Stating Buy-Outs on Pre-Paid Leases

[BigVolt]

FMV Appraisers - Who are they?

Well you never know what might turn out in 7 years. Fair Market Value isn't universal and can often depend on the appraiser. I wouldn't be too shocked if people find out that FMV ends up being exactly the same as the buyout option or close to it, I think a lot of these lease companies would like to dump these systems which end up becoming a liability as soon as possible.

So who are these appraisers?

What rules do they have to follow in terms of valuation?

Where can I sign up in 20 years to be one, if I'm still around!

[russ]

Well you never know what might turn out in 7 years. Fair Market Value isn't universal and can often depend on the appraiser. I wouldn't be too shocked if people find out that FMV ends up being exactly the same as the buyout option or close to it, I think a lot of these lease companies would like to dump these systems which end up becoming a liability as soon as possible.

Probably correct but there will be parties setting up to remove them and resell them I wold expect.

I agree with Ian that in 20 years time I will really care less! 67 now so that is past my expected lifetime by my estimation.

[KRenn]

I wonder where that leaves those of us who have the EBO option? Probably on the hook if IRS comes calling. I guess I'm thankful that there are probably a few guinea pigs before me when the chickens come home to roost seven years from now. LOL! Actually, waiting out the lease is fine for me too. In 20 years, I could be a senile old geezer and the solar lease will be the least of my problems.

Well you never know what might turn out in 7 years. Fair Market Value isn't universal and can often depend on the appraiser. I wouldn't be too shocked if people find out that FMV ends up being exactly the same as the buyout option or close to it, I think a lot of these lease companies would like to dump these systems which end up becoming a liability as soon as possible.

[Ian S]

From what I have heard, it remains available, but the language had to be written differently, its now the greater of fair market value or the early buyout from what I understand. I think legally, operational leases, which the vast majority of solar leases are, have to be offered at FMV whenever you buy it out, otherwise it isn't legal.

I wonder where that leaves those of us who have the EBO option? Probably on the hook if IRS comes calling. I guess I'm thankful that there are probably a few guinea pigs before me when the chickens come home to roost seven years from now. LOL! Actually, waiting out the lease is fine for me too. In 20 years, I could be a senile old geezer and the solar lease will be the least of my problems.

[KRenn]

I heard that SunPower is no longer offering the EBO (didn't know that it was still being offered on title change).

I'm wondering why?

Was it because of the expiration of the cash grant and 100% depreciation in 1st year, or were there legal issues forcing the change?

It was a great lease, the only lease/PPA offering that I thought was better than a cash purchase.

Sorry to see it go!

From what I have heard, it remains available, but the language had to be written differently, its now the greater of fair market value or the early buyout from what I understand. I think legally, operational leases, which the vast majority of solar leases are, have to be offered at FMV whenever you buy it out, otherwise it isn't legal.

[BigVolt]

SunPower Is No Longer Offering EBO?

My installer mentioned that the Sunpower lease was recently changed and the EBO is only possible if you are transferring the title of the house (ie selling it). I requested a copy of the revised lease to verify.

I heard that SunPower is no longer offering the EBO (didn't know that it was still being offered on title change).

I'm wondering why?

Was it because of the expiration of the cash grant and 100% depreciation in 1st year, or were there legal issues forcing the change?

It was a great lease, the only lease/PPA offering that I thought was better than a cash purchase.

Sorry to see it go!

[KRenn]

Ian is correct - it would be stupid for them to maintain responsibility for maintenance after you take over the system.

Careful about that installer - he seems to be rather loose with words.

Yeah, there's no maintenance after the lease ends is my understanding, its a take it or leave it type of situation.

[russ]

Ian is correct - it would be stupid for them to maintain responsibility for maintenance after you take over the system.

Careful about that installer - he seems to be rather loose with words.

[Ian S]

I too have been looking at this system and I was glad to stumble across this thread. It does seem to be 'to good to be true' but given the rationales in this thread it seems to make sense. I'm sure Sunpower's costs are far below what they are selling their panels for and they are making up in depreciation and credits. They seem like a good company (unless you look at the rightwing blogs...) and they seem to have a good chunk of the market and if this lease catches on, they will do quite well.

On the question to exercise the buy out or not in 6 years, my installer was telling me that it's not actually in the interest of the lessor to do the buy out as Sunpower will continue to monitor and maintain the system for the life of the lease. if the inverter goes belly up in 15 years, they would have to replace it. in that respect it kind of feels like insurance with a pretty minimal premium. Also he mentioned that at the end of the term, most likely they would just give the system away as it would not be cost effective to remove them from people's houses.

I'm pretty close to jumping in. anyone want to play devil's advocate and tell me why this is a bad idea?

Your installer is almost certainly wrong in claiming that Sunpower would continue to be responsible for maintenance after transfer of ownership. According to my Sunpower lease, if the EBO is exercised, the system is transferred to me on an "as-is, where-is" basis which tells me that they have no responsibility for the system after the transfer. So get a copy of the lease and read it carefully and if you don't understand it ask a lawyer. Now they may continue to provide the monitoring service as they do this for folks that buy instead of lease. But maintenance? No way.

[jinx1832]

My installer mentioned that the Sunpower lease was recently changed and the EBO is only possible if you are transferring the title of the house (ie selling it). I requested a copy of the revised lease to verify.

[KRenn]

My local installer is strongly recommending a Sunpower package: E20/327 x 19 = 6.21Kw for $13.5K. Although I consider the EBO featurea key benefit of the Sunpower lease, he warned me that there is no guarantee on the 3rd party appraisal FMV. Is there anyway to gauge the potential FMV of this system? I always get worried when appraisals are involved given the inherent subjectivity.

I know this issue was discussed in this thread, just not clear if there is a concrete anwser.

Thanks.

There really isn't but ultimately their motivation is to unload that system between years 7 and 9. They've made back all they are going to at that point, holding on to the system means incurring future costs, like replacing the inverter....etc. In anycase, the SunPower lease is the only one that seems to be somewhat affordable, especially on the prepaid end.

[jinx1832]

FMV vs EBO Price

My local installer is strongly recommending a Sunpower package: E20/327 x 19 = 6.21Kw for $13.5K. Although I consider the EBO featurea key benefit of the Sunpower lease, he warned me that there is no guarantee on the 3rd party appraisal FMV. Is there anyway to gauge the potential FMV of this system? I always get worried when appraisals are involved given the inherent subjectivity.

I know this issue was discussed in this thread, just not clear if there is a concrete anwser.

Thanks.

[KRenn]

The 'unofficial' quote I got was for about little over 1k per panel: 16.5k for a 16 panel system for the new 327 watt panels. I should be getting a real quote tomorrow and we'll see if it stacks up. I was also told that if I went with the lease over a buy, that I would be dealing with SunPower directly and they would only be installers. in other words, they wouldn't be charging me for the benefit of being as middle man and that SunPower would be paying them to do the instal.

That actually sounds pricy, I'd definitely get more quotes. 16x327=5.232kW system.

At $4 a watt, a purchased system(obviously not SunPower) will cost you about $21,000 up-front. But then you get varying utility incentives...which aren't much...and a 30% tax credit which would amount to about $7000. Subtract the $7k from 21 and now you're in for $14,000 for a purchased system that you own 100%. One of the main advantages of doing a prepaid lease is that the cost is significantly reduced, however in your case, this really isn't true. I would definitely shop around for other quotes, if you can buy a system cheaper than you can lease it, even if its a non-SunPower system, that is a win-win-win-win every time.

and as for the 12 year ROI, the way I see it, it gets pretty hot here (I'm in southern california) and I expect that my ROI will be more in the order of 7 years given the kind of bills we get over the summer. I probably won't stay in the house for more than that but even if I do, the monitory savings should be more than enough to justify it. I can wait until I break even before I look at the buyout, but that's a long way off.

I didn't say it was a 12 year ROI, I said you had to decide on how long you were going to stay in your home to decide whether the buyout makes sense or not. If you expect to stay in your home for 12 years or less, the buyout makes sense because you would gain ownership and gain appreciation of your home value. if you plan on staying for more than that, it's probably better to hold on to the lease depending on how things look between years 6-8 since they would be on the hook for inverter replacement.....etc.

[Naptown]

Check very carefully about them maintaining the system after the buyout. I tend to doubt they would maintain something if they no longer owned it particularly considering the replacement inverter costs. At 5 years on a prepaid they have squeezed every ounce of profit from the system in the form of credits, depreciation etc. After the 6 year mark it only starts to cost them in maintenance. By selling out at that point the cost of maintaining the system is on you.

[vordo]

A. It really isn't in your best interest unless you plan to sell the house within 12 years....if so, that additional $1000-2000 might earn you $10,000 or more in higher appraisal value.

B. The idea that they would just "give the system away" is obtuse. Nobody can know that for sure and any installer that claims that automatically loses credibility points in my eyes.


The SunPower lease is legit, I would recommend getting quotes from various SunPower dealers as the pricing between them CAN and WILL vary considerably at times. Additionally there's differences in panels, some are using 230 watt modules, some are using 320 watt modules and now some even have the new 20% efficiency 327 watt modules that they're offering.

The 'unofficial' quote I got was for about little over 1k per panel: 16.5k for a 16 panel system for the new 327 watt panels. I should be getting a real quote tomorrow and we'll see if it stacks up. I was also told that if I went with the lease over a buy, that I would be dealing with SunPower directly and they would only be installers. in other words, they wouldn't be charging me for the benefit of being as middle man and that SunPower would be paying them to do the instal.

as for the giving the system away thing, who bloody knows given 20 years is a long ways away and I'm sure systems will be even more efficient, smaller and cheeper. we'll have to wait and see on that one.

and as for the 12 year ROI, the way I see it, it gets pretty hot here (I'm in southern california) and I expect that my ROI will be more in the order of 7 years given the kind of bills we get over the summer. I probably won't stay in the house for more than that but even if I do, the monitory savings should be more than enough to justify it. I can wait until I break even before I look at the buyout, but that's a long way off.

thanks for the perspective, anyone else?