Buying a home with a solar lease

[igell]

Hoping I can get some help here since i am very new to solar...

I am in the process of purchasing a home that has a solar lease on it. The lease is a 20y and currently on year 6 (so14 more years)
The contract states that there are options on changes to lease every 5y or at sale of property.
1. I have an option to pay out the lease up front for $6200 (so i dont pay the 3% annual price hike)
2. Buy out the panels altogether for $8k
3. or leave things as they are and continue to lease

I am trying to understand how much savings I would get and what is the best plan of action.
Seller provided me a bill for 2020 but I seem to be missing how many kwh the panels generated over the year to make an informed decision... right?

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[hayhayday]

If it were me I would likely take the 6200 option as the system likely will have little to no value in 14 years especially with likely changes to net metering coming up and would welcome them removing it in 14 years while being responsible for keeping everything running until then.

[J.P.M.]

Another piece of info you'll need to make informed decisions is knowledge of how the likely upcoming changes to NEM for the big 3 I.O.U.'s in CA will affect your bills.

I'd get informed about that before I made any decisions.

At this time things are murky but it looks like NEM as we know may well take a substantial hit in terms of cost effectiveness.

Too bad you bought a home with a solar lease.

[igell]

I read through the NEM changes proposed in CA but have a hard time understanding what it really means. What is the alternative? will it make leasing solar less cost effective? How much will a typical bill change?

[sabersix]

Why not have the seller buy-out the lease as part of the sale of the home?

[foo1bar]

I am trying to understand how much savings I would get and what is the best plan of action.
Seller provided me a bill for 2020 but I seem to be missing how many kwh the panels generated over the year to make an informed decision... right?

Since this is just a question of how to pay for the system, I do not think it matters how many kwh the panels generated over the year for making this decision.
What you need is how much did he pay for the lease last year (and how much you will pay for the next 14 years)

You're not making a decision on whether to purchase the solar system or not - so how many kwh it produces isn't going to affect the decision on how to pay for it.
(But as a home buyer, I would want that information, just because it's useful information to know)

When you have the annual lease cost in hand, you can do a net present value calculation to see whether $6200 up front is better option than doing a lease, that I'm guessing is about $350/year right now.

If the lease is small enough per year, I might keep the lease as-is... But I'd look at the NPV and my cash availability, since usually buying a house (and the misc. expenses with moving, etc) leaves most people cash-poor.

[solardreamer]

I read through the NEM changes proposed in CA but have a hard time understanding what it really means. What is the alternative? will it make leasing solar less cost effective? How much will a typical bill change?

Assuming you are with PG&E based on the bill photo, the proposed NEM changes basically mean you will get reduced credit for solar energy you feed to the utility grid and there will be higher fixed monthly fees for having solar. Also, PG&E rate plans are likely to get more expensive due to time-of-use schedule changes that further reduce the value of solar energy feed to the grid. So, it all means your bill will get much higher. Not sure how your usage pattern compares to the current owner but given the high true-up charges on the bill the solar system maybe undersized.

[igell]

Since this is just a question of how to pay for the system, I do not think it matters how many kwh the panels generated over the year for making this decision.
What you need is how much did he pay for the lease last year (and how much you will pay for the next 14 years)

You're not making a decision on whether to purchase the solar system or not - so how many kwh it produces isn't going to affect the decision on how to pay for it.
(But as a home buyer, I would want that information, just because it's useful information to know)

When you have the annual lease cost in hand, you can do a net present value calculation to see whether $6200 up front is better option than doing a lease, that I'm guessing is about $350/year right now.

If the lease is small enough per year, I might keep the lease as-is... But I'd look at the NPV and my cash availability, since usually buying a house (and the misc. expenses with moving, etc) leaves most people cash-poor.

What do you mean by lease cost? From my understanding i am just paying the NEM and delivery charges. the original contract stipulates .15 per KWH charge and a 2.9% per year increase so around .17 today.
Also if I decide to buy out the system then isnt that a purchase or lease decision?

[igell]

Assuming you are with PG&E based on the bill photo, the proposed NEM changes basically mean you will get reduced credit for solar energy you feed to the utility grid and there will be higher fixed monthly fees for having solar. Also, PG&E rate plans are likely to get more expensive due to time-of-use schedule changes that further reduce the value of solar energy feed to the grid. So, it all means your bill will get much higher. Not sure how your usage pattern compares to the current owner but given the high true-up charges on the bill the solar system maybe undersized.

So if I decide to purchase the system outright, can I install batteries and avoid selling power back to pge?

[solardreamer]

So if I decide to purchase the system outright, can I install batteries and avoid selling power back to pge?

Sure but that will likely be even more expensive than equivalent PG&E charges if you are talking about dedicated home battery systems.

[J.P.M.]

What do you mean by lease cost? From my understanding i am just paying the NEM and delivery charges. the original contract stipulates .15 per KWH charge and a 2.9% per year increase so around .17 today.
Also if I decide to buy out the system then isnt that a purchase or lease decision?

Sounds like you have (or will have ) a PPA , not a lease. A lease is a fixed $$ amount/month. A PPA is when the system owner charges you a fixed amount per kWh the system produces.

[foo1bar]

What do you mean by lease cost? From my understanding i am just paying the NEM and delivery charges. the original contract stipulates .15 per KWH charge and a 2.9% per year increase so around .17 today.
Also if I decide to buy out the system then isnt that a purchase or lease decision?

I agree with JPM - that isn't a lease, that's some kind of PPA if you're paying based on a per-kwh basis.

In any case, the information you need is NOT the PG&E bill that you posted.
What you need is how much was being paid to the solar company.

*AND* what does the $6200 get you vs. the $8000.
Do you still have to pay some amount per year if you go with the $6200 buyout? What is their responsibility if you do the $6200 buyout compared to the $8k purchase?

You have only posted half of the information on what the electric costs are for this house - the PG&E half.
You also need the information on what is being paid to the solar company.

So if I decide to purchase the system outright, can I install batteries and avoid selling power back to pge?

If you want to waste money that badly, I can come by your house and you can give me $1000 every couple years.


Any battery based solar system is going to cost more per kwh than PG&E charges.
You are best off with a grid-tie system. You'll get credits for the kwh you sell to PG&E - and probably a bunch of those credits will be during "peak" rate times.
And a good portion of your kwh you consume will be during night-time off-peak rates.
So when you give PG&E a kwh during peak rate time, you get enough credit that you can use 2 or 3 kwh from them during off-peak.

*IF* you produced more kwh during the full year than you consume, you would wind up getting paid only $.05/kwh or so. (which would be bad, since you're paying the solar company ~$.17/kwh for those kwhs)
But looking at the PG&E bill, that's not going to happen. The seller had to pay PG&E $1.6k So if your power consumption is similar, you're going to have significant kwh you still purchase from PG&E.

[igell]

Sounds like you have (or will have ) a PPA , not a lease. A lease is a fixed $$ amount/month. A PPA is when the system owner charges you a fixed amount per kWh the system produces.

yes... its a PPA, how will that effect my decision. If i buy it outright then i no longer pay a fixed amount per kwh?

[J.P.M.]

I agree with JPM - that isn't a lease, that's some kind of PPA if you're paying based on a per-kwh basis.

In any case, the information you need is NOT the PG&E bill that you posted.
What you need is how much was being paid to the solar company.

*AND* what does the $6200 get you vs. the $8000.
Do you still have to pay some amount per year if you go with the $6200 buyout? What is their responsibility if you do the $6200 buyout compared to the $8k purchase?

You have only posted half of the information on what the electric costs are for this house - the PG&E half.
You also need the information on what is being paid to the solar company.


If you want to waste money that badly, I can come by your house and you can give me $1000 every couple years.


Any battery based solar system is going to cost more per kwh than PG&E charges.
You are best off with a grid-tie system. You'll get credits for the kwh you sell to PG&E - and probably a bunch of those credits will be during "peak" rate times.
And a good portion of your kwh you consume will be during night-time off-peak rates.
So when you give PG&E a kwh during peak rate time, you get enough credit that you can use 2 or 3 kwh from them during off-peak.

*IF* you produced more kwh during the full year than you consume, you would wind up getting paid only $.05/kwh or so. (which would be bad, since you're paying the solar company ~$.17/kwh for those kwhs)
But looking at the PG&E bill, that's not going to happen. The seller had to pay PG&E $1.6k So if your power consumption is similar, you're going to have significant kwh you still purchase from PG&E.

I don't want this to sound/look like Foo1bar and I are in cahoots, but if I were you, I'd take what he writes very seriously. Additionally, I'd do my homework and keep an ear to the ground for NEM 3 developments as I'd suggest any changes, whatever they flush out to be will most likely increase your electric bill which means PV will likely be less cost effective after any changes to NEM.

[J.P.M.]

yes... its a PPA, how will that effect my decision. If i buy it outright then i no longer pay a fixed amount per kwh?

Depends on what the contract says, and since you don't seem to know much about it, I can't say for sure, but but probably not.
I'd just be very careful about a decision that may have 14 yrs. of consequences without knowing the future of net metering in CA. Seems to me you're looking at the situation without full or even necessary knowledge of the situation.

Leases and PPA's were never a good deal for most folks from the beginning. Likely altered NEM in the near future will only make a bad situation worse and you appear to want to buy into it.