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

SunRun Solar PPA Example

In my last post about SunRun, we talked about the basic outline of the SunRun solar PPA. In this post, we’re going to go through an example of an average system in Southern California Edison (SCE) utility with tiered rates and net metering. The example would be similar in other SunRun territories, but not Arizona and Los Angeles, which are leases.

In this example:

  • The customer’s average monthly electric bill is $153/month.
  • This corresponds to $.21/kWh average rate across the rate tiers.
  • The solar system’s size is 5 kW DC, or 4.23kW AC.
  • This system’s size (5 KW) will offset 87% of the home’s expected electric bill over a year. So you’ll still have to pay the utility 13% of your power needs for the next 18 to 25 years.
  • In the example, SunRun projects electric rates in SCE territory to rise an average of 6.5% annually across higher rate tier customers. I think that’s a good estimate. Recently, in April of 2009, energy hungry SCE customers saw a rate increase from 3% to 10%, depending on which rate tier. Historically, electric rates have risen an average of 5% nationally over the last few years, but due to new clean energy requirements and carbon cap and trade legislation in Congress, experts believe utility rates will increase faster than they have in the past, especially for big energy users who are pushed into the high rate tiers. Your state/utility will have different projected increases.
  • This 6.5% projection means that the current .21 kWh average rate for this customer will be $.56/kwh by the end of the 18 year contract.


  • To lock in your $.21/kWh bill for 87% of your electric bill for the next 18 years (assuming your power needs remain the same), the customer pays $3752 upfront.
  • For a small fee, you can spread this upfront payment over the first year and pay $237 a month plus the $133/month for solar, and $20/month for the left over utility bill.
  • Assuming that 6.5% rate increase over the 18 years of the contract, you’ll start to see more and more savings every year. For example:
  • After 5 years, you’ll be saving almost $500 a year in electricity costs. Your combined SunRun bill and utility bill will be $155.66/month. Without SunRun, you would have been paying almost $196.66/a month.
  • By the end of the 18 year contract, in today’s dollars, you’ll have saved $9,253.
  • You can purchase the system at year 18 for $5000 or continue the contract at a rate of 10% less than the utility rate at that time.
  • By the 25th year, if you’ve purchased the system, you’ll be paying zero to SunRun and only $89.25/month to the utility. If you only had stayed with the utility, your bill would be $692.83/month.
  • All installation costs, and inverter replacement and full maintenance is included. (Expect excellent maintenance from SunRun. They want to make sure your panels are properly maintained and working because their fee is based on how much electricity the panels generate. So, if something goes wrong with your solar system, you’ll probably get a quick visit from the SunRun installer to make sure you’re getting full power out of your solar panels.

SunRun notes that the above sample quote is for a home with good solar potential. Check my previous post about gauging whether your home is right for solar.

In my next post, I’ll talk about the new Los Angeles and Arizona lease model and give an example.

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The Sun Run PPA: The Basics (Updated)

Continuing on our look at residential solar PPAs (power purchase agreements) and solar leases, let’s check out the biggest player in the residential PPA market, SunRun.

First, the basics:

  • SunRun is a California PPA company that offers solar PPAs in California and Massachusetts. In Arizona and Los Angeles, SunRun provides a lease model similar to Solar City’s.
  • With a SunRun PPA, there is some upfront money involved. It can be as little as $1000, but that’s for a small system.
  • For larger systems, you can still do $1,000 down, but the monthly payment will be a little higher than your old non-solar electric bill–initially. Down the road, you’ll be ahead of the game when electric rates rise–and they will.
  • You’ll eventually see a payback for the upfront costs in electric savings. This will take a few years, depending on the size of your system. Larger systems will see payback sooner, especially for customers in the higher tiered rate utilities.
  • You can break up the upfront payment over the first 12 months of your contract, but there is a small fee.
  • SunRun contracts with a select group of experienced installers . These companies are all very well known in the business, so good quality there.
  • With the panels installed, SunRun charges you a per kWh charge for the electricity your panels generate. Essentially, they become another utility, except the energy is coming from your solar panels. You will also remain connected to the grid, so no worries at night or on cloudy days.
  • You’re locked in for 18 years, though you can transfer the agreement to a new home owner, a new home, or buy out the agreement before then.
  • SunRun maintains the solar, including the inverter replacement costs and repairs, and guarantees you that the solar panels will generate the contracted amount of power during the year. If they don’t, SunRun will reimburse you the extra money you paid to the utility if for some reason the system doesn’t generate the predicted amount of power. In other words, if something goes wrong with the system, you’ll still pay that contracted flat solar rate, no matter what.
  • Although SunRun predicts how much power your panels will generate over a year, it breaks up your yearly expected usage into a monthly bill, just like your utility. Also like your electric company, you’ll pay a per kWh charge.
  • How much is this per kWh charge? That depends on where you live, how many solar panels you need, and how much you put down upfront, as well as how much a particular installer charges you. They always formulate the deal so that it’s the average of the tiered rates that you’re paying now, today. In other words, they try to formulate your combined monthly SunRun solar bill and residual utility bill to be the same as your bill now.
  • So where’s the savings? Next year when your normal electric rates start going up. Remember, the SunRun portion of your bill remains the same for 18 years.
  • Historically, electric rates have been rising nationally at around 5% a year, but rate increases might be steeper due to Cap and Trade carbon legislation currently going through Congress, so rates might rise more quickly–making solar a great deal, no matter how you finance it.
  • At the end of the 18 years, you can buy your panels for a pre set amount at $1 per DC watt or renew your PPA agreement at a rate that is guarantied to be 10% less than your utility rate.
  • Since you don’t own the panels, but just pay for the electricity, SunRun receives all of the state rebate and/or utility cash incentives, plus the 30% Federal tax credit and green tag credits (sort of like carbon credits, but for solar.) However, they work in most of the rebates and 30% tax credit into their formula. This is a great feature for those who don’t pay much in taxes and don’t benefit much from tax credits.
  • There’s no lien on your property and you don’t dip into home equity. However, SunRun does require you to have good to excellent credit. Their qualifications are not just based on your FICO score, so they can be flexible.
  • Solar Fred Note: The Sun Run Lease formula for Arizona and Los Angles is different than the above Solar PPA model for California and Massachusetts. I’ll get to the lease model in a future post.

In my next post, I’ll give an example of an average sized 5KW DC (4.23 KW AC System) in Southern California for SunRun’s PPA. So, the above model would apply to most of California and Massachusetts utilities, but not to Arizona and Los Angeles.


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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.

How much is your roof worth with solar panels?

Profit from your roof space: find local deals on solar in your area, eliminate your power bill, and join the solar revolution.

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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.)

How much is your roof worth with solar panels?

Profit from your roof space: find local deals on solar in your area, eliminate your power bill, and join the solar revolution.

Calculate my savings!

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.

How much is your roof worth with solar panels?

Profit from your roof space: find local deals on solar in your area, eliminate your power bill, and join the solar revolution.

Calculate my savings!

Solar Insights: Solar Leases, PPAs, etc

So, I’ve been thinking…. Always a bad thing. Nevertheless, over the next few weeks, I’m going to start focusing on the benefits–and challenges– of solar leases, PPA programs, and later, the CityFirst municipal programs that are beginning to sprout up throughout the country.

The leaders of the solar leasing movement are:

  • Solar City in California, Oregon, and Arizona
  • Sun Run for PPAs (Power Purchase Agreements) and/or leases in California, Arizona, and Massachusetts
  • CT Solar Lease, a Connecticut only partially State funded program in partnership with the Connecticut Clean Energy Fund, AFC First Financial Corporation, US Bank, and a visionary company, Gemstone Lease Management, LLC, which is developing other leasing models in other States too.
  • There are others, but these are certainly the ones that are the most prominent. I’ll get to others eventually.

Now, I know I’ve outlined the basics of solar PPAs, solar leases, and municipal CityFirst programs in my Cash Poor series of posts, but I’ve realized I need to spend time and be more specific about each one.

Why? First, because these programs vary greatly. But more importantly, because in talking to both consumers and even some solar professionals, there is still the misperception that solar is a lovely, a green idea, but people can’t afford it right now. It’s not practical. Yada, yada, yada. I’ve tried to assuage these concerns with other posts, but it’s not enough.

Don’t get me wrong. Home equity financing is still a great deal over the long term for residents in most states–though not neecesarily in Connecticut. (I’ll get to that in the next few posts.)

Even so, if you want to keep what’s left of your home equity in reserve AND YOU STILL WANT TO SPEND LESS ON YOUR CURRENT AND FUTURE ELECTRIC BILL, than these three models are clearly the best way to go today with little or no upfront cash.

So, yes, damn it, you can have your solar and afford it too, and I will make the case for why that’s possible with the CT Solar Lease over the next several posts.

How much is your roof worth with solar panels?

Profit from your roof space: find local deals on solar in your area, eliminate your power bill, and join the solar revolution.

Calculate my savings!