SunRun 'leased' Solar System in California

[Naptown]

I work with SunRun and came across this conversation. Hopefully I can clear up the confusion. SunRun and SolarCity are two separate providers, each of which offers a way for homeowners to switch to solar without buying the panels. It's very similar to a lease. The companies collect the incentives and rebates in order to pass savings along to the homeowner. In general, a pre-paid option from SunRun will net out to less than what a cash deal would be after rebates and incentives. Plus, with this solar service (or leasing) model, you get free maintenance and monitoring. You get the benefits of solar power - fixed electric bills and clean energy - without the hassles of ownership. If you have additional questions you can also call 1-855-4SUNRUN and speak with someone live.

How about getting someone other than a robot autoreply respond to my numerous requests to become a dealer.

[Eugener]

Have you checked into state, local and utility rebates?
Go to dsireusa.org and see what is available to you.
I am having a hard time wrapping my head around this lease deal. The Solar City via Sunrun is also confusing as they are competitors here.

I work with SunRun and came across this conversation. Hopefully I can clear up the confusion. SunRun and SolarCity are two separate providers, each of which offers a way for homeowners to switch to solar without buying the panels. It's very similar to a lease. The companies collect the incentives and rebates in order to pass savings along to the homeowner. In general, a pre-paid option from SunRun will net out to less than what a cash deal would be after rebates and incentives. Plus, with this solar service (or leasing) model, you get free maintenance and monitoring. You get the benefits of solar power - fixed electric bills and clean energy - without the hassles of ownership. If you have additional questions you can also call 1-855-4SUNRUN and speak with someone live.

[Naptown]

Have you checked into state, local and utility rebates?
Go to dsireusa.org and see what is available to you.
I am having a hard time wrapping my head around this lease deal. The Solar City via Sunrun is also confusing as they are competitors here.

[mdh]

Are you forgetting about the California or PGE or other utility discounts and rebates? Seems like they are keeping them to themselves and a sarge part of the profit.

I hope I did not make this confusing. sorry. The prepaid less from SolarCity (via sunrun) is about $3K less in price than a full cash system purchase. I believe Sunrun is making their profit all from the depreciation schedule since they technically own the system. Sunrun gets all the tax benefits and rebates. Optically, they are pass them along.

[Naptown]

I was wrong. The outright purchase price is $26,518 before credits. After tax breaks i am looking at $17,643. Prepaid lease is $14,629. So there is a cash savings. With a pre-paid lease (up front) they pass it on to me. With a pre-purchase Sunrun owns the system... they get the depreciation and the tax benefit. However, they pass the exact discount to me equal to the tax benefit. thanks,

Are you forgetting about the California or PGE or other utility discounts and rebates? Seems like they are keeping them to themselves and a sarge part of the profit.

[mdh]

So they charge you full purchase price, give you the federal credit as a rebate they get the depreciation, the California benefits of the rebates and feed in incentives. And in 20 years you have to give it back or buy it all over again? And you get a 20 year warranty on an inverter that is warranted for 25 years?
Can I interest you in the purchase of a bridge in a great lower east side Manhattan location?

i know i am an idiot for considering this. Please see my last post. I made a mistake. about a $3K delta in savings on cash. Sure the products are under warranty, but unclear in the fine print if this includes labor beyond the installer portion. I think you are answering my question... do the cash purchase? I am wondering at the end of 20 years on the pre-purchase lease what will be the appraised value IF i want to buy the system. Who knows, 20 years down the road, will the technology be much improved? Hard for me to believe in year 21 my $26K system will have a value beyond a few thousand dollars?

thanks for schooling me. Really.

[Naptown]

the net price is the same... i get the tax benefit equivalent. With a pre-paid lease (up front) they pass it on to me. With a pre-purchase Sunrun owns the system... they get the depreciation and the tax benefit. However, they pass the exact discount to me equal to the tax benefit. thanks,

So they charge you full purchase price, give you the federal credit as a rebate they get the depreciation, the California benefits of the rebates and feed in incentives. And in 20 years you have to give it back or buy it all over again? And you get a 20 year warranty on an inverter that is warranted for 25 years?
Can I interest you in the purchase of a bridge in a great lower east side Manhattan location?

[mdh]

let me get this straight
You are considering a full cash purchase price on a lease? This means that the lease cost and the outright purchase cost are the same?
The only added value to you is a warranty for the 20 years and free monitoring?
If the above is correct who owns the federal tax credit and any state and local incentives you may be able to get, is it you or the leasing company?

I was wrong. The outright purchase price is $26,518 before credits. After tax breaks i am looking at $17,643. Prepaid lease is $14,629. So there is a cash savings. With a pre-paid lease (up front) they pass it on to me. With a pre-purchase Sunrun owns the system... they get the depreciation and the tax benefit. However, they pass the exact discount to me equal to the tax benefit. thanks,

[Naptown]

Great advice... i could not find a thread on this topic.. i will search again. How about the fact that they will cover the invertor repair? Great food for thought.. now i am all confused again

If they are using microinverters such as Enphase they are now warranted for 25 years.

[Naptown]

sunrun offers a pre-purchase lease that i am considering via Solarcity. the price equals a full cash purchase. the additional value includes monitoring, and extended warranty for the full lease period. At the end of 20 years, you have to negotiate a buyout or they take the system off the roof. I think there is a chance they will give you the system for free because the cost of removing and repairing your roof my might be more than the asset value? Or, at the end of 20 years, you might want new technology.

So, any thoughts on pre-purchase lease vs. cash purchase?

thanks...

let me get this straight
You are considering a full cash purchase price on a lease? This means that the lease cost and the outright purchase cost are the same?
The only added value to you is a warranty for the 20 years and free monitoring?
If the above is correct who owns the federal tax credit and any state and local incentives you may be able to get, is it you or the leasing company?

[mdh]

I would always recommend cash purchase first, and then prepaid lease second. Don't buy into any of "no they won't come and take the panels after 20 years."


Yes they will. At that point those panels still represent a viable tax-write off, if not a retail sale to somebody, probably not the original leasing entity but don't be mistaken and assume that nobody is coming for those panels after 20 years.

Great advice... i could not find a thread on this topic.. i will search again. How about the fact that they will cover the invertor repair? Great food for thought.. now i am all confused again

[KRenn]

sunrun offers a pre-purchase lease that i am considering via Solarcity. the price equals a full cash purchase. the additional value includes monitoring, and extended warranty for the full lease period. At the end of 20 years, you have to negotiate a buyout or they take the system off the roof. I think there is a chance they will give you the system for free because the cost of removing and repairing your roof my might be more than the asset value? Or, at the end of 20 years, you might want new technology.

So, any thoughts on pre-purchase lease vs. cash purchase?

thanks...

I would always recommend cash purchase first, and then prepaid lease second. Don't buy into any of "no they won't come and take the panels after 20 years."


Yes they will. At that point those panels still represent a viable tax-write off, if not a retail sale to somebody, probably not the original leasing entity but don't be mistaken and assume that nobody is coming for those panels after 20 years.

[mdh]

sunrun offers a pre-purchase lease that i am considering via Solarcity. the price equals a full cash purchase. the additional value includes monitoring, and extended warranty for the full lease period. At the end of 20 years, you have to negotiate a buyout or they take the system off the roof. I think there is a chance they will give you the system for free because the cost of removing and repairing your roof my might be more than the asset value? Or, at the end of 20 years, you might want new technology.

So, any thoughts on pre-purchase lease vs. cash purchase?

thanks...

[KRenn]

First when I talked to them, they got my PG&E smart meter number and were able to look up my last year's usage and found I would definitely qualify/benefit from their panels and program. Over the past year we averaged about 850 kwh per month. PG&E's billing tiers are $0.122 for the first 319kwh, $0.139 for the next 95khw, $0.30 for the next 223kwh, and $0.342 for what we use above that. So each month we pay around $0.13 per kwh for the first 415 kwh, and about $0.32 per kwh for the next 350-600 kwh depending on the month.

SunRun is going to install the solar panels on our house free of charge, however the installation fee varies from house to house. Ours happened to be free, others can be up to $1k or $2k. It sounded like it depends on the roof (i.e. installation labor), shade, direction of the house, etc. If it's a tough roof, then you have to pay extra to cover the extra installation costs. If it has shade or isn't facing the right direction, they won't make as much off the panels (is what they were implying).

What we then get is a solar panel array that they predict will produce 4,626 kwh per year (averages to 385 kwh per month). They bill us at a rate of $0.285 per kwh on a monthly basis, for the entire predicted 4,626 kwh they expect to produce in the year. If the panel produces less than what they expect, they will refund the diffrence. If the panel produces more than what they expect, we won't be charged anything in addition to the 4,626 kwh annually. The rate of $0.285 per kwh will increase annually by 2.9%. The contract term is for 20 years, and after that I can either have them remove the panels at no charge, or purchase them at fair market value (assessed by a 3rd party appraiser). If I sell the house, then I can transfer the contract over, subject to the new owner passing their credit check.
?

You would be absolutely foolish to sign a contract with an escalator. There's a lot of leases that offer zero escalator nowadays. It makes absolutely no sense, all you are doing is trading one ever-increasing payment in, for another ever increasing payment except you can dump your utility company when you move but you're stuck with the lease and if you have difficulty getting a new homeowner to sign on to an ever increasing lease, you've got to eat the cost.


Not a smart idea. Generally the bigger companies will give you the least competitive pricing. SolarCity, SunRun, Sungevity, they all have major overheads and promised returns to investors...etc...etc, I would look at some other options such as BrightGrid or SunCap and find local installers who utilize those companies and see what their numbers look like in comparison.

[Naptown]

I spoke to a SunRun provider, and I really disliked the 2.9% escalator. That meant to me you are guaranteed to have an increase in rates for the next 20 years. They use the 6% average increase year over year for utility rates, but the grahs they provided only showed a 4 year stint (from 2003 to 2006). When I did the research and saw rates dropped heavily in 2003 in my area, I then dug up the last 10 years of rates and didn't see anything near a 6% YOY increase. I saw about a 20% increase in 10 years. with a 2.9% increase I would have had a 33% increase (since it's cumulative). I calculated it to be a 72% increase in 20 years.

Try and verify using your bills for the last 3 years.

I very much liked the prepaid option they had, but SolarCity had a better rate (bigger system for comparable cost).

Do your research, look at your usage and your bills for the last 12-24 months. Use a spreadsheet and see how much money it will really cost you (or save you) to find out if it's worth it.

At the end of the day, if you can buy the system and are comfortable with supporting it and inverter replacements it's the best route. Lease/PPA approaches still get you green energy, but you send your green to someone else.

-OCJeff

well said