SoCal Lease Quote

[Cypress]

So over the last month or so, I've taken the time to research options on leasing a solar system for our house located just north of Los Angeles. I picked leasing as we don't have that much extra cash to pay up front for an entire system. I looked into the possibility of getting a loan, but even with good credit and low rates, the numbers aren't all that better. In many cases, the monthly loan payment (20 years) is substantially higher and the total cost paid over the life of the loan far exceeds your average lease total.

Before I looked into solar, a mild conservation effort was done, and we did a few things to get our SCE bill down a bit. LED's, CF's, and a variable speed pool pump. We are averaging about 1000 kWh's / month with our bills somewhere around 230/ month. I was thinking a solar sized system that gets us 75% production would be a good start, so a system that generates 7500 kWh a year should suffice. My roof has clear southern sky access and has been mentioned by most I've spoken to as fairly ideal for solar.

I looked at a number of companies. Solarcity, Sunrun, Sungevity, SunPower, 1BOG, and a local installer or 2.

So far the best deal I've come across from all of them is Sunrun. Here is their proposal:

Sunrun PPA Lease
4.34 kW System
17 255 Renesola Panels
PowerOne PVI-4.2-TL inverter
Guarantee 6949 kWhs production

0 down, 0 upfront, no escalators, no overage charges, can buy out the system anytime after year 5 starting at 14k.

Payment: $101 (17.5c a kWh)

Seems like a pretty decent deal and is more competitive than what I've seen so far. Avoids the main pitfalls of most common lease complaints (escalators, what happens if I sell, etc) Does anyone have any comments or suggestions? Not sure about Renesola panels. I wanted to go a little bit bigger but they are saying that it may not be possible to get more than 17 panels up on my roof. Of course the site survey will clear all that up.

Thanks,

[Ian S]

What do you estimate your total payment - PPA + new SCE bill - to be compared to the $230 a month it is now?

[Cypress]

What do you estimate your total payment - PPA + new SCE bill - to be compared to the $230 a month it is now?

They are estimating it to be about 70-80 a month conservative. The goal was to stay out of tier 1 and 2 SCE but that won't be possible during the summer months I'm sure. I'd imagine having like a 50 dollar SCE bill for 9 out of 12 months and probably closer to 100 during the summer 3. One of my reservations with this proposal is that it's sized too small. I will probably take a hard look at Sunpower as they can give me a more productive system for the number of panels I can fit but it will be at a higher rate.

[KWiK]

HERO Progam

Have you compared this lease to a purchase using the HERO program? If you do the lease, what if you decide to expand the system, is it allowed?

Just a couple thoughts that popped into this newbs mind...

[J.P.M.]

So over the last month or so, I've taken the time to research options on leasing a solar system for our house located just north of Los Angeles. I picked leasing as we don't have that much extra cash to pay up front for an entire system. I looked into the possibility of getting a loan, but even with good credit and low rates, the numbers aren't all that better. In many cases, the monthly loan payment (20 years) is substantially higher and the total cost paid over the life of the loan far exceeds your average lease total.

Before I looked into solar, a mild conservation effort was done, and we did a few things to get our SCE bill down a bit. LED's, CF's, and a variable speed pool pump. We are averaging about 1000 kWh's / month with our bills somewhere around 230/ month. I was thinking a solar sized system that gets us 75% production would be a good start, so a system that generates 7500 kWh a year should suffice. My roof has clear southern sky access and has been mentioned by most I've spoken to as fairly ideal for solar.

I looked at a number of companies. Solarcity, Sunrun, Sungevity, SunPower, 1BOG, and a local installer or 2.

So far the best deal I've come across from all of them is Sunrun. Here is their proposal:

Sunrun PPA Lease
4.34 kW System
17 255 Renesola Panels
PowerOne PVI-4.2-TL inverter
Guarantee 6949 kWhs production

0 down, 0 upfront, no escalators, no overage charges, can buy out the system anytime after year 5 starting at 14k.

Payment: $101 (17.5c a kWh)

Seems like a pretty decent deal and is more competitive than what I've seen so far. Avoids the main pitfalls of most common lease complaints (escalators, what happens if I sell, etc) Does anyone have any comments or suggestions? Not sure about Renesola panels. I wanted to go a little bit bigger but they are saying that it may not be possible to get more than 17 panels up on my roof. Of course the site survey will clear all that up.

Thanks,

1.)I'm not very familiar w/ your POCO rates and W/out knowing any of the particulars like actual monthly usage, roof orientation, zip, etc. it's not possible to est. system output in kWhrs./yr. w/a lot of confidence, but a SWAG of $700-$1000/yr. residual bill seems possible w/4.3kW system facing mostly south at ~20 deg. tilt w/ min. shade, w/MAYBE about something like half of that remaining bill due to tier 1 + 2 use +/- some.
2.) You may get a bigger elec. size on your roof w/Sunpower but I bet you won't get it from Sunrun and I bet it'll cost more than $101/mo. scaled up for size. So, you may get a bit more yearly production w/Sunpower but it may not be worth the extra cost. Need to run some #'s.

Pay your money, take your choice. Read the lease and read it again, then take it to an attorney for an opinion. Caveat Emptor.

[Ian S]

They are estimating it to be about 70-80 a month conservative. The goal was to stay out of tier 1 and 2 SCE but that won't be possible during the summer months I'm sure. I'd imagine having like a 50 dollar SCE bill for 9 out of 12 months and probably closer to 100 during the summer 3. One of my reservations with this proposal is that it's sized too small. I will probably take a hard look at Sunpower as they can give me a more productive system for the number of panels I can fit but it will be at a higher rate.

You might want to get more than one Sunpower quote as they can vary. Before you sign, read the lease/PPA document thoroughly and ask an attorney any questions you might have. Pay particular attention to what happens at the end of the agreement and how any buyout is structured prior to the end of the contract. The lessor should also provide insurance coverage but you may want to check with your agent to see if there is anything else you may need in that area. Also check to see what happens if you default - it can get pretty nasty. The Sunpower panels should allow you to get more power out of your limited space and probably more energy over the lifetime of the system but that will likely be offset by higher cost. You will just have to run the numbers to see what works best for you. Saving $50/mo is a decent deal but I'd think hard if it was only $10-20 a month. Pressure the Sunpower guys to sharpen their pencils! Maybe you can even shave a bit more off your usage so a smaller system will work better. Good luck.

[Cypress]

Have you compared this lease to a purchase using the HERO program? If you do the lease, what if you decide to expand the system, is it allowed?

Just a couple thoughts that popped into this newbs mind...

My zipcode has no Hero program. I'm qualified for a 20 year 5 percent loan but the numbers, pre-rebate, are abysmal.

Here are the figures on the loan:

$145.19
Monthly Payment

$34,845.66
Total of 240 Payments

$12,845.66
Total Interest Paid

The number would be better if I could immediately apply the rebate but you can't and would have to wait until at least the next tax cycle. I've heard of some doing a bridge loan until the rebate can be applied but all of that sounds like a real headache. The bottom line is the cost of a lease is very similar to doing a long term loan. True you get to own the system when you're done, but quite honestly, I'm pretty sure in 20 years, I'd probably be more interested in installing the latest hardware then keeping 20 year old crap. Not to mention the 20 year warranty and guranteed power output.

[slopoke]

Is that 20 year loan the only financing option you got? If you bought a system in the size you stated, 4.34kW, it should come in approx $15,000 total. I used $3.50 per watt, which most would say is close to a fair assuption. After the tax credit it should be roughly $10,500. So it would be in the neighborhood of a small car payment at a five to six year loan length. Just a little food for thought.

[KWiK]

Bummer on the no HERO program... you are paying so much in interest because of the 20 year term. The dollar amount you are working with is essentially a typical car loan, so shortening your term reduces the total interest paid. At only 10years your payment is still in the $200 range... so the system is really only costing you the amount of power you use above the amount generated... and we haven't even gotten to the tax incentive... The Newbs opinion: buy it don't lease, payoff in shortest term possible - but get a better price. yours seems high to me...

[Cypress]

...At only 10years your payment is still in the $200 range... so the system is really only costing you the amount of power you use above the amount generated... and we haven't even gotten to the tax incentive... The Newbs opinion: buy it don't lease, payoff in shortest term possible - but get a better price. yours seems high to me...

So if I finance it for 10 years and my payments are roughly 200 a month or so...that adds up to 200x120 = 24,000. And with this lease, its, 100x240 = 24,000. Of course with the purchase, the rebate needs to be taken into consideration, but with the way my situation is right now, I cannot expect to get the full amount through taxes.

With the 10 year loan I see absolutely no return on investment for at least 10 years because the payment and POCO bill add up to well over what I'm paying now. In fact I'd be in the red for 10 years which defeats my goals of trying to save costs in the short term. And if I went with the 10 year loan, soon after the 10 years I'll be looking at an inverter replacement around the corner....tack on another 2k or so....and who knows what else I'd have to deal with going with a cheaper system....again I don't see the argument on why a loan is so much better than a lease...both have issues.

The reality is, if I went with a purchase, I would probably go with Sunpower equipment which is going to raise the cost up even more. I wouln't feel comfortable buying lower end stuff without the peace of mind of a 20 year guarantee of production and warranty that a lease provides.

[wanabefree]

Its all a matter of perception

Cypress,

You will not get a lot of positive feedback on leasing/ppa here because the regulars here are pretty set on there positions. Kinda like Dems vs Reps. There is very little argument that if you can afford to purchase your solar with cash or very low % short term loans it is the best ROI over a 20yr term. however if you are unable to pay upfront or finance then leasing/ppa can make sense. If you purchase you are prepaying at a fixed cost for most or even all of your electrical bill upfront. A lease or PPA can generally save you 20% or more monthly over the same 20 yr term so to me either way its a win win. A lease/ppa only works if you already have have high electric bil,l in States like CA that is a given. A lease/PPA has the advantage of maintenance free term as long as the company stays in business or get bought out by another reputable company. On the other hand with a performance guarantee you if it doesn't produce you don't pay.

You have to make up your own mind if it makes financial sense to lease/ppa or not. I am in the process of doing just that myself and i also am in southern California. I quit posting on the lease/ppa topic for the most part because for the most part Its pretty predictable on this forum you will get beat up if you are pro lease/ppa. That does not make me right and others wrong its just a matter of your perception. By the way I have not done the math but I would bet if you took the say 20% monthly savings and invested it in an IRA with modest returns for 20yrs I think you might actually get close to the same ROI as purchasing. Just a thought.

[Cypress]

Yeah I get that even mentioning the name lease around here is fairly taboo. Which is really too bad because I see a lot of misconceptions about leasing that may have held water at one point, but things are changing and evolving constantly, and it's too the point now where if you are cautious and do your homework, it's not such a horrible deal as many make it out to be. Things like built in escalators being eliminated, not having to pay for excess power produced, and being able to fully opt/buy out the equipment just a few years in...to name a few. Even with this being the case now, I bet we still see the same arguments repeated again and again like one of those pull string dolls...Leasing sucks! Escalators suck! You're locked into for 20 years with no way out! You can't sell your home! OMG!

My goal wasn't really to persuade anyone's opinions or try to self justify my own future decision. Tbh, I'm still on the fence about doing anything solar related but given I'm in socal, have a great roof for solar, and dealing with $240 power bills, it maybe more foolish to sit around and do nothing...i dunno....my goal with this post was to share some current lease pricing and find out if others in my situation are getting similar or better deals...

[J.P.M.]

Yeah I get that even mentioning the name lease around here is fairly taboo. Which is really too bad because I see a lot of misconceptions about leasing that may have held water at one point, but things are changing and evolving constantly, and it's too the point now where if you are cautious and do your homework, it's not such a horrible deal as many make it out to be. Things like built in escalators being eliminated, not having to pay for excess power produced, and being able to fully opt/buy out the equipment just a few years in...to name a few. Even with this being the case now, I bet we still see the same arguments repeated again and again like one of those pull string dolls...Leasing sucks! Escalators suck! You're locked into for 20 years with no way out! You can't sell your home! OMG!

My goal wasn't really to persuade anyone's opinions or try to self justify my own future decision. Tbh, I'm still on the fence about doing anything solar related but given I'm in socal, have a great roof for solar, and dealing with $240 power bills, it maybe more foolish to sit around and do nothing...i dunno....my goal with this post was to share some current lease pricing and find out if others in my situation are getting similar or better deals...

1.) It's a free country. I'm not too concerned about what other people think of my opinions, actions and statements, and I certainly try to be respectful of other opinions.
2.) I'd suggest one maybe different way to look at all this buying vs. leasing of solar equipment is to think of it as how best to reduce a residential electric bill, hopefully in the most cost effective way possible for the circumstances, and not solely about putting solar electricity on one's property (if at all).
3.) For starters, solar energy usually is not the (first) most cost effective option to reduce an electric bill, and therefore (logically perhaps), not the first action to be taken. IMO, most people put the cart before the horse and throw expensive solar electricity, lease or buy, at a bloated energy bill. Many things can be done before solar to reduce the electric bill that have a much greater return on investment, and BTW, reduce the economically optimum solar size as a nice little side bennie. That's not meant as a rant, but I bet it's true more often than not.
4.) Maybe a lot of the things called misconceptions in this thread persist mainly because they are often still an accurate description of a lot of situations and still do hold water. Some things change, some things don't. Some things evolve. Some things get called by different names, get recycled and peddled anew.
5.) One of my observations about all this buy vs. lease cheerleading is that much of the time (but by no means all the time e.g. this poster- Cypress) some of the most avid defense of one side of this issue (or the other), and some of the most bilious vituperation of the other position seems to come from people who have made one choice against the other (buy vs. lease or the other way around), and need to defend or justify their actions. My experience is that such reactions usually come at the expense of logic and an objective, honest exchange of views. Then, it becomes a shouting match and useless finger point, not unlike our current government.
6.) I acquired more education and left a financially rewarding job in sales because I got and continue to have an interest in solar energy and energy conservation. That was close to 40 odd years ago. I was degreed, titled and worked as a mechanical engineer, project engineer and engineering manager in the petrochemical and power business, but always kept current w/ solar activities through journals, conferences and professional and academic associations. Solar energy is a big part of my life. It's the original reason I became an engineer. I want it to work. I'm a fan. I'm also very aware that my pants go on like everyone else's - one leg at a time. I'm just a bit luckier than some, maybe.
7.) I'm also a fan of cost effectiveness. Sometimes leasing makes sense. Other times it makes finances worse in the long run. An analogy to renting furniture or appliances comes to mind. Sometimes it makes sense, but maybe not a good long term solution.
8.)Relative to this discussion, part of what I did as an engineer was to figure out if some activity, equipment or process made economic sense. I'm not an economist or an accountant, but I believe I know something about process economics and also solar process economics FWIW.
9.) Every situation is different. I believe, perhaps erroneously, I understand that as well as most. Maybe I'm B.S.ing myself. However, I wonder: if more people considering solar energy knew what I think I know about solar energy and process economics and life cycle costing as it relates to cost effective solar, would some of those same folks change their mind about the economic viability of leasing ? If I was thinking about a major purchase, or a change if lifestyle, which solar certainly may entail, I'd want all the information I could get my hands and brain around. That's pretty much the process I started 40 odd years ago. I'm still learning and getting dumber by the hour. It's all there for the learning. Sometimes I find what I often view as continuing, sometimes arrogant ignorance disheartening.
10.) Once the economic landscape surrounding a solar acquisition has been determined, the real decision - what is really wanted at an emotional level can be turned loose - for better or worse, but it just may then be based on more accurate information. At the end of the process, pay your money, take your choice. Just try to make it an informed one.
11.) I'll support someone's right to roast hot dogs over a fire stoked with $20 bills. Just don't expect me to endorse it as a good idea. Not everyone who tells you what you don't like is your enemy. Not everyone who tells you what you want to hear is your friend.

[Ian S]

"bilious vituperation"? LOL!!!

[wanabefree]

"bilious vituperation"? LOL!!!

Say What ? Is this the in the dictionary?