of the system is less than 6-7k (probably a lot more if i factor in time value of money for 20 years), a pre-paid lease where you keep the SRECs really seems to be superior in every way I can see. Especially if you are of the school of thought that these companies will not want to come out after 20 years to pull off old equipment, and will likely give you the system for basically free rather than be bothered pulling off old equipment and fixing your roof back up.

Please feel free to add in some other disadvantages I'm not thinking of (after all, maybe I missed something), but as I see it, if you can negotiate keeping SRECs, there isn't too much of a downside to pre-paid leases over outright purchase in these circumstances. I considered difficulties if I wanted to sell my house for some time, but eventually came to the conclusion that, unlike a normal lease where you are locking someone in to payments that may escalate, with a pre-paid lease I can't imagine a potential buyer having an issue. Note that I was helped out by a lot of the mods and users here in making my decision, so I'm posting now to hopefully help in someone else's decision. Best of luck to anyone considering solar.

Every situation is different. You seem pleased and that's what counts. Questions: Was reducing your electric load and/or conservation measures any part of your decision ? How much are SREC's going for in NJ these days ?

[J.P.M.]

not really russ, lets look at it dollar for dollar.
$130 a month x 12 months = $1560 , $1560 x 20 years for lease is $31,200 total. After 20 years i say either take it off my roof, and hopefully something better out at that time. or continue my lease for an additional 5 years. IF u purchase the system u may have an outdated system that u just sank in approx $35,000 and its gone . Now u need another system for who knows how much..
Purchase system for say around $32-35k , after waiting for rebates to come thru so initial layout is $58k out of pocket. Plus another $4k two times for new inverters so u maybe investing $40k-45k after 20 years vs my non escaltor lease payment of $31,200. So can u still say buying it is the better option ?

1.) Given: The future is a big crap shoot.
2.) Simple, back of the envelope analysis analyses such as this can be comforting but I'd suggest perhaps misleading without going further.
3.) If a decision is really looked at "dollar for dollar" lots of other things may need to be considered involving the time value of money, cost of funds, decision making analysis (as in "what else can I do with the $$'s ?"), comparison of alternatives, taxes, salvage values, depreciation, etc., etc. If I'm going to hang a major decision on any type of analysis, I'd try to make the sophistication of my analysis reflect the importance of how that decision might affect my wallet, lifestyle and future commitment(s).
4.) All this is before looking at what you really want to achieve for your particular lifestyle which is the trump card and often has little to do with cost effectiveness (Which, BTW, IMO, is as it should be), but at least you'll walk in with your eyes more open and perhaps make a more informed, if not better decision.
5.) I'm only saying over simplifying what may be a major decision may be ill advised. More information won't hurt.

[kad153]

Guaranteed buying is the better option IF you have the money to do so.

Not to disagree with the experts here, but after spending a lot of time looking at options, I found that financially a pre-paid lease where you get to keep the SRECs is actually the better option than buying in many circumstances, depending on your state's specific rebates. I'd imagine this is because leasing companies can pass along the benefits of accelerated depreciation that only they can take.

In my case specifically, I could have bought my system outright for $45-46kish, or done the prepaid lease with SRECs for $25k. My system is a 14.5k system with 58 250w LG black mono panels and 3 Sunnyboy inverters (a 5000TL, 4000TL, and 3000TL) here in NJ. Advantages of buying would have been the 30% tax rebates, so after my refund it would have been a total cost of $31500-32200, and the fact that I own forever. With the pre-paid 20 year lease, I save 6-7k and don't have to lay out a bunch more and wait for the refund, I have maintenance and monitoring for 20 years (so in years 10-20 if those inverters go I get free replacement), plus I get a guarantee of my production each year. And I also get an option to make them take it off my roof after 20 years in the event new technology makes this obsolete. The downside is potential difficulties in adding to the system, and obviously after 20 years I do not own. However, as long as the FMV of the system is less than 6-7k (probably a lot more if i factor in time value of money for 20 years), a pre-paid lease where you keep the SRECs really seems to be superior in every way I can see. Especially if you are of the school of thought that these companies will not want to come out after 20 years to pull off old equipment, and will likely give you the system for basically free rather than be bothered pulling off old equipment and fixing your roof back up.

Please feel free to add in some other disadvantages I'm not thinking of (after all, maybe I missed something), but as I see it, if you can negotiate keeping SRECs, there isn't too much of a downside to pre-paid leases over outright purchase in these circumstances. I considered difficulties if I wanted to sell my house for some time, but eventually came to the conclusion that, unlike a normal lease where you are locking someone in to payments that may escalate, with a pre-paid lease I can't imagine a potential buyer having an issue. Note that I was helped out by a lot of the mods and users here in making my decision, so I'm posting now to hopefully help in someone else's decision. Best of luck to anyone considering solar.

[russ]

not really russ, lets look at it dollar for dollar.
$130 a month x 12 months = $1560 , $1560 x 20 years for lease is $31,200 total. After 20 years i say either take it off my roof, and hopefully something better out at that time. or continue my lease for an additional 5 years. IF u purchase the system u may have an outdated system that u just sank in approx $35,000 and its gone . Now u need another system for who knows how much..
Purchase system for say around $32-35k , after waiting for rebates to come thru so initial layout is $58k out of pocket. Plus another $4k two times for new inverters so u maybe investing $40k-45k after 20 years vs my non escaltor lease payment of $31,200. So can u still say buying it is the better option ?

Guaranteed buying is the better option IF you have the money to do so.

[ajpslp]

If you don't have the money it is a great option - you are letting the leasing company make the lion's share of the money over 20 years though. Your maintenance concerns are quite minor actually.

not really russ, lets look at it dollar for dollar.
$130 a month x 12 months = $1560 , $1560 x 20 years for lease is $31,200 total. After 20 years i say either take it off my roof, and hopefully something better out at that time. or continue my lease for an additional 5 years. IF u purchase the system u may have an outdated system that u just sank in approx $35,000 and its gone . Now u need another system for who knows how much..
Purchase system for say around $32-35k , after waiting for rebates to come thru so initial layout is $58k out of pocket. Plus another $4k two times for new inverters so u maybe investing $40k-45k after 20 years vs my non escaltor lease payment of $31,200. So can u still say buying it is the better option ?

[russ]

Leasing is a great option because as long as we are living and breathing we need to pay the electric company anyways so why not just pay $200 less per month to some other company ? looking forward to panels and getting it up r and running !!

If you don't have the money it is a great option - you are letting the leasing company make the lion's share of the money over 20 years though. Your maintenance concerns are quite minor actually.

[Mr. Vegas]

As someone mentioned here to own the stem is probably cheap.?? NOT , the system to purchase outright is $58k! then rebates etc comes to around almost 25-30k. Yes so u own it outright BUTinverter replacement in 6-10 years costs $4k to replace and in the course of 20 year lease may need 2 of them for $8k . Is that worth it ? don't think so . Leasing is a great option because as long as we are living and breathing we need to pay the electric company anyways so why not just pay $200 less per month to some other company ? looking forward to panels and getting it up r and running !!

+1.

Those are some hot looking panels too man. Makes everything else I've seen look plain. Your roof is going to look nice.