Looking at pre-paid lease for solar energy system

[KRenn]

From what I see on the APS website you must have a done deal to make the reservation for rebate:

To fill out this form you will need :

► Proposal from your Installer or Dealer which includes the following information :
► Model and Manufacturer of solar panels and total watts DC-STC
► Model and Manufacturer of inverter and total kW-AC
► Tilt angle and azimuth for panel installation
► Shading Percentage (Less than 25%, 26%-40%, Above 40%)
► Cost for equipment and installation components of your PV system
► You will be asked to choose a Renewable Energy rate plan designed for customers who have interconnected renewable systems. Once your reservation has been confirmed, we will contact you to ensure that the rate you have selected meets your needs.

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Not necessarily. You can pick an installer and a quote to reserve off of, and if you choose not to do it, or to do it with someone else, you're not obligated to anything, basically everything but the size of the system can be modified later on by whoever the actual installer ends up being.

[JerzeyAS]

In these "prepaid" leases....why would any customer want to buy the system at the end of 6 years??

[Ian S]

In these "prepaid" leases....why would any customer want to buy the system at the end of 6 years??

Well, it depends on what the buyout price is but if it's very cheap, then it could be an attractive option for someone who really wanted to buy and saw that prepaid lease option as a way of doing so on the cheap.

[JerzeyAS]

makes no sense to buy the system....in these prepaid leases

installer warranty is over after 5 years...so any issues are on the owner...

inverter warranty is a few years away from expiring another potential future expense to the owner.....


so why let the leasing company off the hook?? They give you the option to buy out the system because at that point, they cant make any more $$$$ from the system....at that point they can only lose $$$$$....

so what do they do, they try to sell you back the system at a cheap price($500 to $1000)...

but again why would you ever let them off the hook??


so my question if you dont buy the system...since the leasing company owns the system...what stops them from repoing there equipment?

[Ian S]

makes no sense to buy the system....in these prepaid leases

installer warranty is over after 5 years...so any issues are on the owner...

inverter warranty is a few years away from expiring another potential future expense to the owner.....


so why let the leasing company off the hook?? They give you the option to buy out the system because at that point, they cant make any more $$$$ from the system....at that point they can only lose $$$$$....

so what do they do, they try to sell you back the system at a cheap price($500 to $1000)...

but again why would you ever let them off the hook??


so my question if you dont buy the system...since the leasing company owns the system...what stops them from repoing there equipment?

Again, if someone would prefer to buy the system, a prepaid lease with purchase option at year seven essentially allows them to do that at significant cost saving over purchasing at the start instead of the prepaid lease. What keeps them from repoing the system is the contract. As long as you fulfill the contract terms you get the use of the system for 20 years. No one forces you to buy the system at year seven. It's just an option. Sure the leasing company gets out from maintenance responsibilities but maintenance wouldn't have been included in the first place if you had purchased instead of leasing.

[JerzeyAS]

I just feel theres gotta be something to it....

I dont see the leasing company taking on potential loses with no gain after that buy option isnt excersized....

[solarpowered]

I just feel theres gotta be something to it....

I dont see the leasing company taking on potential loses with no gain after that buy option isnt excersized....

Leasing company doesn't take a loss. They own the system. They get tax credit, plus 5 years of depreciation. Then charge the leased consumer cost of the system without the depreciation/write offs, and of course apply interest into the monthly payments to the consumer.
The gain is 30%, plus 5 years of depriciation so a total of 40% of the total system price is given to the leasing company.
After contract is completed, leasing company should walk out with roughly 110~120% of what the value of the system at 100% would be at time of purchase.

[JerzeyAS]

Leasing company doesn't take a loss. They own the system. They get tax credit, plus 5 years of depreciation. Then charge the leased consumer cost of the system without the depreciation/write offs, and of course apply interest into the monthly payments to the consumer. The gain is 30%, plus 5 years of depriciation so a total of 40% of the total system price is given to the leasing company.
After contract is completed, leasing company should walk out with roughly 110~120% of what the value of the system at 100% would be at time of purchase.

what monthly payments?

[solarpowered]

what monthly payments?

Excuse me then, we are talking about different subjects. You are talking about pre paid. Those aren't offered in california at the moment. month to month is all we get. No money down's, with $500 cash back, or option of Ipad 2 with $250 cash back and roughly $80 per month for a 2.5KWh system. pre-paids don't exist here. However we are being offered transerable lease arrangements that leave the lease with the home if the home owner sells there home.

[Ian S]

Excuse me then, we are talking about different subjects. You are talking about pre paid. Those aren't offered in california at the moment. month to month is all we get. No money down's, with $500 cash back, or option of Ipad 2 with $250 cash back and roughly $80 per month for a 2.5KWh system. pre-paids don't exist here. However we are being offered transerable lease arrangements that leave the lease with the home if the home owner sells there home.

Are you sure you can't get a prepaid lease in Cali? I seem to recall some Cali folks on this site who got prepaid quotes within the last few months.

[Naptown]

Are you sure you can't get a prepaid lease in Cali? I seem to recall some Cali folks on this site who got prepaid quotes within the last few months.

Leases may have changed since the end of the 1603 grants and depreciation going from 100% first year to 50% and balance on a 5 year schedule

[Ian S]

Leases may have changed since the end of the 1603 grants and depreciation going from 100% first year to 50% and balance on a 5 year schedule

Probably wouldn't affect just Cali in that case but the whole country. I would think that would be newsworthy but I can't find anything about it and Sungevity and Solarcity still talk about prepaid leases on their websites. I can see them adjusting their prices on prepaid to account for the changes but it seems to me if they can make a profit, they'll find a way rather than just drop the concept.

[solarpowered]

Probably wouldn't affect just Cali in that case but the whole country. I would think that would be newsworthy but I can't find anything about it and Sungevity and Solarcity still talk about prepaid leases on their websites. I can see them adjusting their prices on prepaid to account for the changes but it seems to me if they can make a profit, they'll find a way rather than just drop the concept.

Solar city, sungevity, and sunpower that I each pulled estimates from confirmed that they haven't offered pre-paid in my area for atleast 7 months now. It seems to be be dead and probably won't be coming back.
How ever the month to month leases aren't looking bad either. Upto $500 cash back as of energizing, no money down, $80 to $100 a month for a 2.5 to 3.5 kwh 20year lease term isn't bad. Being that most of these leases are now transferable to new home owners, makes it a bargain.

[Naptown]

Solar city, sungevity, and sunpower that I each pulled estimates from confirmed that they haven't offered pre-paid in my area for atleast 7 months now. It seems to be be dead and probably won't be coming back.
How ever the month to month leases aren't looking bad either. Upto $500 cash back as of energizing, no money down, $80 to $100 a month for a 2.5 to 3.5 kwh 20year lease term isn't bad. Being that most of these leases are now transferable to new home owners, makes it a bargain.

Is there an escalation clause in there? Meaning the lease cost goes up by a certain % each year.

[Naptown]

Solar city, sungevity, and sunpower that I each pulled estimates from confirmed that they haven't offered pre-paid in my area for atleast 7 months now. It seems to be be dead and probably won't be coming back.
How ever the month to month leases aren't looking bad either. Upto $500 cash back as of energizing, no money down, $80 to $100 a month for a 2.5 to 3.5 kwh 20year lease term isn't bad. Being that most of these leases are now transferable to new home owners, makes it a bargain.

That is an absolutely crappy deal. And one of the worst I have ever seen.
Lets say you do a 20 year lease on a 2.5KW system at $80 per month
Over the course of the lease you will have paid $19200.00 for that system
Lets say that you are getting 1.3 KWH per year per DC watt installed ( Dont know exact location or details of system to refine the output further.
So 2500 watts = 3250KWH per year
So you're paying .20 Per KWH that's a savings of $650 per year on the electric bill.
At that rate you are $350 in the hole the first year and worse as the system degrades and the esclator kicks in.
At the end of the lease counting no escalator and no system degredation you will have paid $7,000 more for the electricity.

Now compare to a purchased system
A small system will most likely be about the same up front cost of $7.00 per watt.
You will pay $17,500 for that system (you have already saved $1700.00
You can take the 30% Federal credit =$5,200.00
There may be state and utility rebates that I do not know about which you can include in your own calculations.
So as above the system has cost you net after credits $12,250
Using the same savings calculation as above the system will produce $13,000 worth of electricity.

Now comparing the two the lease is $7,750 more over the life than a purchase.

A larger system will be less costly per watt than a small one and will pay itself back much faster.