Categories: Solar Economics, AB 811/PACE/LACEP Funding, AB 920 Payments, Feed-in Tariff, Solar Rebates, BWP Rebates, GWP Rebates, LADWP Rebates, PWP Rebates, SCE/CSI Rebates, Solar Tax Incentives

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02/16/15

  08:35:00 am, by Laurel Hamilton, Projects Coordinator, Run on Sun   , 877 words  
Categories: All About Solar Power, Solar Economics, Residential Solar

Top 5 Reasons to Stay Away from that Solar Lease!

Public Domain NREL solar home image

UPDATE: See end of post for National Renewable Energy Laboratory (NREL) report findings regarding solar leasing vs loans.


In the debate of owning versus leasing solar panels, the folks over at NPR weighed in with a story last week that caught our eye, er, ear.  While it offers a fair explanation of some of the pros and cons,  we don’t think it did a good enough job of highlighting just why that solar lease should be avoided.  Here’s our top 5 reasons to avoid a solar lease.

Reason #5 - You can’t get credit on your appraised home value with leased solar panels. 

As we noted in our recent post about solar ownership boosting your home’s resale value, if you don’t own the panels on your roof, they aren’t an asset toward boosting your home’s value.

Reason #4 - The “benefit” of covered maintenance is a myth!

Leasing companies tout that they cover the maintenance on your solar system, but the truth is that most maintenance is already covered by product and installer warranties.  (For example, Enphase microinverters come with a 25-year warranty - longer than the typical lease term.)  For most residential system owners the only maintenance their systems need is to wash the panels off with a hose.

Reason # 3 - You don’t have to be a Geek to own solar!

The NPR story suggests that to own solar requires a very “hands-on” approach, with the homeowner being forced to navigate the shoals of rebates, tax credits and permitting on their own.  Nothing could be farther from the truth.  A reputable, local solar installation professional, like Run on Sun, will handle all of those messy details for you.

Reason # 2 - A leased system complicates selling your home!

If you decide to sell and you have a leased system on your roof, your prospective buyer has to not only meet your required offer, they also need to satisfy the leasing company’s qualifications to assume the remainder of your lease.  A buyer might qualify for a mortgage, but not satisfy the credit requirements of the leasing company, and even if they do, they might not be interested in the hassle of dealing with a lease payment for the remainder of your twenty-year term.

Reason # 1 - The leasing company is ripping you off!

Bottom line, this is the number 1 reason to avoid a lease.  But don’t take our word for it, let’s look at what one of the largest solar leasing companies says, right there in the tiny print on their website:

Savings on your total electricity costs is not guaranteed. Financing terms vary by location and are not available in all areas… A 3 kW system starts at $25-$100 per month with an annual increase of 0-2.9% each year for 20-30 years, on approved credit.

Just how bad a deal is that?  Well, let’s take a typical 3 kW solar project.  That is really small, so the cash price from a local installer is probably around $4/Watt - which works out to $12,000 up front.  However, if you own, you receive the rebate (if any) and the tax credit.  In PWP territory, that rebate works out to roughly $2,200 but in SCE territory, the rebate is zero.  So to take the worst case example for ownership, we will assume no rebate.  In that case, the tax credit is worth 30% of $12,000 or $3,600 leaving the ultimate cost to own at $8,400.

Now what happens in a lease for that same system?  No rebate or tax credit goes to you - the leasing company pockets those.  What about your payments?  Well, let’s take the middle ground suggested in the leasing company’s quote above and look at a cost of $60/month in year 1, with an annual increase of 1.45%.

Cost of solar - owning vs leasingHere the green line represents the cost of ownership - $8,400 which is constant over the life of the 20 year lease.

The orange bars are the annual payments which in year 1 amount to $720 (12 x $60) and by year 20 have increased to $947.

The red bars are the cumulative cost of leasing solar.  By year 11, the owner has come out ahead.  By the time the lease ends in year 20, the solar leasing customer will have paid $16,567 in lease payment - nearly twice what the system purchaser paid - and they still will not own the system on their roof!

 While it may be true that not everyone can afford to purchase a solar power system outright, that is changing as solar becomes more affordable for more people.  Plus, with the emergence of solar loans, which can provide for little or no out-of-pocket cost while still retaining the benefits of ownership, cash-constrained consumers can still go solar without resorting to the leasing trap.

For all of these reasons, and a whole bunch more, we at Run on Sun have never offered residential leases, and we never will.  If you want to go solar but avoid the pitfalls of leasing, give us a call - we are waiting to help!


UPDATE: Two reports from NREL bolster our conclusions above: “To Own or Lease Solar: Understanding Commercial Retailers Decisions to Use Alternative Financing Models,” and “Banking on Solar: An Analysis of Banking Opportunities in the U.S. Distributed Photovoltaic Market“. Analysts found that businesses that use low-cost loans to purchase a PV system and homeowners who use solar-specific loans can save up to 30 percent compared with those who lease a system through a third-party owner.

02/05/15

  08:07:00 am, by Laurel Hamilton, Projects Coordinator, Run on Sun   , 364 words  
Categories: Solar Economics, Solar Tax Incentives, Ranting, Solar Policy

President Obama: Extend Solar Tax Credit... Congress: Don't make me laugh!

Two weeks ago I included the looming 2016 expiration of the federal Solar Investment Tax Credit (ITC) as one of the “Top 5 reasons you shouldn’t wait to go solar“. The 30% ITC rebate for residential and commercial solar projects is slated to drop to 10% for commercial projects (effectively stopping utility-scale solar growth) and to zero for residential projects (making going solar much less feasible for many homeowners). I mentioned that the likelihood of an extension is far from certain given our partisan federal ‘climate’.White House Flickr Photostream

Then…on Monday the White House released President Obama’s fiscal budget for 2016. To my delight the budget includes:

  1. Boosting clean energy funding to $7.4 billion;
  2. The Clean Power State Incentives Fund allocating $4 billion to encourage states to exceed the minimum requirements for cutting emissions; and
  3. The permanent extension of the solar Investment Tax Credit!

The $7.4 billion figure is up from the $6.9 billion proposed in Obama’s fiscal 2015 budget, a 7.2 percent rise, and over the $6.5 billion actually passed by Congress for this year. The extension of the ITC and further state incentives to reduce emissions would be immensely valuable to keep the ball rolling in the solar field. Given that solar is booming - providing over 170,000 living-wage jobs and eliminating over 13 million metric tons of harmful CO2 emissions in 2014 alone - it makes sense to continue to incentivize. 

However, it may come as no surprise to hear that some lawmakers have said they plan to block the President’s budget priorities entirely. An article in Politico titled “Republicans: Obama Budget ‘Laughable’” cites many congressional Republicans disdain for the budget.

“Obama’s budget is a retread of past proposals that died instantly on the Hill.”
Senate Finance Committee Chairman Orrin Hatch (R-Utah)

The website www.gop.gov cites the singular case of Solyndra as definitive evidence to oppose funding clean energy…despite also claiming to support job growth. (See here as to why Solyndra just doesn’t matter.) With Republicans now controlling both the Senate and the House of Representative, this party line opposition will be a serious challenge to overcome.

Even with the President himself in favor of extending the ITC, and improving funding to support clean energy, the fate of federal support for the solar industry is still quite uncertain.

Watch this space.

01/29/15

  06:36:00 am, by Laurel Hamilton, Projects Coordinator, Run on Sun   , 406 words  
Categories: All About Solar Power, Solar Economics, Residential Solar

Its Official...Solar Boosts Home-Owners' Property Values!

Selling into the SunMany solar stakeholders have always assumed rooftop solar systems add to the resale value of a property. Homeowners and residential solar companies frequently use this benefit as one of the many reasons to invest in solar even though until recently there had been little statistical evidence to support the assumption.

So we were thrilled to read the new study, “Selling into the Sun: Price Premium Analysis of a Multi-State Dataset of Solar Homes,” which finally quantifies the resale value of residential photovoltaic  (PV) solar systems. The study was a collaborative effort including esteemed scientists from the U.S. Department of Energy’s Lawrence Berkeley Lab, Adomatis Appraisal Services, Real Property Analytics/Texas A&M University, University of California at San Diego, San Diego State University, and Sandia National Laboratories.

The team analyzed some 22,000 home sales, of which nearly 4,000 had PV rooftop solar systems (more than double the number in previous studies), in eight states over a 12-year span including the housing market boom, bust, and recovery. This is by far the largest and broadest dataset ever analyzed on the subject.

Results prove that homebuyers are consistently willing to pay more for homes with host-owned solar systems — averaging about $4 per watt of PV installed — across various states, housing and PV markets, and home types. This amounts to a premium of about $15,000 for a typical rooftop system. Other important conclusions the team discovered are as follows:

  • PV premiums had little variability between new and existing homes.
  • The dollar per watt premium decreases incrementally as system sizes increase - with the best value at 4 kilowatts (average household PV size) or less.
  • As systems age, the PV premium depreciates sharply from $6/watt for systems less than two years old to $3/watt after about eight years.
  • PV premiums correlate to the net cost of the solar system — which take into account rebates and incentives — and appear to be independent of the PV system gross cost estimates.

As residential solar systems become more and more common, it is important to be able to value them accurately. The evidence of the added investment value shown from this study is a critical step for the growth of residential solar. And PV premiums are obviously a benefit homeowners should consider when doing their cost-benefit analysis of going solar.

Please note that this study only focused on host-owned solar, not those with leased systems. It would be interesting to see a future study including this growing portion of the PV market.

01/16/15

  11:52:00 am, by Laurel Hamilton, Projects Coordinator, Run on Sun   , 417 words  
Categories: All About Solar Power, Solar Economics, State of Solar

The Numbers are In...Solar Means Jobs!

Velvet installs a solar roof.If you pay any attention to clean tech news, its no surprise to hear that the solar industry is growing. But the record-breaking results from the National Solar Jobs Census, released by the Solar Foundation (TSF) yesterday, are pretty astounding. The study found that the sector grew nearly 20 times the rate of the overall economy. One out of every 78 jobs added in the US in 2014 was in the solar industry! 

The Solar Foundation, an independent nonprofit solar research and education organization, has been conducting the annual National Solar Jobs Census since 2010. The 2014 report, derived directly from inerviews with more than 7,600 U.S. businesses, measured employment growth in the industry between November 2013 and November 2014.

We’ve pulled out a few highlights from the report:

Solar is Hiring!

Solar Jobs

  • As of November 2014, there were 173,807 solar workers employed, 1.3% of all jobs created in the U.S.
  • More than 31,000 new workers were hired in 2014, representing a growth rate of 21.8% since November 2013.
  • This means the Solar sector was hiring at nearly 20 times faster than the national average employment growth rate of 1.1% in the same period.
  • Between 2010 and 2014, employment in solar has grown by 86%, resulting in valuable domestic skilled living-wage jobs.
  • Installation continues to account for the largest share of solar jobs, currently employing over 97,000.

Solar Jobs ComparisonClean Energy is Speeding Past Fossil Fuel Sectors

  • The solar sector (173,807 jobs) is now larger than coal mining (93,185 jobs).
  • Indeed, more folks go to work each day installing solar panels than go into mines to dig out coal.  (And we know which job we’d rather have!)
  • In 2014 the solar industry created more jobs (31,000) than both the oil and gas pipeline construction industry (10,529), and the crude petroleum and natural gas extraction industry (8,688) combined.

Solar Welcomes Diversity

  • Women, African-Americans and Latinos are hired in solar at a higher rate than oil, gas, coal and construction industries.
  • Over 37,500 women worked in solar (21.6% of solar workers), up from 26,700 in 2013.
  • Nearly 17,000 veterans are now employed in the sector, up from 13,000 in 2013.

Trouble Ahead?

While surveyed solar employers are optimistic about 2015, expecting to add another 36,000 jobs, the solar boom may not last forever… 72% of employers surveyed noted that the federal tax credit significantly boosted their sales in 2014. Dramatic downsizing in 2017 after the federal tax credit expires is not out of the realm of possibility. (Are you listening, Washington?)

Studies like this one prove that solar is providing a tremendously valuable boost to our economy while meeting public demand for choice, competition, and cleaner, more affordable energy. Hopefully some form of incentives post-2016 will continue to keep this valuable ball rolling.

01/15/15

  09:32:00 am, by Jim Jenal - Founder & CEO   , 722 words  
Categories: Solar Rebates, PWP Rebates, SCE/CSI Rebates, BWP Rebates, GWP Rebates, LADWP Rebates

2015 Solar Rebate Update

Solar rebates are rapidly becoming an endangered species, but there are still a handful of refuges out there for the lucky few who reside in those areas. Here is our update on who is offering what as of January, 2015.

Solar rebates

Although there are lots of ways to approach this, we figured that the most entertaining would be to rank-order each utility in the Run on Sun service area from best to worst in terms of their rebate program (and we will toss in a handy summary chart at the end).

Pasadena Water & Power (PWP)

Beyond a doubt, the best run solar rebate program in our service area is provided by our hometown utility, Pasadena Water & Power.  The folks at PWP have figured out how to provide generous rebates on a predictable schedule while keeping bureaucratic annoyances to a minimum.  Boy could its neighbors learn a thing or two from PWP!

Here are their numbers as of today:

Residential: $0.85/Watt EPBB; 12.9¢/kWh PBI.
Commercial: $0.85/Watt EPBB; 12.9¢/kWh PBI.
Non-Profit: $1.60/Watt EPBB; 24.2¢/kWh PBI.

Keep in mind, those numbers have been in place for a long time (since 2012!) and we expect them to drop some time this year.

Anaheim

Anaheim is offering some big rebate numbers, but they offer a ridiculously small window of opportunity for snagging them.  Specifically, the window is about to open and you need to submit a rebate application between today, January 15, 2015 and two weeks from today as the window closes on January 29!  After that you are out-of-luck until the next window is set.  For those who can jump on the opportunity, here are the numbers:

Residential: $1.25/Watt EPBB; n/a PBI.
Commercial: $1.10/Watt EPBB; 11.0¢/kWh PBI.
Non-Profit: n/a.

Which brings us to the problem children…

Azusa

Azusa has a rebate program, maybe.  But what it really has as of now is a waiting list.  Good luck with that.

Burbank Water & Power (BWP) and Glendale Water & Power (GWP)

Burbank and Glendale feel like the same city so its not surprising that their local utilities seem to act in lock step.  Both utilities arguably offer rebates, but unlike PWP - their more intelligent neighbor to the East - neither BWP nor GWP can figure out how to keep a rebate program open for more than a few weeks (days?) at a time.  They say they are victims of their own success, but we see it as a sign of bad planning.  (Oh, and don’t get us started about GWP’s alleged Feed-in Tariff program which after a year and a half is yet to have a single application submitted! Genius!)

As for now, all the unfortunate residents of these two communities can do is wait until the new fiscal year in July and hope that some funds will be allocated.

Southern California Edison (SCE)

In SCE territory the party is officially over - there are no more rebate funds available, and despite the Governor’s call for 50% of electricity to come from renewables by 2030, there are no moves a foot to refund the CSI program.  This is unfortunate beyond the lack of funding - with the demise of the CSI rebates, so goes the CSI data since that was only gathered as part of the rebate process.  As a result, we lose a major solar incentive along with a major source of market data for the largest solar market in the country!  More genius!  (Here’s a thought - since SCE still requires us to go through the interconnection agreement process - via email - why not collect the data that way?)

Los Angeles Department of Water & Power (LADWP)

LADWP offers a rebate, but they have the most excruciating process ever for getting it.  (Think of that wealthy Uncle who could easily help you out, but is going to make you bow and scrape before he cuts loose with some ducats, and you get the picture.)  Moreover, non-residential rebates are going away in favor of the Feed-in Tariff program, but for small commercial or non-profit customers, that option simply doesn’t pencil out. 

For those residential customers with the patience to outlast the bureaucrats, here’s their rebate:

Residential: $0.40/Watt EPBB; n/a PBI.

Frankly, that’s just not worth the trouble.

In Summary

So here’s the overall results for all of these utilities:

Solar rebate rates in Run on Sun service area, January 2015

While rebates are going away, the 30% federal tax credit is still in place, and will continue through the end of 2016. Carpe diem!

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Jim Jenal is the Founder & CEO of Run on Sun, Pasadena's premier installer and integrator of top-of-the-line solar power installations.
In addition, Run on Sun offers solar consulting services, working with consumers, utilities and municipalities to help them make solar power affordable and reliable.

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