Buying with Bank Financing

[Ian S]

Sorry JPM, when you describe my outlook as simplistic and short-sighted ESPECIALLY when your claim is not backed up by one iota of evidence, IMHO that constitutes more than simply disagreeing with an opinion. In fact if you want simplistic, I'd suggest it's a better description of your opinion on leasing which if I understand it correctly is pretty much NO regardless of an individual's circumstances. Perhaps you can identify a specific instance on this forum where you actually advised someone that a solar lease might be a good option to pursue. In stark contrast, I have always maintained that there are circumstances wherein a lease can make sense for an individual but that they have to work out the numbers to really be sure. Furthermore, I have ALWAYS stated that folks should look to conservation and other low/no cost measures FIRST, and that solar PV won't make sense at all for those with some combination of low rates, low incentives, low consumption, etc. I have also ALWAYS argued that oversizing is NOT the best approach from a cost-effectiveness standpoint. Indeed, I walked the walk on the latter by installing a system that offsets only 2/3 of my total consumption but covers - just barely - ALL of my peak usage.

[russ]

I'm not sure how I'd insult an opinion anyway.

If being politically correct (P.C) means never saying what someone with oversensitive feelings may not like, then, FWIW and to be clear about it, and at the risk of being politically incorrect, screw P.C. I'm disagreeing with the opinion, not insulting or disrespecting you or anyone else. Your inference that I may be disrespectful to you or anyone is not something I can address or choose to do anything about.

To some simply disagreeing with them is insulting.

[J.P.M.]

That's respectful? I'd hate to see what you consider insulting. I can only imagine how popular you must be within your HOA. Lots of eye-rolling when you get up to speak at the annual meeting, I suspect. LOL!

FYI, How popular I may be in my HOA is not a matter for discussion here. I serve at the pleasure of the membership of my HOA and take my fiduciary responsibilities seriously. Part of that includes honesty. It ain't a popularity contest.

However, since you seem curious, FWIW and FYI and to you inquiries, I offer the following:

Opinions vary. People in my HOA who have taken my advice (mostly by doing their solar homework) generally have somewhat friendly thoughts, whether they agree with me or not. Many residents disagree with my opinions but I believe they do not doubt my veracity, intentions, motivation, good will or good manners. Maybe I'm wrong. I'd guess a few smile to my face and call me a butt hole elsewhere. Either way, or anywhere in between, I try to speak my true feelings and call'um like I see'um without attempting to offending, but, to quote Strother Martin's character: "Some folks you just can't reach". My observation is the more unsure someone is of their information and decisions, the more defensive and belligerent they become.

Those residents who lease Sunpower systems for example, are generally less favorably inclined toward favorable thoughts, particularly those (fortunately few) whose monthly payments are now a bit greater than their bills would have been had they done nothing - that (somewhat local) situation being mostly for 2 reasons: 1.) The initial small, (market driven) difference between their lease payment and prior POCO cost, and 2.) POCO Rates being somewhat less than the were at lease signing (a situation in monthly flux just now and probably for the next yr. or two).

I suspect part of their rancor may be due to their feeling that they got caught looking the wrong way when I suggested leasing was maybe not a good idea, particularly leasing Sunpower stuff which is good but overpriced for similar performance, and therefore less cost effective than other stuff. The rest of their angst is probably due to my scintillating personality.

I'd suggest (also respectfully) that not agreeing or liking what someone says or writes may not be a valid reason to infer (as you seem to be doing) it as being disrespectful. The way I learned it, I can disagree with opinion(s) as long as I'm respectful of the person having that opinion. Not liking what I say/write is not, in my book, a reason to claim, or infer I'm disrespectful of anyone.

Not applying this to you but, I'm of the opinion that sometimes folks use that tactic as a means of passive aggression when they lack enough of a sack, or information, or both to engage in meaningful discussion.

I'm not sure how I'd insult an opinion anyway.

If being politically correct (P.C) means never saying what someone with oversensitive feelings may not like, then, FWIW and to be clear about it, and at the risk of being politically incorrect, screw P.C. I'm disagreeing with the opinion, not insulting or disrespecting you or anyone else. Your inference that I may be disrespectful to you or anyone is not something I can address or choose to do anything about.

[J.P.M.]

That's same as eMPG use on EV. Depends on how you size your solar, your net generated cost per kWh vary. The differences are your saving of each kWh.

Same theory as you build solar to keep you off higher tier rate. The power user always on high tier rate, so solar make sense for them.

I respectfully disagree with your methodology in figuring saving realized from E.V. acquisition. Most economic analyses take the actual situation and conditions into account as best as can be determined, not simplifying assumptions that may not be applicable.

VERY oversimplified and for illustrative purposes only:

Right now, subject to change, if I charge an E.V. on a separate meter at home, and have one eye and one balloon knot, I'll charge it for about $.17/kWhr. between midnight and 5 A.M., NOT the rate of the last (highest) kWhr. purchased, just like one of my neighbors does most nites.

I'd then look at the savings from using a different fuel source as in, using your #'s: $1,862.00 - ($.17/kWhr. X 3,820 kWhrs.) = $1,209/yr. SAVINGS.

Now, how much will it cost you to switch your current vehicle to an E.V., including acquisition costs for the new E.V. reduced by any ICE vehicle as trade in, plus any necessary home charging equipment additions, plus the incremental cost of adding enough solar capacity to generate an additional 3,820 kWhrs./yr. ?

Next: Project the net present worth of that $1,209 forward in time until you get to the # of years it takes for that net present worth sum to equal the sum of all those vehicle acquisition and changeover costs. That's a REAL back of the envelope SWAG at how long it will take for an E.V. to break even from a cost effective standpoint.

I'd do something like the above before I made my decision if only as a check on reality.

This still being a free country, I'd then do what I damn well pleased with my money and tell people who question my vision to kiss what they seem to think blocks it. But I'd do so with a bit more information and my eyes and brain open.

As far as building solar, the smart money does it because it's their best economic choice. The really smart money usually finds there are almost always better economic choices to keep you off the highest, or higher tiers before throwing expensive solar electric systems at bloated energy bills. Those who oversize without a prior reasoned, informed economic analysis of alternative uses of the assets needed may have vision. An alternate possibility is that they may be seeing things through rose colored glasses, or may have their vision partially blocked by their gluteus maximus.

[Ian S]

I am of the respectful opinion that the outlook you seem to exhibit on these issues is simplistic and shortsighted, particularly with respect to the time value of money and the comparison of alternatives. Another one of those things we each see differently.

That's respectful? I'd hate to see what you consider insulting. I can only imagine how popular you must be within your HOA. Lots of eye-rolling when you get up to speak at the annual meeting, I suspect. LOL!

[silversaver]

Pardon? Why 48 cents?

That's same as eMPG use on EV. Depends on how you size your solar, your net generated cost per kWh vary. The differences are your saving of each kWh.

Same theory as you build solar to keep you off higher tier rate. The power user always on high tier rate, so solar make sense for them.

[russ]

Now, lets break down your each kWh by: $1862 / 3840kWh = $0.484 per kWh. Your saving is always at highest rate in electricity bill.

Pardon? Why 48 cents?

[silversaver]

A proper sized system today won't be the same when you look at it 5 years from today.

The saving you get from electricity bill is far less than what you can save in gasoline.

If you drive 12,000 miles per year. Lets say you have average of 27MPG. 12000miles / 27mpg = 444.44 gallons of gasoline needed. One gallon of gasoline is about $4.19 X 444.44 gallons = $1862 (your annual gasoline spending)

An average EV needs about 32kWh per 100 miles. So you need (12000 miles / 100miles) = 120 units of 32kWh. So you need about 32kWh X 120 = 3840kWh annually.

Now, lets break down your each kWh by: $1862 / 3840kWh = $0.484 per kWh. Your saving is always at highest rate in electricity bill.

some might say oversizing is due to gross ignorance, IMO, having vision.

[HX_Guy]

I think it goes without saying that it will depends from location to location. A place like San Diego, which in which I have to assume people consume substantially less kWh than a place like Phoenix, it's a lot harder to justify financing a system because the loan payment will most likely be higher than what your electric bill would be.

I didn't have to go the financing route but I did look into it extensively and at least with the math I did, it made sense if one is unable to pay for the system differently. I'll give you an example of a system that was estimated to produce enough to cover 100% of usage, 12.20kW.
The gross system cost was $37,551 and the loan would have looked like this...0% interest on $11,265.30 (30% ITC) and 2.99% for 12 years on $25,285.70 (70% of original minus $1000 State ITC) for a monthly payment of $209.19.

Our electric bill averages $242 per month. Now there would still be some charges of about $15/month to be grid-tied...but add that to the loan payment and you're at $224.19. Less than the old electric bill and all the while you're paying down the system.

[J.P.M.]

I'm not even sure what this means. What constitutes a "poor first choice among alternatives?" Still a first choice I guess and still saving on an electric bill. What's not to like? I'm assuming of course that, however you finance, your total monthly cost after solar is less than before. Are you saying that's no longer possible in San Diego even if you don't oversize?

Ian: Read and quote the whole post, not cherry picked parts you can take out of context and then, to paraphrase Kipling, twist them like a knave would do to make a trap for fools. As for "What's not to like ?" - since you ask, I'll tell you - that starts with a poor understanding of when an action may or may not result in long term savings. I am of the respectful opinion that the outlook you seem to exhibit on these issues is simplistic and shortsighted, particularly with respect to the time value of money and the comparison of alternatives. Another one of those things we each see differently.

Most of what follows is opinion. If you are interested, read on. I'll attempt to further explain some of what I was attempting to convey by the "Poor first choice" wording. If not, move on to the next post with my apologies for wasting your time.

There are many measures one can take to reduce a residential electric bill. All are a matter of choice as one's lifestyle, sensibilities and budget dictate. One of those many measures is adding solar electric generation capabilities.

In the past, love it or hate it, solar was financial insanity - meaning for this conversation that the levelized cost of solar generated electricity using just about any reasonable set of criteria amounted to several times what the levelized cost of electricity was when purchased from SDG & E (the POCO).

Flash forward to today.

As the years have gone by, the cost of installing a solar electric system has decreased. (That's good) Also, the cost of the POCO power has gone up some (How much is somewhat complicated, but FWIW, usually less than people think).

The cost of the other measures like insulation, HVAC equipment etc. has increased some.

The cost of changing a thermostat setting or turning off a light is still zero the last time I checked.

Mostly due to system cost reductions, the Levelized Cost Of Electricity (LCOE) for solar electric today is, in many cases, less than it has been in the past (That's good).

That does not mean however that solar is the now MOST cost effective measure of all those measures to be taken to reduce a residential electric bill - just more cost effective than it was. An example: I think some solar passed new windows for energy cost effectiveness a few yrs. ago.

Nor does it mean that the LCOE of solar electricity is guaranteed to be less than the LCOE from the POCO. Getting closer MAYBE, and depending on system design and sizing, in some cases quite close, but not a lock.

Other measures are usually (not always, just almost always) still more cost effective than solar electricity and therefore probably better candidates to head the list of things to do to reduce a residential electric bill (and LCOE) when arranged in order of most bang for the buck, making those other measures a "better" choice among alternatives.

The measure that reduces the electric bill the most for the $$'s invested should head the list, ( the "best first choice among alternatives") followed by the measure with the next most bang, etc. (Some common sense applies here. For example, I'd probably spend $100 to save $10 before I'd spend $9900 to save $1000, depending.)

Around here, solar electric is still pretty far down any list of cost effective measures - such list constructed using any reasonable set of realistic financial parameters and assumptions, but it seems to be moving up.

IMO, To the degree that solar electric is far down such a list makes it a "poor first choice" for measures to reduce an electric bill. A choice, probably or maybe, just not the 1st choice. Put another way, the probability of solar being a financially sane choice today is higher than in the past, but still not a lock.

I am of the educated opinion that around San Diego, most (>> 50%) of solar electric systems are oversized and also acquired with little or no consideration of cost effectiveness (That's not good).

IMO, this hurts cost effectiveness. Large solar electric systems replace "cheaper" electricity at the expense of long term cost effectiveness. Still MAYBE cost effective, just less so, making other measures more cost effective in a relative sense. In this way, oversizing a system keeps it farther down the list.

If/when systems are sized with optimum cost effectiveness in mind, they are usually smaller, land "farther up the list" of cost saving measures, and I bet get installed on homes where a lot of conservation measures have at least been checked for efficacy, suitability, personal taste, sensibilities, and also cost effectiveness, and probably implemented to some degree prior to solar. Such systems, by definition save the most money of all solar electric systems in the long run, however "long run" is defined by the owner (That's good).

Oversizing is one of the big impediments keeping solar electric from becoming more cost effective. Again, IMO, most of the oversizing is due to gross ignorance.

[Ian S]

Now, for the most part, compared to other ways to save on an electric bill, it's mostly improved to only being a poor first choice among alternatives. A large part of this is due to gross oversizing of solar electric systems.

I'm not even sure what this means. What constitutes a "poor first choice among alternatives?" Still a first choice I guess and still saving on an electric bill. What's not to like? I'm assuming of course that, however you finance, your total monthly cost after solar is less than before. Are you saying that's no longer possible in San Diego even if you don't oversize?

[Sunking]

Well stated JPM. If you cannot afford to pay in cash, forget it. Even if you can afford to pay in cash, you are better off investing that money elsewhere. Take a loan and no wonder you are poor.

For me, short honest answer to your questions is no.

If I may, FWIR, my $.02 on solar financing:

I'd respectfully and modestly suggest from a somewhat informed and probably unpopular opinion:

At this time, using just about any reasonable and realistic criteria, most often the long term, levelized cost of electricity on even the most reasonably designed (not oversized) system in San Diego is still more than just plain old buying electricity from SDG & E thus making it, for the most part, cost ineffective at this time.

In the past it was financial insanity. Now, for the most part, compared to other ways to save on an electric bill, it's mostly improved to only being a poor first choice among alternatives. A large part of this is due to gross oversizing of solar electric systems.

Finance charges and fees from banks only make an already non cost effective system less cost effective.

It's a free country - pay your money, take your choice. I'm only suggesting that you walk in with you eyes, brain and opinion open.

Bottom line: Until and unless your prepared to run a proper cost analysis to find out if your long term choice makes any financial sense, know that before spending multiples of $10K on a possibly/likely poor, long term financial choice, it will only become a poorer choice if financing is involved.

[MySolarFriend]

With over 5 years of residential solar sales experience...I would agree 110% with the post above this.
Very well stated and factual sprinkled with sound opinions.

[J.P.M.]

Has anyone used credit union or bank financing to purchase their solar system? It appears that there are a number of local (San Diego) and national banks that will do solar loans based on credit score. Does anyone have any good or bad experience with such financing?

Thanks in advance.

~Joe

For me, short honest answer to your questions is no.

If I may, FWIR, my $.02 on solar financing:

I'd respectfully and modestly suggest from a somewhat informed and probably unpopular opinion:

At this time, using just about any reasonable and realistic criteria, most often the long term, levelized cost of electricity on even the most reasonably designed (not oversized) system in San Diego is still more than just plain old buying electricity from SDG & E thus making it, for the most part, cost ineffective at this time.

In the past it was financial insanity. Now, for the most part, compared to other ways to save on an electric bill, it's mostly improved to only being a poor first choice among alternatives. A large part of this is due to gross oversizing of solar electric systems.

Finance charges and fees from banks only make an already non cost effective system less cost effective.

It's a free country - pay your money, take your choice. I'm only suggesting that you walk in with you eyes, brain and opinion open.

Bottom line: Until and unless your prepared to run a proper cost analysis to find out if your long term choice makes any financial sense, know that before spending multiples of $10K on a possibly/likely poor, long term financial choice, it will only become a poorer choice if financing is involved.

[MySolarFriend]

Financing Solar

There are a number of loans that specialize in purchase financing. Admirals, EnerBank, Matador, etc. Most have a high credit score requirement and a maximum loan amount of around $60K.