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.
Last modified: June 15, 2009