Buying a home with a solar lease

[igell]

thanks for putting up with me guys.. I understand i did not provide all the info but it took me a while to figure it all out, i think:

1. Its a PPA where I buy per kwh from tesla and all the overage NEM from PGE
2. last year the system produced 1700kwh (although its rated at 3200) so last year the owner paid tesla $289. (1700*.17)
3. on top of it, since he used way more then he produced he paid PGE $1,633, which was charged at roughly .32/kwh
so there seems to be a significant saving by going solar at least today. assuming energy costs stay flat there is a savings of roughly $2600 over 14y just going solar. (i understand that costs will not stay flat, but if they go up roughly 3% every year, it should stay the same.
issue is the
1. solar does not seem to be working at full capacity. When the sale closes i can have tesla support come out and take a look.
2. the energy it makes does not come close to covering the homes energy costs.
I expect my energy use to be significantly less than the current owners but it probably wont cover my use either. my estimated use 4000kwh per year

Even with the current system only producing 1700kwh/ year, my savings over the next 14y will be roughly $2,600 over just going directly with PGE.
So it seems like buying out the lease is the best bet to lock myself in to .17/ kwh price. But if i plan to stay there roughly less than 8y, just continue the lease month to month (with 3% yearly hikes i will be paying roughly .27 per kwh at the end of the 20y lease period if i am still there which is still not bad considering PGE costs will be much higher by then)

I think my calculations are roughly correct.

[hayhayday]

If you think the system will continue to underproduce I would just pay the lease payments as 14 years of ~300 is only about 5k including increases and a 20 year old system that already underpreforms is likely worth almost nothing. Assuming there is a problem and calling them could get it to get back to full production your montly bill would almost double making prepaying the lease more compelling. The current nem proposal assuming it passes will only give 10 years from original pto date on net metering so it might be safer wait until you know the outcome before asking them to come out and fix the system if you intend on continuing with monthly payments as 4 years from now you could be stuck paying both the ppa while getting only a fraction of that as credit for the generation.

[solardreamer]

thanks for putting up with me guys.. I understand i did not provide all the info but it took me a while to figure it all out, i think:

1. Its a PPA where I buy per kwh from tesla and all the overage NEM from PGE
2. last year the system produced 1700kwh (although its rated at 3200) so last year the owner paid tesla $289. (1700*.17)
3. on top of it, since he used way more then he produced he paid PGE $1,633, which was charged at roughly .32/kwh
so there seems to be a significant saving by going solar at least today. assuming energy costs stay flat there is a savings of roughly $2600 over 14y just going solar. (i understand that costs will not stay flat, but if they go up roughly 3% every year, it should stay the same.
issue is the
1. solar does not seem to be working at full capacity. When the sale closes i can have tesla support come out and take a look.
2. the energy it makes does not come close to covering the homes energy costs.
I expect my energy use to be significantly less than the current owners but it probably wont cover my use either. my estimated use 4000kwh per year

Even with the current system only producing 1700kwh/ year, my savings over the next 14y will be roughly $2,600 over just going directly with PGE.
So it seems like buying out the lease is the best bet to lock myself in to .17/ kwh price. But if i plan to stay there roughly less than 8y, just continue the lease month to month (with 3% yearly hikes i will be paying roughly .27 per kwh at the end of the 20y lease period if i am still there which is still not bad considering PGE costs will be much higher by then)

I think my calculations are roughly correct.

Are you certain the system is supposed to produce 3200Kwh/year? Is it in the PPA agreement? If so, it's a reasonable size for your expected 4000Kwh/year consumption.

Buy or not, I suggest you contact Tesla ASAP before completing the home purchase to a get feel of their customer support quality. I would personally want the seller to get it taken out and not deal with a problematic system if the customer support sucks.

[igell]

The paperwork states that an estimated first year production is 3200, this is year 6 but it should still be much higher than 1700kwh.
At this point seller doesn't want to be involved and the price for the home is good enough in this market to buy it no matter what. solar lease is not enough of a deterrent. Ill try to contact support but i doubt they'll do anything until i actually take ownership of the lease. My only decision now is buy out the lease at $6200 or continue just paying monthly because i will only have the option to buy out the lease at change of ownership.

[J.P.M.]

The paperwork states that an estimated first year production is 3200, this is year 6 but it should still be much higher than 1700kwh.
At this point seller doesn't want to be involved and the price for the home is good enough in this market to buy it no matter what. solar lease is not enough of a deterrent. Ill try to contact support but i doubt they'll do anything until i actually take ownership of the lease. My only decision now is buy out the lease at $6200 or continue just paying monthly because i will only have the option to buy out the lease at change of ownership.

One more time: By your own statement, it's not a lease. It's a PPA.

Also, we don't know anything about the array's orientation or shading. I can't even see where you've stated the system size. Without that information it's impossible to say whether or not the system is underperforming.

Now, if it were to produce something like the (assumed) Tesla annual output estimate of 3,200 kWh/yr. and your not near the Oregon coast or far northern CA to produce 3,200 kWh/yr. ought to require something like a (3,200kWh/yr)/(1,500 kWh/yr. per installed STC kW) = 2.13 STC kW. If that's close to the size, the buyout price would be $8,000/2,130 ~ $3.76/STC W. Hell, you can buy new for something less than $3.50/STC W even in N.CA and take an addition 26% tax rebate on top of that.

I'd ask the seller for a 6,200 credit on the price of the house. If that works, and if your still interested in pursuing PV, wait until the dust settles around the NEM 3.0 hoopla, and for the love of the Almighty, get informed about PV, how it works and how PG & E charges residential customers for electricity. Then, call Tesla or whoever owns this turkey and be prepared to have them tell you there's nothing wrong with it, but only after they don't return your phone calls for some time. If they fix it - which I think is doubtful given what I've seen of their work, personnel and professionalism, whatever the output is, you'll be paying less than retail for the power if or until NEM 3.0 guts the cost effectiveness for PV produced residential electricity.

Most of what I've read in this thread that others have offered in the way of information and advice seems to have not made an impact on what you seem to not know about your situation and what influences it. I think a lot of your problems in reaching a decision stem from ignorance. I suspect most of those who have offered advice would not wasted time on Tesla or told the owner to make an adjustment in the offering price of the home. probably close to the buyout price. Whatever you do, know that Tesla will always be a poor vendor for service.

[foo1bar]

The paperwork states that an estimated first year production is 3200, this is year 6 but it should still be much higher than 1700kwh.
At this point seller doesn't want to be involved and the price for the home is good enough in this market to buy it no matter what. solar lease is not enough of a deterrent. Ill try to contact support but i doubt they'll do anything until i actually take ownership of the lease. My only decision now is buy out the lease at $6200 or continue just paying monthly because i will only have the option to buy out the lease at change of ownership.

What does the $6200 up front get you?
What does the $8000 up front get you?

*IF* it is only able to produce 1700 kwh, it's definitely not worth $6200 to buy it out.
The next 14 years of payments would be only ~$5k.
I think that only if production goes up more than 30% would it make sense to pay $6200 now to get out of the next 14 years worth of yearly payments.
Even then, I'm assuming 0.5% production decrease/year, 3% rate increase, and a discount factor for NPV calculations of 1.00
If you increase the discount factor to something that I think is more realistic like 1.02, then it'd have to be producing 50% more for it to be worthwhile to buy out the lease.


I'd probably ask about seeing previous year's records... Did something happen (tree grew? inverter failed?) that half the array was not working last year?

Also, at $.17/kwh, I'd want to make sure that the power I'm buying from Tesla is cheaper than if I were buying that power from PG&E.
In order to tell you'd need a lot more billing details - see what it looks like for $/kwh for the kwh being sent to the grid.
$.17/kwh is pretty high price. Even for PG&E.
And that could be why the seller's system isn't producing as much - he may have partially disabled it if the $/kwh is cheaper buying from PG&E than buying from Tesla.

Probably it doesn't make that much of a difference overall.
But it may give you some leverage - that when you look at this solar thing it looks like you'll be paying way too much compared to if you installed a new system today. So you think the seller should credit you $6200. Or they can get Tesla to remove the system.

of course, this also means you have to consider whether the seller will simply go "OK - I'm done with you, we'll just relist the house."

[solardreamer]

The paperwork states that an estimated first year production is 3200, this is year 6 but it should still be much higher than 1700kwh.
At this point seller doesn't want to be involved and the price for the home is good enough in this market to buy it no matter what. solar lease is not enough of a deterrent. Ill try to contact support but i doubt they'll do anything until i actually take ownership of the lease. My only decision now is buy out the lease at $6200 or continue just paying monthly because i will only have the option to buy out the lease at change of ownership.

Sounds like the housing market for you makes it impractical to ask the seller to do much as you are getting a good enough price to make up for the $6200. If so, I think the decision is mainly dependent on how long you plan to stay. If it's for the long haul then it's probably better to buy it out and be ready and budget to potentially hire new installer to replace it with appropriate system as many installers refuse to take over existing systems installed by others.