PPA vs buying

[wanabefree]

Related question on the pros & cons

Since we are talking about conservation first here is a question that I think is relevant.
I know for a fact that just switching over to all cfl/led lighting has had a big impact on my kwh usage over the past 2 years. My fear is that as homes become more energy efficient the Power Companies will see less revenue. Solar adds to that equation in a big way too. Modern appliances all are more efficient and newer homes have better insulation and energy saving windows as well..
So what impact will this all have on the cost effectiveness of Solar in the future. Will Solar be more or less competitive to grid? Will the utility companies just raise the price per kwh to make up for there loss of revenue.

If the mods here think this is off topic go ahead and move it but I think its something to consider.

[Ian S]

Since we are talking about conservation first here is a question that I think is relevant.
I know for a fact that just switching over to all cfl/led lighting has had a big impact on my kwh usage over the past 2 years. My fear is that as homes become more energy efficient the Power Companies will see less revenue. Solar adds to that equation in a big way too. Modern appliances all are more efficient and newer homes have better insulation and energy saving windows as well..
So what impact will this all have on the cost effectiveness of Solar in the future. Will Solar be more or less competitive to grid? Will the utility companies just raise the price per kwh to make up for there loss of revenue.

Raising the cost per kWh is possible but it doesn't get to the heart of the problem for the utilities. Instead, I think there will be more of an attempt to separate the cost of grid access from the actual energy usage. Some utilities already do that to some extent but the trend will intensify.

[J.P.M.]

LOL at cage fighting! I'm too old for that. But I think it would be quite possible to come up with a stickie that would put all the pros and cons out there for newbies to evaluate. Heck, I even added a con to leasing! BTW, I had nothing to add to the buying pros because I think you covered them well. I am curious as to what comments I made that you strongly disagree with. Also, there was the one comment of yours that I put question marks after because I didn't understand your point.

Ian: I'll send you a P.M. next 24 hrs.

[russ]

Since we are talking about conservation first here is a question that I think is relevant.
I know for a fact that just switching over to all cfl/led lighting has had a big impact on my kwh usage over the past 2 years. As the CFL lamps screw up the power factor for the utility that is a bad step from their view point

My fear is that as homes become more energy efficient the Power Companies will see less revenue. Solar adds to that equation in a big way too. Modern appliances all are more efficient and newer homes have better insulation and energy saving windows as well.. A forward thinking company will see it as an opportunity - a dinosaur will see danger


So what impact will this all have on the cost effectiveness of Solar in the future. Will Solar be more or less competitive to grid? Will the utility companies just raise the price per kwh to make up for there loss of revenue. The biggest cost factor so far is where the utilities raise the charges on everyone to cover the high FIT they are forced to pay to RE generators. At substantially less than 1% of gross generation it is hard to believe solar is much of a threat actually.

If the mods here think this is off topic go ahead and move it but I think its something to consider.

Comments in bold within the text.

[wanabefree]

Russ,

Please explain this quote as I do not understand what this means.
"As the CFL lamps screw up the power factor for the utility that is a bad step from their view point"

I have seen something like this stated before and was confused then too.

[inetdog]

Russ,

Please explain this quote as I do not understand what this means.
"As the CFL lamps screw up the power factor for the utility that is a bad step from their view point"

I have seen something like this stated before and was confused then too.

Do you understand what "power factor" refers to?
If not, I can start explaining from there.
If you do, I will start in the middle.

[wanabefree]

Not really

Do you understand what "power factor" refers to?
If not, I can start explaining from there.
If you do, I will start in the middle.

I only know it has something to do with sine waves and how it is different from a regular electrical load. I do not understand how that is good or bad for the power company. So please treat my like its a lesson for Dummies.

Dave

[inetdog]

I only know it has something to do with sine waves and how it is different from a regular electrical load. I do not understand how that is good or bad for the power company. So please treat my like its a lesson for Dummies.

Dave

OK:

Let me know if you want more details or have questions on a particular section:

1. AC has a sine wave function of voltage over time. For a resistive load, the current waveform follows the voltage waveform exactly. As a result the actual power delivered is exactly the same as the product of the RMS voltage and the RMS current. In addition, that power is delivered with the smallest possible current for that nominal voltage.

2. If instead of a resistor you have an inductor or capacitor, the current will be 90 degrees out of phase with the voltage. That is, the current peak will be at the time of the voltage zero point and vice-versa. The energy will be going into the load for two quarters of the cycle and coming back out of the load for the other two quarters. As a result the average power is zero, but a lot of current flows anyway, which makes the POCO unhappy. They have to provide facilities that can carry that current, but get no income from it.

3. A motor load will have a situation somewhere between #1 and #2. The measure of the true power divided by the product of volts and amps is called the power factor, and that number can range from 0.0 (bad) up to 1.0 (perfect).

4. In addition to the phase related power factor, a load which only conducts for part of the cycle, such as when the voltage is above some minimum value, will also deliver an amount of power that is less than the product of amps and volts. This kind of miss is called distortion power factor, and the POCOs dislike it for the same reasons. Actually they dislike it even more because they cannot compensate for it by putting fixed capacitors into their network.
Some dimmers and electronic power supplies are good examples of this type of load.

For more information, but not as logically and concisely presented (modest, isn't he....), you can go to Wikipedia.

[SunEagle]

OK:

Let me know if you want more details or have questions on a particular section:

1. AC has a sine wave function of voltage over time. For a resistive load, the current waveform follows the voltage waveform exactly. As a result the actual power delivered is exactly the same as the product of the RMS voltage and the RMS current. In addition, that power is delivered with the smallest possible current for that nominal voltage.

2. If instead of a resistor you have an inductor or capacitor, the current will be 90 degrees out of phase with the voltage. That is, the current peak will be at the time of the voltage zero point and vice-versa. The energy will be going into the load for two quarters of the cycle and coming back out of the load for the other two quarters. As a result the average power is zero, but a lot of current flows anyway, which makes the POCO unhappy. They have to provide facilities that can carry that current, but get no income from it.

3. A motor load will have a situation somewhere between #1 and #2. The measure of the true power divided by the product of volts and amps is called the power factor, and that number can range from 0.0 (bad) up to 1.0 (perfect).

4. In addition to the phase related power factor, a load which only conducts for part of the cycle, such as when the voltage is above some minimum value, will also deliver an amount of power that is less than the product of amps and volts. This kind of miss is called distortion power factor, and the POCOs dislike it for the same reasons. Actually they dislike it even more because they cannot compensate for it by putting fixed capacitors into their network.
Some dimmers and electronic power supplies are good examples of this type of load.

For more information, but not as logically and concisely presented (modest, isn't he....), you can go to Wikipedia.

Great explanation concerning power factor.

Item 4 is caused by harmonic distortion from "switch mode" power supplies like those in computers, electronic ballast lighting and Variable Frequency Drives for motors. The reason POCO's dislike it is that the only way to improve the distorted power factor is to use harmonic filters which are designed to cancel out the specific harmonics generated by those power supplies along with fixed capacitors to improve the power factor.

If the harmonic distortion is too high, the least you will experience is losses in equipment efficiency and the worst would be equipment failure due to overheating.

[Tml]

My info so far

This has been awesome looking into thus far. I must say I am still very confused about what to do and where this all goes from here. Just to update my experience so far with the info I received from you guys and from the PPA site plan I got a quote from so far.

First, last month was my lowest electric bill I have had in years. I have been focusing on replacing incandescence with LED's, taking care of my pool to find out best daily run times. I figured out it costs me approx. $115 per month for my pool pump and I will be buying a variable speed pump within the next 2 months which will cost me approx. $60 per month. I am also getting quotes for a new A/C which I plan on installing before the summer.

I spend most of my time looking at my daily usage on SCE website and plugging in numbers to try and figure out how much I can save on my electric bill. Unfortunately it gets overwhelming at times and I am working on today's usage to see how much I can save with solar vs not installing it at all. I am stuck on the buy vs PPA. With virtually no understanding of electricity like most of you, I don't even know if I am moving forward or just confusing myself.

The PPA looks great "today", but with escalation the figures down the road are not as appealing. The biggest factors against the PPA for us are 20 year contract and the 2.9% escalation. Putting in the numbers the .15c is great until say year 10 which is at .19c and at year 20 which is at .26c. I figured out with my last years usage I would have saved $1602.79 or $145 per month if I had the PPA plan. Sounds really good. I am in tier 4 every month now with SCE and would have only gone into tier 4 four times with solar, but a lot less Kwh in that tier.

The other issue I see with PPA is with the question everyone has with selling the house. I don't plan on selling and if I moved I would rent the house, but if for some reason we did have to sell the buyer would have to assume the contract not at the initial .15c kwh, but more like .20c kwh and with whatever degradation and outdated panels and inverters are on the house at the time. 10 years from now who knows what technology will bring and where the new costs are for solar.

Just a quick run down of the PPA quote I received.

7.75kW DC system (at $7 per watt installed or 54,250) so at year ten the buy out is somewhere around $27k.

(31) Yingli Energy YL 250P-29b modules with (31) Enphase M215-60-2LL-S2x-2C.

Production from system per month:

Jan= 570.7 kwh
Feb= 577.5 kwh
Mar= 1009.5 kwh
Apr= 1126.8 kwh
May= 1123.7 kwh
Jun= 1257.4 kwh
Jul= 1275.6 kwh
Aug= 1219.5 kwh
Sep= 1006.1 kwh
Oct= 726.3 kwh
Nov= 642.4 kwh
Dec= 533.5 kwh

Total of 11069.1 kwh per year and I average around 13000. I figure I would pay them approx. $43,791 over 20 years at today's usage.

If I were to get a HELOC and buy a system say at $6 a kw then I am looking at $46,500. Does the federal rebate actually give back 30% in the form of a check or is that just a write off on my taxes and I don't actually get around $14,000 back to pay into my loan?

Sorry for the long post. I thought some of you may be interested in a few things I had to say and may have some good responses on the information I have so far? I have about 50 sheets of paper with numbers written all over them. Kind of fun trying to save money!!!

[russ]

First, last month was my lowest electric bill I have had in years. Well done!

I spend most of my time looking at my daily usage on SCE website and plugging in numbers to try and figure out how much I can save on my electric bill. You need to get real numbers using something like a killawatt http://www.powermeterstore.com/brands/p3_international measure the actual consumption yourself where possible.

The PPA looks great "today", but with escalation the figures down the road are not as appealing. The common quandry!

The other issue I see with PPA is with the question everyone has with selling the house. the buyer would have to assume the contract not at the initial .15c kwh, but more like .20c kwh and with whatever degradation and outdated panels and inverters are on the house at the time. 10 years from now who knows what technology will bring and where the new costs are for solar. Again the common quandry

Just a quick run down of the PPA quote I received.

7.75kW DC system (at $7 per watt installed or 54,250) so at year ten the buy out is somewhere around $27k. The 7$ is the highest price I have seen in a couple of years - what is different

(31) Yingli Energy YL 250P-29b modules with (31) Enphase M215-60-2LL-S2x-2C.

Production from system per month:

Jan= 570.7 kwh
Feb= 577.5 kwh
Mar= 1009.5 kwh
Apr= 1126.8 kwh
May= 1123.7 kwh
Jun= 1257.4 kwh
Jul= 1275.6 kwh
Aug= 1219.5 kwh
Sep= 1006.1 kwh
Oct= 726.3 kwh
Nov= 642.4 kwh
Dec= 533.5 kwh

Total of 11069.1 kwh per year and I average around 13000. I figure I would pay them approx. $43,791 over 20 years at today's usage.

If I were to get a HELOC and buy a system say at $6 a kw then I am looking at $46,500. Does the federal rebate actually give back 30% in the form of a check or is that just a write off on my taxes and I don't actually get around $14,000 back to pay into my loan? Tax rebate - no cash transfer involved.

I have about 50 sheets of paper with numbers written all over them. Kind of fun trying to save money!! That is the real onject for sure

From PV Watts - orientation or other conditions may be different than they used for you.

• 
• RESOURCE DATA
• SYSTEM INFO
• RESULTS

12,353 kWh per Year
RESULTS

4.84	912	144
4.43	746	118
6.29	1,160	183
6.34	1,133	179
5.66	1,038	164
6.47	1,157	182
6.74	1,223	193
6.60	1,197	189
6.25	1,094	172
4.86	890	140
5.26	938	148
4.70	868	137
5.70	12,353	$ 1,948

Find A Local Installer Download Results: Monthly | Hourly
Caution: Photovoltaic system performance predictions calculated by PVWatts® include many inherent assumptions and uncertainties and do not reflect variations between PV technologies nor site-specific characteristics except as represented by PVWatts® inputs. For example, PV modules with better performance are not differentiated within PVWatts® from lesser performing modules. Similarly, the “Energy Value” column simply multiplies the utility-average electricity price by production. Complex utility rates and financing can significantly impact the energy value. See Help for additional guidance.

Requested Location	orange, ca
Weather Data Source	SANTA ANA JOHN WAYNE AP, CA (TMY3)
Latitude	33.68° N
Longitude	117.87° W
DC Rating	7.75 kW
DC to AC Derate Factor	0.83
Array Type	Fixed (open rack)
Array Tilt	33.8°
Array Azimuth	180°
Average Cost of Electricity Purchased from Utility	0.16 $/kWh
Cost of Electricity Generated by System	0.19 $/kWh

[catalano]

I know this thread is a little old now, but I wanted to add a little to it. I'm on Long Island and got approached by Vivint back in June. There offer was pretty much identical to the original poster's situation. My 2 main concerns were the auto price increase of 2.9% per year, and the requirement that I purchase 100% of the system's output. In that regard my thinking was/is that in 10 years or so my kids will be off to college, I'll probably have cycled through most of our major appliances and replaced them with more efficient models, so my consumption would theoretically be much less. I didn't pursue the offer and after so many months I didn't hear from them and figured that maybe they rejected our house after the site survey. Well, they actually called a few days ago to tell me that my CAD plan was ready and they wanted to review it with me. I told the gal that called that we had pretty much decided against moving forward, but she suggested I meet with the rep anyway to discuss my concerns. So we did.

Regarding my concern about the auto price increase - the contract is written with language that says that the price WILL increase each year by 2.9%. So, like a previous poster, I did the projection and figured the cost at year 20 to be approximately .27 kWh. Right now my bill is somewhere between .19 kWh and .22 kWh depending on the month. Looking back to April 2009, my cost was .20 kWh and in 2001 my rate was approx .15 kwh. So to me it seemed like a crap shoot of who's rate would be highest at the 20 year mark. The rep's response was that Vivint has not yet implemented a rate increase on any of it's contracts even though it is permitted to. He also says that the 2.9% is a maximum and that they may be rewriting new contracts to state that. My response was that my contract states that the rate WILL rise that amount each year. He also stated that their financing agreement with their backers requires them to save the homeowner a minimum of 5% compared to the current utility rates. I said that was great, but that's not written into the contract either. He said he would try to send me some info with those requirements. He also was extremely confident that PSEG's rates would escalate at a significantly higher rate. That may or may not be true, like I said, its kind of a crap shoot. Maybe the Governor finally grows a pair and forces the utility to be more competitive, maybe they force the upstate hydro plants to sell their output to Long Island, maybe we get the much hyped power cable from Canada - who knows. There are lots of variables that will affect the PSEG rates over time.

With regards to the second concern about possibly having to consistently purchase more energy than I need, he stated that their contract with PSEG limits them to producing no more than 90% of the home's annual energy needs. If they are consistently producing more than that they would have to remove some panels. Again, there is nothing about this in the contract, but he said he would try to get me more info.

As for the concern about the affect on the home's value when putting it up for sale, that's not really a concern for me. We'll probably be here for the duration, and if not, I don't anticipate having a problem attracting a buyer with the panels installed. Even if it is an issue at the point (years 10 - 20) the net value of the system will be a very small portion of the overall value of the house.

One last thing that I didn't see mentioned is the panel's impact on property taxes. With owned and leased systems I'm told that it becomes part of the home's assessed values and can increase your property taxes. Not so with the PPA. So that's one other thing to consider.

I'll post back if/when I get any more info from the Vivent rep.

Regards,
CJ

[Tml]

Between what the contract says and what the sales rep said really got me concerned so I decided to put the whole solar thing to rest for a while since it was consuming my time too much. I was really hoping the competition would start driving costs down over time while I waited. I was just reading an article this morning http://finance.yahoo.com/news/solarc...040314760.html about Solar City financing the panels to own. Did not get too much into it, but it got me thinking solar again.

The little information I read every once in a while about how the electric companies want to put a surcharge on solar panel owners since you are actually still on the grid and they want re-coup some monies from all of the people going solar concerns me. If more and more people get solar the electric companies have to get their money back somehow. I assume the more people that get solar would mean electric company rates would have to rise quicker to make shareholders happy.

Let us know what you find out catalano.

I saved a good amount of money on electricity costs getting a variable speed pool pump and replacing all of my lighting in the house, but my old A/C unit killed me this summer.

[russ]

Talk to another salesman this guy is feeding you bull and possibly doesn't even know it.

1) No one knows how rates will increase
2) What the contract states is important - the sales guy will possibly be selling ladies undies next week so his word of of little importance.
3) If you produced too much they would come remove panels? Sounds like bull!
4) If the contract says a 2.9% increase is allowed it will be 2.9% - not less.
5) He says their backers insist they must save the homeowner 5% - see it in writing in your contract or it doesn't count.

[J.P.M.]

Welcome back.

1.) Check out a new A/C unit and don't oversize it. Before that check your attic insulation and air leakage. those are often easy and cheap ways to save more. Not using something is always cheaper than buying more of it.

2.) Remember, you will likely still have an electric bill pretty much regardless if you purchase, or lease, or PPA. Monthly fees will still be paid, probably by the homeowner (you) even with a 100% offset. At this time, those fees appear to be trending upward.

3.) Annual increases on PPA's and leases add insult to injury. As Russ points out, while no one can predict future rate increases. However, 2.9% is probably above the historical nat. ave. annual rate increase, and beyond what most utilities have done. The 6% or more claimed by most peddlers is simply B.S. Period.

FWIW, to my experience, about half the annual increase in bills most homeowners see, whether they know or admit to it, is due to increased usage, often paid for at higher tier rates.

4.) Around my neighborhood, meaning in my HOA, purchase prices have dropped and appear to be leveling off at this time at about $3.50 - $3.75/Watt. Lease prices have been somewhat steady for a couple of years at somewhere between $22 and $28/D.C. kW per month, depending mostly on vendor, roof type/configuration and particulars. Escalation has become a much less frequent occurrence for the last couple of years in the leases I've reviewed.

If you can't be talked out of a lease/PPA, at least avoid annual escalation.