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Solar Power Rocks

Clear info on home solar power rebates, tax credits, and other benefits

Solar Fred’s Most Useful Solar Economic Posts on SolarPowerRocks.com

Photo : Flickr/Patrick Hosely

For the last 3 years, SolarPowerRocks is and has been a very useful resource for solar consumers. We’ve got tons of information about technology and solar economics–some of which needs a bit of updating because solar rebates change so often in so many states. Forgive us.

However, there are some evergreen solar posts that remain useful for anyone wishing to go solar in 2010 and beyond. These are in no particular order, but they are skewed toward understanding solar economics. The reader comments and our responses are also pretty informative as well.

Ye Old FAQ & More.

Some of these are also mentioned below, but as I said, we’re slanting on economics here.

What’s “Net Metering.”

Net Metering is perhaps the most important solar policy in the U.S. right now. Think of net metering as a virtual battery storage device that sometimes pays you money back at the end of the year.

What’s the Diff? Solar Lease vs. Solar PPA

Solar Leases and Solar Power Purchase Agreements are becoming increasingly popular in the U.S. because they have low up front costs. The down side is that you generally don’t save (or earn) as much money as buying. Be sure to read reader comments for more discussion about this.

San Francisco Picks up the Solar PACE

PACE (Property Assessed Clean Energy) is another way to go solar with low to no upfront costs. The concept is generally the same in every city, although there can be different qualifications in every state. With PACE, you finance your solar and/or energy efficiency improvements through a special tax assessment on your property. Should you move before 20 years, no problem. Unlike a loan, the new home owner takes over the payments (and the solar savings.)

How to Calculate the 30% Federal Solar Investment Tax Credit (ITC)

Until 2016, Americans can receive an uncapped 30% tax credit that helps bring down the cost of solar. However, it doesn’t always come off the top. Here’s a simple guide to calculate the tax credit, but we always recommend confirming everything we say with a tax geek. We’re just solar geeks.

Another post about New Jersey Solar and SRECs in general (and TRECs)

Dave gives a great overview of Solar Renewable Energy Credits (SRECs). Right now, this incentive is hot in New Jersey and a few other states, but as solar markets grow throughout the U.S., SRECs are going to be a great extra cash benefit to going solar.

Solar Fred Info: What’s a Feed in Tariff?

Feed-in-Tariffs (FiTs) are another way to incentivize solar and is widely credited with the solar boom in Germany, Spain, and other countries. Instead of rebates and net metering, you finance your solar system through a bank loan. However, the Utility pays you a huge cash premium for every watt that your system produces. In theory, you quickly pay back your loan and keep making money throughout the 20 year contract. FiTs are only in some states and/or cities, but there is a chance that there will one day be a national FiT.

Naturally, no matter how you finance your solar, we just want you to go solar. If you’re not sure if solar is right for you, forget guessing. Just get a free quote. What can you lose? It’s free, and free is almost as good as free energy from the sun.

Thanks for reading.

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Is Solar Finally Affordable in 2010? In Many States, Yes.

Photo: Flickr/Jurveston

Is solar finally affordable in 2010? In many states, I think the answer is yes, and it’s not just for the rich eco-minded elites either. That may have been the case before 2009, but many factors have finally made solar affordable for middle class budgets across the U.S.

First, before we get into the nitty-gritty numbers,  let me just make a few observations of what has changed in the last two years to make solar affordable in many states:

  • The Federal 30% Tax Credit. Previous to 2009, that tax credit was capped for residents at $2000. Not any more. Now you get the full 30% off the installed cost of your solar system, calculated after any state or utility rebates.
  • Solar panel prices have plummeted. There’s nothing like a recession to make demand lower and force panel companies to compete by reducing prices. In just a year, panel prices have dropped 50% and are still inching lower. Labor, however, hasn’t dropped, so there is a floor.
  • The growth of innovative financing options. Let’s be clear here: Buying is always more cost effective than leasing in the long term, but buying means getting a home loan to pay for it up front. HOWEVER, residential solar leases and solar PPA’s do allow you to go solar for very little up front money, so you will save some money—just not as much money as buying through a home equity loan or PACE program (see below). So, get a quote for buying and leasing if you want and compare. Either way, you’ll see it’s affordable.
  • PACE (Property Assessed Clean Energy). These programs did not exist until just recently. They’re growing in cities everywhere now, like San Francisco.  Bottom line, a great way to finance your system, and if you move before 20 years, by law, the new home owner takes over the payments, so you can move free and clear of any residual loan value, and the new buyer can benefit from the solar and pay the remaining loan.
  • The growth of SRECs. New Jersey is the poster child of why solar is now affordable, and a large part is due to the Solar Renewable Energy Credit market there. These markets are growing in every state.
  • The expansion of net metering. Many—but not all—states now have net metering. With this system, if your solar panels produce extra solar power during the day, the utility is required to credit you back that power at night. In some areas, they’ll even pay you for the extra power if your panels produced more “net” energy at the end of the year.

Okay, so that’s the broad strokes of why solar is affordable in 2010. What about the numbers? Numbers are really difficult to apply to everyone, and I’ve written why before. Realize that what you pay is going to be more or less than your neighbor or a person in another state. Wish there were one policy and one price for solar, but that’s just not the case.

With that mind, let’s go through some example prices and payback time for a $100 average monthly electric bill and a net price of around $12,000 or less. Keep in mind that these are pre-negotiated, no-haggle, group purchasing prices through our partners at 1bog.org.

 

2010 Solar Price for a $100 Electric Bill in Some (but not all) Solar Affordable Markets


CityPayback time assuming 6% annual electric rate hike.Net Cost After All Incentives% of Home Usage now Solar Powered Los Angeles Solar5.6 years!!!!$7651.20 96%Phoenix Solar7.4 years$9319.40 82%Denver Solar10.1 years$12303.90 72%New Orleans Solar8.9 years$10,597.50 73%San Antonio Solar10 years$12,348.00 74%New Jersey Solar3.4 years!!!!$10453.7282%

 

As I said, pretty much affordable when you take into consideration all of the incentives. Now, you will pay more money up front, that’s true, but it does pay off fairly quickly, and I didn’t even mention the increase in home value and other income tax benefits. Plus, solar systems last for 25 years, or longer, so free electricity after only 3.4 years in the case of Northern New Jersey.

Curious about the numbers for your home? Do what I did and use 1bog’s free estimation calculator. If the numbers don’t pencil out this year, then write down the numbers to benchmark yourself and try again next year.

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SunRun Lease (L.A. & Arizona): The Basics

We’re still getting through reviewing the various solar leases and solar PPAs in around the U.S. Today, we’re returning to SunRun and their other solar financing program, a Solar Lease.

SunRun is mainly known for its Solar PPAs, but in some states or utility areas, they have a Solar Lease model because of complex utility agreements and/or state laws. Here are the basic need-to-knows.

In the next post, we’ll go over a SunRun solar lease example for an average size 5kw DC system.

  • As mentioned, this program is currently only available in the Los Angeles (LADWP) utility and in Arizona. (For other areas in California and Massachusetts, see this post.)
  • Standard up front cost is typically $500, but could be less or zip in some utilities in Arizona. So, good news for people worried about high up front costs for solar.
  • This is an 18 year lease agreement. Should you move, you can transfer the lease to the new homeowner, buy out the remaining agreement, or buy the system at a predetermined cost.
  • You’ll need very good to excellent credit to qualify. SunRun says it takes into consideration more than just your FICO score.
  • SunRun does not place any kind of lien on your home, nor does the lease dip into your home equity, but again, they do look at your credit and ability to pay.
  • All maintenance of the solar system is included in the lease, including the inverter, which usually conks out at around 12 to 15 years.
  • As always with SunRun, they have a list of very experienced installers who will design, install, and maintain your system. That’s really great, considering there are so many new solar companies who have little experience with solar.
  • SunRun calculates your first year’s combined Solar lease and utility bill to be equal to what you’re paying now. So, you don’t really save anything in the first year of monthly bills. The real savings come in the next 17 years (or more if you buy the panels.) Why?
  • Because for the next 17 years, your SunRun solar lease bill will rise by only 2.9%, whereas the utility portion will probably rise at a higher rate, perhaps 5% or more.
  • Historically, utility rates have risen nationally at an average of 5% a year. In the future, could be more or… less. That’s a risk, but with climate change legislation running through Congress and California requiring utilities to buy more renewable energy, it’s a pretty good bet that electric rates will rise by at least 5%, especially in utilities with tiered rates.
  • Because the panels are technically owned by SunRun, they collect all of the incentives, including state and utility rebates, Federal tax credits, and renewable energy credits (RECs).
  • However, SunRun says it works these incentives into your overall lease price. That can be a really good deal for middle/upper middle income people who may not be able to take full advantage of the Federal Government’s 30% tax credit. (A tax credit is like a gift card for the IRS. For example, you owe $10,000 and get a $9,000 solar tax credit, then you only owe $1,000 on April 15th. Owe less? The credit can be taken over 5 years. Check with your tax expert to confirm.)

In my next post, I’ll lay out an example of the SunRun LADWP lease for Los Angeles and Arizona.

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SunRun is Now in Los Angeles

SunRun has done what no other Solar Lease or Solar PPA company has done before. They have made an agreement with my home town utility, the Los Angeles Department of Water and Power (LADWP), and according to SunRun, they have already sold their first low money down solar lease in the city.

I’ll get more into the details of the SunRun lease and PPA models in the next few posts. This post is a shout out to the LADWP to say thank you! …and also, please make more deals with other third party solar finance people.

Third party solar finance companies, such as the ones I’ve listed in another post, help to make solar affordable because they lower the upfront costs for both home owners and especially for businesses and government entities. I’m quite frankly perplexed as to why the LADWP has been blocking very experienced, qualified NABCEP solar installers from implementing their various financing programs. Many cities allow these companies to do the same solar installations, and the LADWP should as well. L.A. could have so many huge solar installations on schools and other businesses right now. Furthermore, we are losing good solar jobs in our struggling Los Angeles economy–not to mention the environmental loss. I hope this new agreement is a sign that the LADWP is beginning to remove any obstacles that other cities don’t have.

In the mean time, the SunRun Solar Lease is open for business in Los Angeles! I’ll be getting into more details over the next few posts, but overall, I think it’s a great, affordable, low money down program.

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Tell Your Friends: 0 or Low Money Down Solar


Happened again. I ran into a green person, who told me he loved solar but that it wasn’t affordable. What he’s really saying is that the up front costs are too high, which is why I’m discussing the growing number of leasing and PPA companies out in the U.S.

However, I also want to remind green and all hues of people about all of the available Zero to low upfront cost solar financing vehicles. Not all are right for everyone, but one of them is probably right for you. Then, I want you to get a quote, be pleasantly surprised (told ya) and spread the word to all misinformed greenies. So that you can’t miss the low up front factor, I’m going to put those parts in green bold:

  • Low down Home Equity Financing. If you have enough home equity in your home today and in the 28% tax bracket, your up front costs will be the minimal second mortgage fees, perhaps $1000. Sweet. You’ll most likely benefit from the 30% Federal tax credit and writing off the loan’s interest. (Check with your tax adviser, naturally.) And after 8 – 13 years, the panels will have paid for themselves including the aforementioned mortgage fees. Panels last at least 25 years, remember, so that’s also a great selling point to also boost your home value. Naturally, you need to be in a solar friendly state for the best incentives. Check your state here.
  • CityFirst type Municipal Financing. The idea is simple. Your city funds solar through bonds. You typically buy your solar through a city approved solar dealer, and benefit from all of the rebates and tax incentives of your city and State. Your home gets a special tax assessment for the rest of the installed solar costs, paid over 20 years, typically at 7% or 8% interest. No money down, no home equity assessments, no dealing with banks. What’s not to like? You’ve got to live in one of these cities. But the list is growing. Call your mayor.
  • Solar Leases and Solar PPAs, as mentioned above. Solar Fred is now in the process of going through the details of the programs that I’m aware of. There aren’t that many for the residential market, and they’re only in a few states, but that will change in the coming year. The highlights: 0 or not much down, monthly fees or power rates that are as good or less than what you’re paying now. Some are flat rate for 20 years. Others, you pay a little more every year. If you’ve got one of these puppies in your area today, call ‘em up. See what the numbers are for you, your roof, your energy usage.
  • Unsecured Solar Financing. How about unsecured solar loan from clean power finance at 7% or so. It’s available through partner installers, and according to the website, no fees, points, so again, 0 or no cash down. Hello?
  • Solar Panel Company Financing. There’s a new trend in town that Solar Fred needs to check out. Big solar panel manufacturers such as SunPower are doing their own 0 down financing. Naturally, you have to use their panels and buy through one of their installers. But the panels themselves have a great reputation, so it’s not like you’re slumming. Again, details are sketchy for now, but I’ll let you know after I get the skinny.
  • Energy Efficiency Mortgages. They’re limited, offered by the Feds, low interest. Read more here. You might have to make some other efficiency investments first before going solar, but that’s not a bad thing for you, your wallet, or the environment, honest. And yes, it’s still 0 down.

And so dear green readers, let it not be said that residential solar is too expensive or that there are high up front costs. One way or another, you can afford solar. You just have to reach for the phone or click on your mouse and start the process for getting a quote in your area. It’s free. That is, no money down for the quote. Tell your friends, spouse, and dog, or have them read this post. (I’m assuming your dog is an environmentalist.)

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Solar Info: List of Solar Lease and Solar PPA s

So, we’ve been talking about Solar Leases and Solar PPAs for homes. As I mentioned in an earlier post, the structures of these can vary greatly.

I’ve briefly reviewed the CT Solar Lease and briefly outlined the Solar City Lease and SunRun PPA model.

In a quick (2 hour search) of the web, I’ve found the following seemingly active residential solar lease or PPA providers, but other than the ones just mentioned, I have not done my homework yet to go over each company. So buyer beware, but if you’re interested in going with a solar lease or solar PPA in your area, here are the websites of the residential ones I’ve found so far:

In the Near Future: (As announced in the Philidelphia Enquirer):

Here are mainly Commercial/Business/Government PPA companies:


In terms of what to expect from the residential list above:

  • Solar PPAs and Solar Leases will be different from company to company and State to State.
  • In fact, the same company offering a Solar Lease in California may only offer a Solar PPA in Arizona or visa-versa.
  • Some pay for maintenance or contribute funds to the maintenance, while others don’t.
  • Some companies are the installer, while others offer their leasing or PPA program through pre-qualified installers.
  • Some charge you a leasing fee for 15 years or longer with (or without) an annual increase, while with PPAs, you pay just for the energy you use with a yearly per watt rate increase.
  • Some require a down payment or deposit of as little as $1000–or more. Others cost you nothing upfront.
  • Most require that you have a pretty good credit score in the high 600′s or even 720 in the case of Solar City’s program.
  • All are long term commitments of at least 15 years, with options to buy and/or transfer the agreement to a new owner.
  • Most–if not all of these companies–will be happy to provide a commercial PPA for your school, church, business, or government agency as well.

Know of any more residential solar lease or Solar PPA programs? Please drop a comment below and share.

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