About to purchase but SRECS holding me up.. Need advice

[quest2255]

So was originally looking at your typical sale companies (Vivint, SolarCity) until one of my neighbors suggested that I buy. I found out about another company Direct Energy Solar which has ties to some electric company in Texas however is UK based (sounds crazy right). Well the deal that they offered me on purchase seems better than any of the leasing options that Vivint and Solar City were proposing given the SREC incentive. They are guaranteeing me $65/Srec for 5 years which is what I'm going to put towards my panel payments each year. Well I'm trying to decide if to go along with that deal or manage my SRECS myself. I'm in Maryland and the rate for SRECS keep dropping which isn't instilling alot of confidence in the market (saturated market I suppose?). So my question is this, should I go along with this deal or should I manage them myself. There are no commission fees going through the company (direct energy solar). I also want to make sure I'm not being oversold as I can't really tell how much each panel is being sold for. This is the best system spec wise I could find between the 4 companies (solar city, vivint solar, direct energy solar, solar energy world) I've interviewed. My hesitation is particularly about:

Financing through the company: 5% APR... all other companies offer 2.99%. If I got financing through my bank, what kind of loan is that considered (Personal?)
Overall cost of the system- How do I figure out if I'm paying too much?
SRECS- sell them myself or have company sell them? Any chance of this being cancelled half way through and company not paying me back those credits? Any chance of it rising over the next 5 years?


My system specs are below.

System Size 15.000 kW
Annual Production 16,906 kWh
SYSTEM DESIGN
Panel Type LG 300W
Inverter Type Enphase M250-60-2LL-S22

Gross System Cost $52,450
Promotional Discount, -0.30 ($4,500)
MD Clean Energy Grant ($1,000)
30% Federal Tax Credit ($14,385)
Down Payment $0 Term Loan Amount $32,565
Short Term Loan Amount $15,385
Promotional Cash Rebate $500
Term 25 years

YEAR 1 MONTHLY ANNUAL
Utility Savings $182 $2,178
SREC Earnings $85 $1,024
Solar Payments ($210) ($2,515)
Total Savings1 $57 $687

Apologies for some of these questions if they seem repetitive. I actually did some reading on this site and found some horror stories regarding solar panels and just want to be as informed as possible before committing to something like this. This is a big purchase for me. Any and all advice is appreciated.

[J.P.M.]

Be careful what you ask for, but, for starters and since you are asking:

This whole thing sounds like too leaky a vessel to put much faith in.
I see no mention of your annual usage.
Your hesitation is well founded. Stay that way until you know more. A lot more. Get your own answers and do not rely on those with skin in the game to provide them.
So far you've mentioned at least two bottom feeders of the solar vendors (SolarCity and Vivant). Avoid them.
Also, learn about SRECS on your own. That the price of SRECs is volatile is a way of life.
Call me skeptical, but overall, while most any deal is better than a lease, what you describe sounds like, if not a con, at the least a poor deal, especially with the SREC reference thrown in.
For a south facing roof in/around Baltimore w/ a 20 deg. tilt, you ought to be getting something like 1,300 kWh/yr. per installed kW of PV. The vendor's estimate of 1,120 kWh/yr. per kW. seems a bit light. What orientation do you have to work with ?
Download "Solar Power Your Home for Dummies", a free net download, or spend 20 bucks for an updated version. You need an education. If you get one and still think this is a good deal after getting more quotes and your own answers, go for it.

[ButchDeal]

MD SRECs are currently around $20, but they are guaranteeing $65 and for some reason they did the math for you with $85 SRECs.

at $65 an SREC your annual savings drops by $240
at $20 it drops by $780

they also did the federal incentive incorrectly.
you have to count all the up front grants first so you should have

Gross System Cost $52,450
Promotional Discount, -0.30 ($4,500)
MD Clean Energy Grant ($1,000)
Promotional Cash Rebate $500
30% Federal Tax Credit ($13.935)
Down Payment $0 Term Loan Amount $32,565
Short Term Loan Amount $15,385

In other words that is ( 52,450 - 4,500 - 1,000 - 500 ) * .30 = 13,935

[quest2255]

Thanks for the guidance all. Mr ButchDeal the way you have put it the less the value of the SREC the more savings you get? J.P.M I would like to attach my proposal but don't want to divulge all of my personal information. Can I send it to either of you for a review? I'm going to take your advice and get that book and read up some more.

[ButchDeal]

Well no the less you get for the srec the less savings you have

[J.P.M.]

Thanks for the guidance all. Mr ButchDeal the way you have put it the less the value of the SREC the more savings you get? J.P.M I would like to attach my proposal but don't want to divulge all of my personal information. Can I send it to either of you for a review? I'm going to take your advice and get that book and read up some more.

There's no way to PM members. Getting informed is about the best way to avoid getting taken. Read the book, understand how you pay for power, and take sensible energy conservation measures before solar. I'd start by disabusing myself of what seems to be the foregone conclusion you want/need solar PV in the first place. It's a choice - not a mandate, and there is no deadline even if you choose to get solar. If you do choose to do PV, make it the last thing you do to lower a bill because it's the most expensive way to reduce electrical usage.

[quest2255]

Well I got the book. I'll start reading. Our home is a new home and I just wanted to get away from eventually paying for electricity and I figured going solar would be a good choice. As I researched it, it looked more appealing until I got to the SREC market (the gotcha). I understand it works like stocks. What I don't understand is the foreseeable future in Maryland. I know the program is set to run for 10 years but current Governor Hogan did something to legislature which pushed off a vote till next year which caused some concern for me. I would like to depend on these SRECS but, my fear is that I'll lose out on money if it jumps up above $65/SREC. All the companies I've contacted regarding solar are all giving the same amount per SREC. My second fear is that the market does so bad that the program is cancelled. What does that mean for the SREC savings? What does it mean for credits that I get back from the electric company (SMECO). There just isn't enough information on this market to make an informed decision. Look I get this is a public forum, and I appreciate the responses so far, but if someone can answer or point me in the direction or if you know the answers to these questions or if there are better solutions out there which will cost less but work similar or give better performance please let me know. I'm a tech guy so my determining factor was that I was getting a reputable brand (LG) which had the most watts per panel (300W). No one else that I've interviewed gave me options better than that. Again my constraints are cost, tech(panels), financing, and SRECs. Here's all the information that's on my proposal which I think is relevant.

AVG. UTILITY RATE --$0.1377
ANNUAL ESCALATOR --4.00%
ANNUAL CONSUMPTION --15,648 kWh

PRODUCTION ESTIMATE
System Size 15.000 kW
Annual Production 16,906 kWh

SYSTEM DESIGN
Panel Type LG 300W
Inverter Type Enphase M250-60-2LL-S22

Gross System Cost $52,450
Promotional Discount, -0.30 ($4,500)
MD Clean Energy Grant ($1,000)
30% Federal Tax Credit ($14,385)
Down Payment $0
Term Loan Amount $32,565
Short Term Loan Amount $15,385
Promotional Cash Rebate $500
Term 25 years @ 5.99% APR

YEAR 1 MONTHLY ANNUAL
Utility Savings $182 $2,178
SREC Earnings $85 $1,024
Solar Payments ($210) ($2,515)
Total Savings1 $57 $687


I appreciate all the information so far so please keep it coming. I'm just a little frustrated and as it's my first home I really don't want to make what could be a huge mistake. You can also e-mail me at quest2255@aol.com (yes I still have one of those) and I can communicate some information via that if anyone is willing to spare the time.

[ButchDeal]

again, MD SRECs are far from $85

[quest2255]

They (company I'm potentially buying from) want to buy my SRECS from jump for $65/SREC. I know the rate is $20/SREC but they are trying to lock me in for 5 years. That's a long time in my opinion and there isn't enough information on the market especially in MD to make an informed decision. My assumption is that the local companies SMECO, PEPCO, BGE all have to purchase these SRECS so I'm not sure how hard it will be to sell them to those companies if I decide to sell them myself. My concern is a year from now will it jump up to $165 or $200 like it has in other states. I would be pretty pissed if that happens.They are buying the SRECS from me because they are owned by an electric company which needs them.

[J.P.M.]

They (company I'm potentially buying from) want to buy my SRECS from jump for $65/SREC. I know the rate is $20/SREC but they are trying to lock me in for 5 years. That's a long time in my opinion and there isn't enough information on the market especially in MD to make an informed decision. My assumption is that the local companies SMECO, PEPCO, BGE all have to purchase these SRECS so I'm not sure how hard it will be to sell them to those companies if I decide to sell them myself. My concern is a year from now will it jump up to $165 or $200 like it has in other states. I would be pretty pissed if that happens. They are buying the SRECS from me because they are owned by an electric company which needs them.

Yea, but they'll need them for the right price, which fluctuates and which is as unknown in the future as the weather or politics as your other state pricing seems to indicate. Be as pissed as you want, but know that's just the way it is. So, do the homework, and take your best shot and expect to be on the wrong end of any decision once in a while. Fortune favors the bold and at the same time slaughters the foolish. FWIW, I'd leave SREC's out of most decision making and treat them like gravy or icing if/when they showed up, as in for example, size the system properly and use any SREC income to offset the residual bill.

As for the company's price - pay your money, take your choice - or not.

[ButchDeal]

They (company I'm potentially buying from) want to buy my SRECS from jump for $65/SREC. I know the rate is $20/SREC but they are trying to lock me in for 5 years. That's a long time in my opinion and there isn't enough information on the market especially in MD to make an informed decision. My assumption is that the local companies SMECO, PEPCO, BGE all have to purchase these SRECS so I'm not sure how hard it will be to sell them to those companies if I decide to sell them myself. My concern is a year from now will it jump up to $165 or $200 like it has in other states. I would be pretty pissed if that happens.They are buying the SRECS from me because they are owned by an electric company which needs them.

they are guarantying you $65 fine then use $65. I just don't understand why you would use $85 with a guarantee of $65 and current pricing at $20.
there are fees to sell them usually as well, not much but still fees. I wouldn't count on SRECs in MD for much of the ROI
and certainly not for more than 5 years.

[cebury]

To help make it more clear, reinforcing what both JPM and Butchdeal have stated, Srec pricing is beyond your control and out of everyone's ability to foresee. Either be a gambler or play it safe, bird in the hand and all that. That part all depends on you.

Do you see Butchdeals point about the 85 vs 65 or was that a typo in your financial summary post?

[quest2255]

Yea, but they'll need them for the right price, which fluctuates and which is as unknown in the future as the weather or politics as your other state pricing seems to indicate. Be as pissed as you want, but know that's just the way it is. So, do the homework, and take your best shot and expect to be on the wrong end of any decision once in a while. Fortune favors the bold and at the same time slaughters the foolish. FWIW, I'd leave SREC's out of most decision making and treat them like gravy or icing if/when they showed up, as in for example, size the system properly and use any SREC income to offset the residual bill.

As for the company's price - pay your money, take your choice - or not.

I believe you misunderstand me. They are actually buying it from me so they can use it for their electric company. The way I understand this works is that each electric company has to purchase "x" amount of SRECS per year to get aligned with some sort of compliance. I know there are fees associated with the selling of SRECS if I take it upon myself. This company doesn't have any fees because they are not selling it on my behalf, they are taking them or buying them from me directly for $65 per srec. Sounds like it's a great deal if they are guaranteeing me $65 per srec for 5 years despite the market being $20. I'll take your advice regarding Solar and do some more research by reading up. What about the actual tech (ie: the panels). Are there better producing panels out there? I used the Solar Estimate link from this site and it seems pretty accurate and it pulls up one of the competitors Solar Energy home (which is a company my neighbor used). Their panels were only up to 275W so I decided to go with Direct Energy Solar because they had better panels. I am concerned that their numbers are staying the same despite me moving from the 275W panels to 300W panels.

[quest2255]

they are guarantying you $65 fine then use $65. I just don't understand why you would use $85 with a guarantee of $65 and current pricing at $20.
there are fees to sell them usually as well, not much but still fees. I wouldn't count on SRECs in MD for much of the ROI
and certainly not for more than 5 years.

That's an interesting question. I asked that before and honestly I don't remember the answer. It has something to do about them using the annual savings and then simplified it so the homeowner could see the savings per month. I think that's it. So if you take the annual savings divide by 12, I believe it comes out to $85 per month. Let me know if that makes sense of if I need to go back and ask that question again.

[quest2255]

To help make it more clear, reinforcing what both JPM and Butchdeal have stated, Srec pricing is beyond your control and out of everyone's ability to foresee. Either be a gambler or play it safe, bird in the hand and all that. That part all depends on you.

Do you see Butchdeals point about the 85 vs 65 or was that a typo in your financial summary post?

I think I will go along with taking the deal at $65/srec. I'm still concerned about my overall cost and if I'm paying too much etc. JPM almost has me thinking don't do it at all and look into other alternatives for power and I'm more confused now then I was before. He is right though, I need to do more research. This is a huge investment for us and I don't want to put my family at financial risk going down this path. Just wish I had some direction on where I can get answers to some of these questions.

[ButchDeal]

Are there better producing panels out there? I used the Solar Estimate link from this site and it seems pretty accurate and it pulls up one of the competitors Solar Energy home (which is a company my neighbor used). Their panels were only up to 275W so I decided to go with Direct Energy Solar because they had better panels. I am concerned that their numbers are staying the same despite me moving from the 275W panels to 300W panels.

ok let me simplify this down for you
say you had two quoted systems both at 15kw size. One uses 300W modules and one uses 275w modules.
the production will be the same. The only difference is one will have more modules and be slightly larger (assuming they were both using 60 cell modules).
they would still produce the same, even if one uses 200w modules and the other used 400w modules.

[J.P.M.]

Just wish I had some direction on where I can get answers to some of these questions.

"Solar Power Your Home for Dummies" is a start. Then, study up on time value of money, utility rates and informed thinking on the direction/degree of future rates and tariff policies. While reading/studying about all that, think about other places you could put the money (and have it reasonably safe for some risk level acceptable to you), and at some future point have a pretty good chance of having all the principal and accumulated earnings available for other uses. Part of the comparison of alternative analysis way of looking at it.

Remember, in spite of everything - vendors, ad hype, talk shows, neighbors, whatever - There is no rush to get solar PV. It will be there (and maybe even for less $$) when you are ready and knowledgeable enough to make a truly informed decision. Knowledge is power.

As to your question about better producing panels, and adding to what Butch writes: In terms of how much power a PV system will produce, it's pretty much accepted that equal (electrical) size arrays in the same location and orientation will produce about equal annual output over the same time period. That is, put a 5kW Sunpower array next to a 5 kW, say, SolarWorld array and a 5 kW LG array, and at the end of a yr. the outputs for all 3 would probably be pretty close to one another. Quality seems to be good and about equal from one decent mfg. to the next, provided you exclude mongrel outfits, etc. Solar PV equipment is at or close to the level of a commodity. I'd be more concerned about the quality, integrity, professionalism and longevity of the vendor I chose. IMO, that's worth a tough but fairly negotiated premium. Also, if you do choose PV, get your roof inspected/serviced. PV will last a long time. Fixing roof problems under an array is expensive and disruptive. Give the roof under an array a higher probability of being as trouble free as any possible array will probably be. Call it cheap insurance.