@Tarkovsky wrote:
@tim1017 wrote:
Here is a short update:
- So there is a component of the lease where a lien on the property can be placed.
- The rates are lower than conventional with an increase of 2.9% every year
- Maintenance is carried by the lessor, which is minimal. There really is no maintenance required other than hosing off the dirt every now and again. Parts are made to last up to 25 yrs.
- Internet connection is REQUIRED or it is cause for default
- They receive the 30% Fed Tax credit
- There is a buyout clause for when the current owners sell the property, the sellers have th eoption to purchase the system (currently at $20,482) or $4 per watt. I contacted the sellers and they are not looking to purchase the system.
I contacted the solar company and worked out a concession from them to extend the the buyout offer to me for an additional three months after close. I am very much in favor of solar but I don't want all these restricitons in place with the current contract AND I want to pay NOTHING for energy as a opposed to a reduced rate. I believe adding the solar as as a part of the home would add some equity (how much I have no idea as this is still relatively new). The three months will also let me gauge the ACTUAL value and maybe help me negotiate a lower purchase price for the system.
As far as I can tell, this is how the numbers break down. First, let's assume the following:
1) the starting rate at which the owner purchased electricity was $0.15/kWh, and that rate increases by 2.9% annually;
2) the owner is in Year 2 of the 20-year lease, so the current purchase price is $0.1544/kWh;
3) you use 1,000 kWh per month (that's about the national average for a home).
Based on those assumptions, you will have paid a cumulative electricity bill of $21,135.87 at the end of Year 11 of the lease (i.e., your tenth year of owning the home, provided you purchase it this year). Based on the lessor's offer to sell the system outright at a price of $20,482, you'd pass that cumulative cost somewhere in the middle of Year 10 of the lease (i.e., after about 9.5 years of you owning the home).
Now, the above analysis doesn't take into account any other associated costs (e.g., maintenance checkups, purchase of new batteries, etc.). It also assumes that you're getting all of your 1,000 kWh a month from the solar array and battery system only (which may be a fair assumption if the battery system is large enough). If you have to periodically rely on another backup system (e.g., diesel generator) in periods of high demand or prolonged cloud cover, there will be additional costs for fuel. That said, the above analysis also doesn't take into account if you have the possibility of net metering, where you put extra electricity back onto the grid (and for which the electric company pays you). Net metering is a fairly common thing these days, so I'd definitely check with the current homeowner to see if the system is setup for that, and if so, how much they're seeing in compensation from the power company each month. In some case, net metering takes a big chunk out of your out-of-pocket costs if you're generating far more than you use.
If you didn't buy the system outright and just continued to pay the lessor for those 1,000 kWh/month for the balance of the 20-year lease period (i.e., approximately 19 years of you owning the home), the cumulative cost to you personally would be $46,077.78 (again, using the aforementioned assumptions). From that perspective, it's certainly going to be cheaper to just purchase the system outright. For reference, the national average price for electricity is currently about $0.13/kWh, so the current solar price is only a little bit more expensive than grid-supplied electricity (and it may become cheaper in the long run, depending on coal and natural gas prices). It all depends on how much electricity you use and how much the maintenance costs. If you don't use much electricity, it may not be all that beneficial to buy the system. If, however, you use more than 1,000 kWh a month, it becomes much more beneficial to buy it outright. The batteries are usually the big maintenance cost, as they typically need to be replaced once every 7-10 years, provided they've been kept in good condition and have been checked by a technician periodically (once a year or so, kind of like a furnace inspection). The main thing would be to ask the current homeowner what their maintenance costs are and what (if anything) they're getting back for net metering. If the system is guaranteed for 25 years, I wouldn't be worried about it becoming obsolete. Solar panels are pretty simple and quite reliable. The batteries are the weak link, but even those are generally worry-free.
Wow, THANK YOU for putting this info together. I was trying for the life of me to figure out where is the break even point and if it's ten years or close to it (i know there are a few variables) then I feel even better about making the purchase outright even though I may be paying more than the "going rate" for a new system today. The problem is, that is the way the contract keeps you in the contract lol. Pretty smart on their end I suppose.
I'll be requesting the billing to review the usage and net power generation as well.
04/27 SCORES - EQ 653
EXP 672
TU 653
