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So let me get this straight... (lease vs purchase)

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  • So let me get this straight... (lease vs purchase)

    SunRun Solar is trying to sell me a lease for a 4.3 kW solar system. The lease costs $8,240 prepaid for 20 years of power (nearly 5,000 kWh produced per year, "guaranteed"). Or, I could pay $64 monthly with a 2.9% annual escalator. At the end of the term, I could buy the system at its "market value" (whatever that means); if I decide not to buy it, SunRun will remove it for free.

    Here's what SunRun says the exact same system would cost to buy:
    Gross cost: $27,000
    NYSERDA incentives: -$6,480 (I live in New York; NYSERDA is the state agency that collects a few bucks in monthly fees from each electric utility customer and uses the money for these incentives)
    Federal tax credit: -$4,956
    State tax credit: -$5,000

    Net cost: $10,564

    So, let's say I didn't have $10,564 lying around. I could borrow it (as a home equity line or loan) at 5 to 6% for 20 years, and my monthly payment would be a few bucks more than the $64 monthly that SunRun wants for the lease - and unlike SunRun's lease payments, the loan payments wouldn't go up. And unlike SunRun's lease, I'd own the system free and clear in 20 years.

    So what, exactly, would be the benefit of a lease? The only thing I can think of is that they will maintain the system, but how much maintenance, really, is the system going to need over 20 years?

    (One other lease "advantage" is that they "guarantee" the system will produce as much electricity as they state, and if it doesn't they will pay me $0.13 per kWh that it didn't produce. Not terribly generous, given that the going rate is $0.18 and expected to increase.)

  • #2
    SunRun seems to have jacked up the price? 6.37$ per watt is a bit over the top today. They apparently jack up the price to be able to claim more money from the federal and state agencies?

    PV Watts shows 4985 annual kWh for Albany, NY

    The inverter is the system maintenance - microinverters have long warranties but central inverters are good for maybe 10 to 12 years.

    Get some quotes from people selling systems - you might get the out of pocket cost down a good bit.
    [SIGPIC][/SIGPIC]

    Comment


    • #3
      Originally posted by snic View Post
      SunRun Solar is trying to sell me a lease for a 4.3 kW solar system. The lease costs $8,240 prepaid for 20 years of power (nearly 5,000 kWh produced per year, "guaranteed"). Or, I could pay $64 monthly with a 2.9% annual escalator. At the end of the term, I could buy the system at its "market value" (whatever that means); if I decide not to buy it, SunRun will remove it for free.

      Here's what SunRun says the exact same system would cost to buy:
      Gross cost: $27,000
      NYSERDA incentives: -$6,480 (I live in New York; NYSERDA is the state agency that collects a few bucks in monthly fees from each electric utility customer and uses the money for these incentives)
      Federal tax credit: -$4,956
      State tax credit: -$5,000

      Net cost: $10,564

      So, let's say I didn't have $10,564 lying around. I could borrow it (as a home equity line or loan) at 5 to 6% for 20 years, and my monthly payment would be a few bucks more than the $64 monthly that SunRun wants for the lease - and unlike SunRun's lease payments, the loan payments wouldn't go up. And unlike SunRun's lease, I'd own the system free and clear in 20 years.

      So what, exactly, would be the benefit of a lease? The only thing I can think of is that they will maintain the system, but how much maintenance, really, is the system going to need over 20 years?

      (One other lease "advantage" is that they "guarantee" the system will produce as much electricity as they state, and if it doesn't they will pay me $0.13 per kWh that it didn't produce. Not terribly generous, given that the going rate is $0.18 and expected to increase.)




      Leases with built-in escalators are strictly for idiots. Clearly you recognize this judging by your comments.

      I wish I could put it any easier, but realistically, you have to be a moron to sign on to a 20 year that increases in cost every single year, especially since the industry standard now is fixed-payment leases. The problem with escalators is two-fold, you're going to pay more and more on a yearly basis and if you decide to sell your home, you now have to convince someone else to take over ever-increasing monthly lease payments. If the US every adopts thorium nuclear technology or invests heavily into fracking, 10 years down the road your lease could actually end up exceeding utility rate increases.

      Solar leasing can make sense for some people, but only if you have a fixed payment, that is, the same exact payment, every single month, year-in and year-out. What sense does it make to try to get away from increasing-utility rates by signing on to an ever-increasing solar lease? Oh yeah, it doesn't. There's plenty of companies that offer fixed-payment leases, SunRun just seems to be behind the times.


      Also, their pricing is way off. That same system is doable for $20,000 or less out of pocket. They are way over-pricing it. A local installer should be able to do it for less than $5.00 a watt total. The prepaid pricing doesn't make any sense at $2.00 a watt if you can buy the same system out of pocket for the same amount of money after incentives have been applied. Most prepaid programs range from $1.00-$1.50 in cost, and that's with reduced incentives.

      Comment


      • #4
        Thanks for your responses, KRenn and russ. This is exactly the feedback I was looking for.

        The SunRun representative did mention that one can pay some amount upfront to eliminate the escalator, but didn't have the figures with him.

        I'm now definitely motivated to get quotes from other installers for a purchased system. SunRun's $6.37/watt may indeed by high, although I live near New York City (not Albany). Everything is more expensive here than upstate.

        Poking around this board, I've seen people say the cost of inverters is $0.75 to $1.00/ watt. Wow, $5,000 to replace a 5 kW inverter 10 years in! That's a pretty big hit. So I wonder how much more expensive micro-inverters are upfront. Also, presumably these are located up near the panels - so would it be a big hassle to replace them once they do start failing?

        Anyway, looks like I have some homework to do!

        Comment


        • #5
          snic-

          Both the prepaid and purchase pricing you have is way overpriced. I am a rep with a solar installer in the NYC metro area and we offer the SunRun leasing program as well. I would be happy to provide you with accurately priced options for your solar energy system.

          I can be reached at 347.590.5450. Please ask for Eric. I look forward to speaking with you.

          Eric

          Comment


          • #6
            Originally posted by snic View Post
            Thanks for your responses, KRenn and russ. This is exactly the feedback I was looking for.

            The SunRun representative did mention that one can pay some amount upfront to eliminate the escalator, but didn't have the figures with him.

            I'm now definitely motivated to get quotes from other installers for a purchased system. SunRun's $6.37/watt may indeed by high, although I live near New York City (not Albany). Everything is more expensive here than upstate.

            Poking around this board, I've seen people say the cost of inverters is $0.75 to $1.00/ watt. Wow, $5,000 to replace a 5 kW inverter 10 years in! That's a pretty big hit. So I wonder how much more expensive micro-inverters are upfront. Also, presumably these are located up near the panels - so would it be a big hassle to replace them once they do start failing?

            Anyway, looks like I have some homework to do!


            Inverter pricing for your size system should run $2500-4000 and that is at current prices. Who knows how much less it could be 12-14 years from now. Micro-inverters are definitely pricier up-front, if you have shading concerns though, they do help substantially. They do come with a 25 year warranty, but A. that's assuming these non-publicly traded companies are in business long-term and B. you have to remove the defective unit and then install the replacement unit on your own dime.

            Comment


            • #7
              Originally posted by KRenn View Post
              Inverter pricing for your size system should run $2500-4000 and that is at current prices. Who knows how much less it could be 12-14 years from now. Micro-inverters are definitely pricier up-front, if you have shading concerns though, they do help substantially. They do come with a 25 year warranty, but A. that's assuming these non-publicly traded companies are in business long-term and B. you have to remove the defective unit and then install the replacement unit on your own dime.
              As of Last Friday Enphase is publicly traded on Nasdaq.
              Yes they are more costly up front but cycle in an inverter replacement (Material only no labor) down the road and the cost evens out. Now add in the 30% federal credit available now (not on a replacement down the road) and the micro's come out on top.
              Rich
              WWW.solarsaves.net

              NABCEP certified Technical Sales Professional

              http://www.solarpaneltalk.com/showth...Battery-Design

              http://www.calculator.net/voltage-drop-calculator.html (Voltage drop Calculator among others)

              www.gaisma.com

              Comment


              • #8
                Originally posted by Naptown View Post
                As of Last Friday Enphase is publicly traded on Nasdaq.
                Yes they are more costly up front but cycle in an inverter replacement (Material only no labor) down the road and the cost evens out. Now add in the 30% federal credit available now (not on a replacement down the road) and the micro's come out on top.

                Thank you sir, I stand corrected.

                Comment


                • #9
                  Originally posted by KRenn View Post
                  Thank you sir, I stand corrected.
                  Very recent development. Were it not for the fact that I get News releases from them I would have not known.
                  Rich
                  WWW.solarsaves.net

                  NABCEP certified Technical Sales Professional

                  http://www.solarpaneltalk.com/showth...Battery-Design

                  http://www.calculator.net/voltage-drop-calculator.html (Voltage drop Calculator among others)

                  www.gaisma.com

                  Comment


                  • #10
                    Originally posted by Naptown View Post
                    Very recent development. Were it not for the fact that I get News releases from them I would have not known.

                    Well that is good to know, I'm always more comfortable dealing with a publicly traded entity over one that is not.

                    Comment


                    • #11
                      ealefeld:

                      I'm very intrigued by your statement that the prepaid and purchase quotes I have are overpriced. This is because I Googled your phone number and found that it's the number for OnForce Solar. Kind of surprising, since it was an OnForce Solar representative that gave me these SunRun lease and purchase quotes.

                      An explanation for why your company's agents are providing overpriced quotes would be most welcome.

                      Comment


                      • #12
                        Originally posted by snic View Post
                        ealefeld:

                        I'm very intrigued by your statement that the prepaid and purchase quotes I have are overpriced. This is because I Googled your phone number and found that it's the number for OnForce Solar. Kind of surprising, since it was an OnForce Solar representative that gave me these SunRun lease and purchase quotes.

                        An explanation for why your company's agents are providing overpriced quotes would be most welcome.


                        [Mod note - repeating, animated images deleted. ]
                        Last edited by Mike90250; 04-03-2012, 09:16 PM.

                        Comment


                        • #13
                          Snic-

                          I found your proposal and spoke with the rep who was helping you. The prepaid amount is accurate and is NOT overpriced. The purchase price you are referring to is NOT our purchase price. It is SunRun's estimated value of the equipment and it is inaccurate to our current pricing model for the new york city area. I apologize about this confusion and would be happy to discuss your purchase options. I encourage you to reach out with your rep or myself to help you continue your process.

                          Comment


                          • #14
                            Originally posted by snic View Post
                            SunRun Solar is trying to sell me a lease for a 4.3 kW solar system. The lease costs $8,240 prepaid for 20 years of power (nearly 5,000 kWh produced per year, "guaranteed"). Or, I could pay $64 monthly with a 2.9% annual escalator. At the end of the term, I could buy the system at its "market value" (whatever that means); if I decide not to buy it, SunRun will remove it for free.

                            Here's what SunRun says the exact same system would cost to buy:
                            Gross cost: $27,000
                            NYSERDA incentives: -$6,480 (I live in New York; NYSERDA is the state agency that collects a few bucks in monthly fees from each electric utility customer and uses the money for these incentives)
                            Federal tax credit: -$4,956
                            State tax credit: -$5,000

                            Net cost: $10,564

                            So, let's say I didn't have $10,564 lying around. I could borrow it (as a home equity line or loan) at 5 to 6% for 20 years, and my monthly payment would be a few bucks more than the $64 monthly that SunRun wants for the lease - and unlike SunRun's lease payments, the loan payments wouldn't go up. And unlike SunRun's lease, I'd own the system free and clear in 20 years.

                            So what, exactly, would be the benefit of a lease? The only thing I can think of is that they will maintain the system, but how much maintenance, really, is the system going to need over 20 years?

                            (One other lease "advantage" is that they "guarantee" the system will produce as much electricity as they state, and if it doesn't they will pay me $0.13 per kWh that it didn't produce. Not terribly generous, given that the going rate is $0.18 and expected to increase.)
                            Hi SNIC,

                            I loved your post. I think you've seen the light on leasing. It isn

                            Comment


                            • #15
                              Originally posted by SolarFan2008 View Post
                              utility prices in many utilities throughout the Northeast are leveling off.
                              That seems to be correct. I happen to have saved every single power bill for the last 5 years. My packrat habits drive my wife crazy, but for once they proved useful. It turns out that we are paying exactly as much per kWh this year as we were paying 5 years ago. There has been some fluctuation, of course, but the average price each year has been 15 to 17 cents/kWh.

                              Of course that's no guarantee that rates won't start going up tomorrow, but it does put Sunrun's assumption of a 5% annual increase in perspective.

                              So, for me, leasing is out. Although I like the idea of purchasing a solar system because I like the idea of increasing the amount of green power being produced, it would mean that, by essentially paying for 10 years or so worth of power upfront, I'm taking the risk that the system will reliably produce as much as predicted without unexpected additional costs. For instance, I have a number of trees that are still growing, which could start to shade the system. Or, as you mention, the roof could start leaking, and fixing it with solar panels on top will be more expensive than fixing it without.

                              One alternative would be to simply start buying power from a green power supplier. I've hesitated with this as well, because I'm not convinced that my purchase of 1 kWh from these companies would necessarily translate into 1 additional kWh of green power being produced. There seems to be a lot of opacity in how utilities are regulated in New York.

                              Comment

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