Solar panels on a house we're looking to buy...

[YeOldeStonecat]

So I'm familiar with full buyout Solar deals....my business colleague (he has Sungevity), and a few friends, have done that. Purchase panels, they offset (often substantially) what you have to purchase from the electric co, usually reducing your monthly electric bill from 30 to 50 even towards 75%.

My colleagues monthly electric bills went from around 180-225/month, down to...60, 50, 40. Worked well for him. But again..he outright bought the panels.

A couple of years ago we talked to a Sungevity rep, but our electrical needs each month are very high and our roof line and trees not the best setup for what they'd have to install to be worth it...it would have basically washed even.

So anyways, our house is on the market, and we're looking to downsize quite a bit. There's a neat ranch around the corner from us, and early this year the owners put a Sungevity system up on it. A 6 kW system but the owners did a 20 year, 0% down, PPA (Purchase Power Agreement) contract. They purchase all the power the panels make, at $0.167 kWh. When it's making a lot in the summer...you gotta pay more..buying all it makes...sometimes around 170 or 180/month. But in the winter, apparently you can dip into that built savings/credit or whatever...I'm not sure.

I'm hesitant on moving further with this house...as since they haven't hard the solar panels for over a year yet (they were installed just Feb of this year)...they don't have a history to compare to. The most detail I got in a forwarded e-mail from the sellers is..."We produced over double what we used this summer, and that gets credited to their account, and in the fall/winter with less sun and less production we can use what we already paid for and was credited to our account".

So that makes me think you purchase every bit produced...and in the better season when it's producing a lot, you can save the credits and use that for free in the winter. But you still have to pay the electric co for whatever additional you need.

I would just love to hear from people that got a solar panel system with this "PPA" type of deal.

The "purchase price" seems high...$0.167 per. Heck, you can purchase from resellers at 8 or 9 cents per kWh....even after the 6 or 12 month intro period is done, often goes to 11 or 12 cents.

 

[HCHTech]

The "purchase price" seems high...$0.167 per. Heck, you can purchase from resellers at 8 or 9 cents per kWh.

If the developer / vendor is the one who financed the arrangement, then this arbitrage seems like where he is making his money. Well, at least one of the places he is making his money. Other places no doubt include markup on the hardware, labor to install, probably an annual maintenance fee & who knows what else. I would examine that contract very carefully before even considering taking it over. Better yet steer clear altogether - either look elsewhere or make your offer contingent on them buying out the contract.

 

[YeOldeStonecat]

This PPA is "zero cost for maintenance/repair" on the hardware for the life of the 20 year.
The more I look into it and think about it, right now....it's probably an OK deal to get into now..if you're into the house for the long haul. 16.7 cents per kWh seems high now, but it's fixed for the 20 years...so in the long run, as the average cost per kWh from the electric co goes up....this deal gets more attractive.

Since we're getting this house only for about 10 years...hmmm...

 

[fencepost]

Frankly that seems like a terrible deal to me. "We'll put solar panels on your roof for free, and all you have to do is pay us for the electricity they generate at twice the utility retail rate! But we'll let you buy electricity from us at that price for the next 20 years, regardless of what the market does!"

Heck, the best way to save money might be to reduce your power bills by throwing a tarp over the solar panels and buying direct from the utility.

 

[YeOldeStonecat]

So...update.....My wife and I shop and compare electric resellers each year, to find and use the cheapest one. Instead of buying direct from our local power company here in CT...Eversource, we shop. We currently use a reseller called "ABest"...located in CT, and we pay about 7.5 cents per kWh. BUT...as I found out..that is not the whole price. That is page 1 of the bill. Last month we used about 2575 kWh. So that portion of the bill came to around 195 or so. BUT..on page 2..is all the delivery/service charges...a whole buncha lines that add up to another 225 bucks or so!

SO...our total electric bill was around 420 bucks!
If I divide that by kWh used...it's around 16.3 cents per kWh.

NOW...the Sungevity costs are more realistic...since they do not have all these additional delivery/service charges. What I would pay is a fixed/locked rate of 16.7 cents per kWh...locked for 20 years!

Right now...that's barely a tad more expensive than I currently pay. But with average electric rates going up about 4% a year...I guess THIS is where Sungevity hopes to catch people..and it really starts to become worth it another year or two or five down the road. And of course, most people don't shop around for the best electric rates...so I'm guessing the average person is paying more than 16 cents per kWh cuz they don't shop for best rates and they just accept the local electric company rates.

It's a 6.6 kW system...26 panels, 2 inverters.
Average production for the year would cost me about $98/month....average cost of production of the solar panels which I would have to purchase. Projected offset at 90%.

There is an option to "Prepay" the PPA....that is, purchase all of the estimated production ahead of time, a fixed price of a little over $14,000.00
This way, for the remainder of the 20 year PPA "lease" (19.5 years remaining)....I would owe nothing to Sungevity. I use all of the electricity the panels produce...for free. Sungevity still owns the panels, maintains them, services them.

I'm not crazy about buying the home with the current PPA...having to pay those monthly rates, which are not overly attractive. Since we're probably only going to own/live in this house for 10 maybe 12 more years....we won't realize the big benefit of the lower costs way down the road.
I'll probably pitch an offer to buy the house, and they knock off 14K and pre-pay that whole PPA for us.

 

[mr m]

My Dad looked into buying a solar panel array for generating electricity. He realize the cost was too much to buy them outright and the leasing paperwork was too daunting. Plus he is too old to see the payback.

The problem is the sleazy sales force selling this great new product. For some reason the home improvement industry sticks to time proven, under handed sales tactics. I had to threaten one salesman who wouldn't stop pestering my Pops. Remember the movie Tin Men?

Solar is the future and the future is right around the bend. Old man Sol can provide all the energy for our homes and cars. We can finally kick the oil habit and all the political and environmental crap that tags along. It's just a little while longer until the price per Watt brings the cost way down.

 

[kwest]

Good idea that is

 

[Larry Sabo]

One problem with prepaying these long-terms deals, is how long will the company be around.

 

[jzukerman]

Last month we used about 2575 kWh.

That seems high to me. How big of a house? All electric appliances? What type of cooling and at what temp? I use up to 900kWh in the summer, but I don't have central AC, just fans and one dehumidifier in the basement, gas dryer, gas stove, off oil boiler hot water tank.

 

[YeOldeStonecat]

That seems high to me. How big of a house? All electric appliances? What type of cooling and at what temp? I use up to 900kWh in the summer, but I don't have central AC, just fans and one dehumidifier in the basement, gas dryer, gas stove, off oil boiler hot water tank.

3,600 sq ft. Big part of it is the huge inground pool we have, and I keep the pump/filter going 24x7 cuz I'm anal about the water staying clean/filtered.
We go down to 1/2 of that in spring and fall. Plus..this summer has been unusually hot, extra heat wave, so the 2x HVAC units I have in the house (upstairs and downstairs ones)...the AC was going full bore.
Propane stove.

 

[jzukerman]

Fair enough. I can understand why you want to downsize.

 

[YeOldeStonecat]

Yeah it's just a HUGE house. 1x kid is gone...he flew the coop....out and on his own now. It's a big yard, 3x buildings on it (a big pool house/cabana), and the house is simply huge. Takes forever to maintain it, little time left for play. Wife 'n I want to sell it, buy a much smaller home, and take the proceeds of this house and put it towards a starter condo down on AMI in Florida.

 

[HFultzjr]

Funny how things work out.

Just married, just starting out.........buy what you can afford (small).
Kids come along, increase in wages, etc..................moving on up (bigger)
Kids move out, retirement down the road, etc................wishing for that 1st house (small).

Start out life as a helpless child
Become a capable responsible adult
End life as a helpless "child".

I'm heading towards stage 3 in both instances.....................LOL.

 

[ComputerRepairTech]

Maybe I don't know what i'm talking about here but why would a PPA be higher than the actual electric kwh rate from the power company? If you are paying a little more than you are placing a bet that the technology you are using is going to pay off after 20 years. This seems rather unwise given the leaps in technology.

Edit: I wonder if they check on them every now and then to make sure you havent covered them