Solar Power. Talk to me.

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Re: Solar Power. Talk to me.

Post by RunningMn9 »

You should check your....business...papers and see if any new factors have come to light.
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Re: Solar Power. Talk to me.

Post by Carpet_pissr »

OK, follow up question: the option on the right in blue indicates "immediate payback", with no money down. ?! Really sounds too good to be true. What am I missing? I see that the savings year over year are less with that option, but does anyone think that the blue option is terrible (relative to the purple)?

I am not very liquid right now, but the advantage of the blue option for now seems to be that I wouldn't have to worry as much about the idea of "stay in your house at least 5 years to make this all worth it".
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Re: Solar Power. Talk to me.

Post by Carpet_pissr »

RunningMn9 wrote: Wed Aug 22, 2018 12:06 pm You should check your....business...papers and see if any new factors have come to light.
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Re: Solar Power. Talk to me.

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Carpet_pissr wrote: Wed Aug 22, 2018 12:21 pm OK, follow up question: the option on the right in blue indicates "immediate payback", with no money down. ?! Really sounds too good to be true. What am I missing? I see that the savings year over year are less with that option, but does anyone think that the blue option is terrible (relative to the purple)?

I am not very liquid right now, but the advantage of the blue option for now seems to be that I wouldn't have to worry as much about the idea of "stay in your house at least 5 years to make this all worth it".
It's a loan. They're weasel-wording it to make it sound like the payback is immediate (as you're not 'paying' anything up front). But you're on the hook for the loan, and if you leave the house I assume you'd either have to pay off the loan or assign it to the buyer (which could complicate a sale).

Other than that I think it's fine. You're giving up some long-term savings through interest, but if you're not sitting on cash to buy the system outright, it can be a good way to get going now.

The one to avoid is the lease/PPA. Those things kill the long-term value and also require you to assign the lease to the buyer if you sell--worst of both worlds!
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Re: Solar Power. Talk to me.

Post by Carpet_pissr »

Zaxxon wrote: Wed Aug 22, 2018 12:27 pm The one to avoid is the lease/PPA. Those things kill the long-term value and also require you to assign the lease to the buyer if you sell--worst of both worlds!
Yep. That's exactly why I specified cash outright or low interest loan in my "profile". I don't want any part of transferring a lease to potential home buyers.
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Re: Solar Power. Talk to me.

Post by Zaxxon »

Carpet_pissr wrote: Wed Aug 22, 2018 12:48 pm
Zaxxon wrote: Wed Aug 22, 2018 12:27 pm The one to avoid is the lease/PPA. Those things kill the long-term value and also require you to assign the lease to the buyer if you sell--worst of both worlds!
Yep. That's exactly why I specified cash outright or low interest loan in my "profile". I don't want any part of transferring a lease to potential home buyers.
Exactly. The PPA can be OK if you know you'll be in the home for the term of the lease and you want solar but just can't or don't want to buy or take out a loan. Outside of that very specific circumstance I think they suck.
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Re: Solar Power. Talk to me.

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Zaxxon wrote: Wed Aug 22, 2018 12:27 pmThe one to avoid is the lease/PPA. Those things kill the long-term value and also require you to assign the lease to the buyer if you sell--worst of both worlds!
Neither of those things are true. :)

I get that they aren't for you, and that's fine. Everyone has different factors to consider. Solar is not a one-size-fits-all proposition. But the leased panels don't kill the long-term value, nor are you required to assign the lease to the buyer if you sell.

That said, if you know you are moving in a few years, a lease obviously doesn't make any sense because it can be a hassle. Of course, if I was moving in a few years, I also wouldn't buy panels. So YMMV.
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Re: Solar Power. Talk to me.

Post by Zaxxon »

RunningMn9 wrote: Wed Aug 22, 2018 12:57 pm
Zaxxon wrote: Wed Aug 22, 2018 12:27 pmThe one to avoid is the lease/PPA. Those things kill the long-term value and also require you to assign the lease to the buyer if you sell--worst of both worlds!
Neither of those things are true. :)

I get that they aren't for you, and that's fine. Everyone has different factors to consider. Solar is not a one-size-fits-all proposition. But the leased panels don't kill the long-term value, nor are you required to assign the lease to the buyer if you sell.

That said, if you know you are moving in a few years, a lease obviously doesn't make any sense because it can be a hassle. Of course, if I was moving in a few years, I also wouldn't buy panels. So YMMV.
Granted it's been a few years since I did my own investigation, but it is absolutely true that at the time your (my) lease options were to assign to the buyer or pay a very large fee to remove the panels if I sold the house and did not want to assign the lease. And they certainly are much less lucrative to the homeowner long-term than a purchase is. Or are you arguing that lease/PPA companies are in the business of shouldering the long-term finance costs while failing to retain any of that value?
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Re: Solar Power. Talk to me.

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We were told in our meeting last month that if we sold the house we either needed the buyer to take over the lease or that we would be on the hook to pay it off. Upon googling solar leases I found an article that actually used an example of someone in my city who was unable to sell her house because of the lease. And we would like to move in maybe 5-10 years.
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Re: Solar Power. Talk to me.

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Zaxxon wrote: Wed Aug 22, 2018 1:02 pmGranted it's been a few years since I did my own investigation, but it is absolutely true that at the time your (my) lease options were to assign to the buyer or pay a very large fee to remove the panels if I sold the house and did not want to assign the lease. And they certainly are much less lucrative to the homeowner long-term than a purchase is. Or are you arguing that lease/PPA companies are in the business of shouldering the long-term finance costs while failing to retain any of that value?
I'm arguing that the lease/PPA has a different cost structure, and benefits different situations differently. And I'm saying that your assertion that they don't add to the long-term value of the home is incorrect, and they don't require that you assign the lease to the buyer.

While it's true that it adds an additional possible complication to the sale, it's not an automatic nightmare.

And I don't know what a "very large fee" means to you. The contract I have specifies that the fee to move the panels is around $1000, which incidentally is the cost involved in taking the panels off the roof and putting them back on (the fee is identical to what it adds to the cost of replacing your roof after you add the panels).

And there are two ways to transfer the lease to the potential buyer. One, they assume the lease (which is not hard to sell considering I have quite a bit of data on how much money it saves). The other is that the net present value of the lease is added to the value of the home, and they integrate the remaining cost of the lease into their mortgage, while retaining the terms of the lease (the leasing company is still responsible for maintenance).

Why do they do it? Because they got the tax break, they get the solar recs, and they get a long-term income stream. I will ultimately pay them about $18k (in 2004 dollars) for the system, which is less than the $33k I would have paid for it if I bought it (even with the tax break). The value gets closer if you consider the solar recs, but I can make that up in the maintenance costs that I don't have to pay, and the production guarantees that they have to meet. And at the end of the lease, they will either absorb the cost of coming to remove the panels, or waive their claim and transfer ownership of the panels to me outright (for no additional fee). I haven't decided what I would do in that scenario, given that they will be 25-year old solar panels, and and N-year old inverter (depending on how many times they have to replace it).

I totally get why many people buy the systems. And in the majority of cases, that probably makes the most sense. But not in all of them. And there are still good reasons to lease, depending on the terms.
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Re: Solar Power. Talk to me.

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Scuzz wrote: Wed Aug 22, 2018 1:21 pm We were told in our meeting last month that if we sold the house we either needed the buyer to take over the lease or that we would be on the hook to pay it off. Upon googling solar leases I found an article that actually used an example of someone in my city who was unable to sell her house because of the lease. And we would like to move in maybe 5-10 years.
That's up to the lease agreement I suppose. Mine includes the option to take the panels with me, as long as I pay to take them down and put them back up at the new place. Not all solar leasing companies are created equal I guess.
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Re: Solar Power. Talk to me.

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I was unclear--I didn't mean they can't add value to the home. I meant that you will be better off long-term financially if you buy vs lease. The leasing company is eating a portion of the long-term savings in order to provide you with the lease. They will add less value than a purchased system.

As for taking the panels off rather than assigning the lease, that's possible but often not a good idea. You're assuming, for one, that your new home is compatible with the system you had on the old home. It's unlikely to have roof faces arranged the same way, be of the correct total size, etc. It's something you can do, but rarely something you'd want to do without changing up the system. Basically, you'd move the system because you had to. Were you not constrained by the lease, you'd leave the old system (and gain that value in sales price) and then buy a new one at the new home, properly sized and designed for that home.

Maintenance savings are also generally a sales pitch rather than a real thing. Maintenance costs on a typical PV system are very low, and generally mostly covered by warranty on a purchased system. Any expected maintenance savings on a leased system will be bigly outweighed by lost system production savings.

I think you're taking my statements too strongly--I said that in certain cases, leasing can make sense. But virtually all of those cases involve not being at all interested in a purchase or loan, and being willing to give up long-term value to get the system without a purchase or loan. It's simply not the case that a leasing company is going to offer you a system with a better expected payback than a purchase/loan. Their profit comes from ensuring that they capture some of the value that you would obtain with a purchase.
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Re: Solar Power. Talk to me.

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RunningMn9 wrote: Wed Aug 22, 2018 1:28 pm
Scuzz wrote: Wed Aug 22, 2018 1:21 pm We were told in our meeting last month that if we sold the house we either needed the buyer to take over the lease or that we would be on the hook to pay it off. Upon googling solar leases I found an article that actually used an example of someone in my city who was unable to sell her house because of the lease. And we would like to move in maybe 5-10 years.
That's up to the lease agreement I suppose. Mine includes the option to take the panels with me, as long as I pay to take them down and put them back up at the new place. Not all solar leasing companies are created equal I guess.
And continue paying the lease I suppose. But Sun Run didn't even want me on the roof looking at or cleaning panels if they put them on my house. That would be part of the agreement. So I imagine "moving them to another house" would require paying them to do it.
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Re: Solar Power. Talk to me.

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Zaxxon wrote: Wed Aug 22, 2018 1:38 pmThey will add less value than a purchased system.
Yeah, I can understand what you are saying there. That's their goal when they lease the system to me vs. sell the system to me. I started with the concept of "buy appreciating assets, lease depreciating assets". I'm also a firm believer that my 2014 dollars are far more valuable to me than my 2034 dollars. So forking over $33k 2014 dollars, then waiting for Uncle Sam to give me some 2015 dollars back was far less appealing to me than given them nothing but a low monthly payment which inflation will reduce to a sack of nickels by the time the lease matures.

If you start the simulation with $33k and you can buy the solar panels, or lease the panels and put that $33k to productive use, I'm fairly confident that you should be leasing those panels, no?

At even a modest 5% annual return, that $33k becomes more than $110k after 25 years (term of the lease).

Finances can be complicated. :)

No worries though, I think we both know that there is a time and a place for either option, and there are lots of factors that go into the decision.
Scuzz wrote: Wed Aug 22, 2018 4:22 pm And continue paying the lease I suppose. But Sun Run didn't even want me on the roof looking at or cleaning panels if they put them on my house. That would be part of the agreement. So I imagine "moving them to another house" would require paying them to do it.
Well yeah...if I take the panels with me I have to continue paying the lease. ;)

In my case, I don't pay them to move them. When I decide to move, I contact them and we start working through the possible options. I can put them in touch with the buyer so they can pitch to them the benefits of assuming the lease. I can basically bump the asking price of the house by the net present value of the lease, and then use that to pay the balance on the lease, and the new homeowner just enjoys the panels for the rest of the lease term without owing anything. Basically they are getting free solar and any required maintenance. Except that by "free" I mean "part of their mortgage".

Or I tell them that I want to move the panels with me, and they look around to find a local installer that will do the job for a set cost without voiding their warranty on the system. It's the exact same process that you have to go through when you need to put a new roof on when you have panels. You've got to get the system taken down, the new roof goes up, then the system gets re-installed. That costs money no matter what option you choose.

The options available seems highly dependent on the solar company though, so there's that. That gets back to the various factors. If the company you are looking at offers different things, that changes the equation and maybe makes it much more likely to choose to buy, and maybe leasing isn't an option at all.

I know that I couldn't be happier. I basically fixed my electrical costs for 25 years (given that I do not plan on moving), and paid $0 up front to do it. That was good enough for me, and I immediately starting saving about $1500 per year. After 25 years, maybe I could have saved more. I think the math is more complicated than most people realize, so I'm not sure to what extent that's true. But even though I suspect that it is, I'm really ok with it. It was basically free savings.
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Re: Solar Power. Talk to me.

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Yeah, definitely a time and place for both.
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I think a lease is fine if you have no plans of moving and you can't afford to outright purchase a system. If you can use a home loan to pay for it and write the interest off and then get the tax credit, then buying is by far the best way to do it.
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Re: Solar Power. Talk to me.

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Scuzz wrote: Thu Aug 23, 2018 12:53 pm I think a lease is fine if you have no plans of moving and you can't afford to outright purchase a system. If you can use a home loan to pay for it and write the interest off and then get the tax credit, then buying is by far the best way to do it.
I'd be really curious to do the math on this. My lease payments amount to the price of the system ($33k vs $33k). The first issue is that I don't get the tax break. So right off the bat, that reduces the "buy" side from $33k. While the interest may be tax deductible, literally all of the interest that isn't tax deductible works against the "buy" side (since my lease payments amount to the cash purchase price of the system that was installed). And any maintenance costs that have to be paid also work against the "buy" side. I think the warranty on the panels is pretty lengthy, but if I recall correctly, the inverters won't nearly last as long as the system's life (I could be misremembering that).

And the added equity to the home will degrade over time with the age of the panels, so by the end we are probably at a wash (we'll both have effectively worthless panels on our roofs).

But all of that analysis assumes that the leasor does nothing with the money that isn't handed over up front. Even at modest gains, that money grows substantially over time, all the while inflation is demolishing that lease payment (25 years of inflation will effectively cut that payment in half).

I suspect that buy is probably still better, but I would be legitimately shocked if it isn't a lot closer than people think if you factor everything in.
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Re: Solar Power. Talk to me.

Post by Zaxxon »

This is pretty slick. Floating PV array.
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Neat!

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Re: Solar Power. Talk to me.

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Zaxxon wrote: Wed Nov 14, 2018 12:37 pm This is pretty slick. Floating PV array.
On the surface (hehe) it sounds good. :mrgreen:
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Re: Solar Power. Talk to me.

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even when you're being innocuous, you make no sense at all.
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Re: Solar Power. Talk to me.

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Unagi wrote: Wed Nov 14, 2018 4:52 pm even when you're being innocuous, you make no sense at all.
The PV array is out on the water, it will need maintenance, it will be more expensive because it's "out on the water". :wink:
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Yeah, 'cause it's miles from land...oh wait, they are floating on an artificial pond, literally adjacent to the edge, and are probably easier to get to than if they were installed on a roof.
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Re: Solar Power. Talk to me.

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I like the idea.
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Re: Solar Power. Talk to me.

Post by Jeff V »

Apparently there's a solar installer hitting up my 'hood with sales reps touting something along the line of no upfront costs whatsoever, and a flat fee paid to the company each month; eliminating variable electric bills. I'm kind of waiting to see how it plays out for a neighbor who bought into it, but there seems to be strong enough interest that a group meeting might be arranged where the sales rep can field questions.
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Re: Solar Power. Talk to me.

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Jeff V wrote: Mon May 06, 2019 10:54 am Apparently there's a solar installer hitting up my 'hood with sales reps touting something along the line of no upfront costs whatsoever, and a flat fee paid to the company each month; eliminating variable electric bills. I'm kind of waiting to see how it plays out for a neighbor who bought into it, but there seems to be strong enough interest that a group meeting might be arranged where the sales rep can field questions.
This sounds like the lease proposal we listened to. You sign a 20 year lease and they install it and maintain it. You pay a set fee for the 20 years based on a formula that involves the cost of the unit and your current electrical bill. We said no based on 2 things, the first being the 20 year lease. The second was that the fee was actually higher than our current electric bill for 10 of 12 months. Now the selling point is that rates are rising and you would be locked in so I would imagine in a few years the fee would probably be less than most months.

But I still think solar is something that if you can afford it you should just buy it outright. That way you get the tax credit and the payoff would probably come much sooner.

By the way, I would guess about half the houses in my neighborhood are on that lease deal now. I do know of one instance where a home sail fell thru because the buyer would not take on the lease.
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Post by Jeff V »

The gist of this current proposal (from those who got the sales pitch and the one that pulled the trigger) is that there are no upfront fees paid by the homeowner and the monthly payments are slightly less than the average electric bill. I guess should figure out what my average bill is so I have a number in mind.
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Post by Zaxxon »

That's generally how they work. My bro in Schaumburg just signed for a 5.8 kW system last week.
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Post by Jeff V »

My average bill over the last 13 months is $100, with a low of $75 and a high of $165. I could probably live with that as a fixed expense provided there are no surprises, like the system being unable to keep up with the AC during brutal summer months and getting a big-ass Com Ed bill anyway.
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Remember that their fee isn't the whole story. I'm assuming that, like our system, you'd still be tied into the grid. Any time you use more power than you generate, you'd need to purchase the extra from your utility company. Our system is estimated to generate 85% of our annual usage (though it was actually closer to 100%). We still have an account with Xcel. I think the electric portion during months when we don't need any extra is somewhere around $10. There is always a connection fee and some taxes. During months when we have to purchase more energy (assuming we haven't banked enough to cover), that amount goes up.

We pre-paid our lease. So our "monthly" fee to the solar company essentially stays the same for the next 20 years. We actually love to see emails from Xcel saying rates are going up. :) But for right now, we are only saving something like 10% off what our Xcel bill would have been.

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It's also worth noting that if you can elect a time-of-use rate opan with your electrical utility, that can work to your advantage with solar since the peak rate periods tend to coincide with peak solar production, meaning you offset the worst rate while paying the cheap rate at night. Especially with an EV or other large load that you can schedule at night (eg dishwashing, laundry, etc).
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Re: Solar Power. Talk to me.

Post by Jeff V »

If the system is designed to cover 85% of needs, then $85 would be the target lease price. Does the vendor also handle all maintenance and replacement costs for the duration of the lease? What about general roof maintenance...how does that work with these panels mounted? What happens at the end of the lease? The lease would have to be transferable should the house be sold within the 20 year duration. Main considerations in order of importance:

1. Will it save me money?
2. Will it affect the value of the home?
3. Is there a chance of ancillary damage caused by the installation and if so, who pays for it?
4. What happens if the vendor goes out of business? This is still a young industry and I'm not sure any providers are fully established.
5. What happens when the lease expires? I don't anticipate moving in 20 years, but moving in exactly 20 years is quite possible. Should I take a dirt nap before then, it'll depend a lot on the kids as to whether my wife would continue living there.
6. If I tap a wire into the panel array, can it also serve as a giant antenna that might bring in more than one OTA signal? (ok, that's not really a consideration).
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Jeff V wrote: Wed May 08, 2019 12:27 pm If the system is designed to cover 85% of needs, then $85 would be the target lease price. Does the vendor also handle all maintenance and replacement costs for the duration of the lease? What about general roof maintenance...how does that work with these panels mounted? What happens at the end of the lease? The lease would have to be transferable should the house be sold within the 20 year duration. Main considerations in order of importance:

1. Will it save me money?
2. Will it affect the value of the home?
3. Is there a chance of ancillary damage caused by the installation and if so, who pays for it?
4. What happens if the vendor goes out of business? This is still a young industry and I'm not sure any providers are fully established.
5. What happens when the lease expires? I don't anticipate moving in 20 years, but moving in exactly 20 years is quite possible. Should I take a dirt nap before then, it'll depend a lot on the kids as to whether my wife would continue living there.
6. If I tap a wire into the panel array, can it also serve as a giant antenna that might bring in more than one OTA signal? (ok, that's not really a consideration).
Off the top of my head...
Yes, the vendor handles all the maintenance and replacement costs for the duration of the lease. The downside to this is that you are dependent on their time frame/urgency.
Not sure what you mean by "general roof maintenance". But they don't cover the roof. Should we decide to replace the roof, then we can have them take the panels down and put them back up afterwards - for a fee.
At the end of the lease, we can either 1) have them come out and remove everything, or 2) buy the system for "fair market value" - which we were told should be pretty low for a 20 year old system. At that point we'd own it and take over all maintenance costs.
The lease is fully transferable if the house is sold. Whether it really "adds" value to a sale will depend on the purchasers, of course. In our case, we have no plans to move... ever.

1) Probably. Assuming that the price of electricity doesn't go down over the next 20 years. How much will depend on how much the price rises.
2) I think so. Of course, if a prospective buyer doesn't want solar, then probably not.
3) To the best of my recollection, if they damage anything during installation, they cover repair costs. There is always a chance, but most of the installation crews around here have done lots of installations, so the chance is pretty small.
4) Beats me. I assume I'd "own" it then and have to handle repairs myself. I don't think our vendor is likely to go out of business. I'd disagree both on it being a young industry and the providers not being established. Our vendor has contracts with both CostCo and Comcast.
5) See above.
6) Good question. Let me know. :D

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Jeff V
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Re: Solar Power. Talk to me.

Post by Jeff V »

Curious you didn't mention them offering a renewed lease, possibly with the installation of a new system (there ought to be lots of advancements in 20 years) as well as removal/disposal of the old system. Part of the reason buying out the old system at FMV would be cheap is that high maintenance/repair costs could wipe out any advantage of keeping the system anyway.

Now, I clearly know nothing regarding the physical installation. Having a roof re-shingled or replaced (and 20 years is a window that would call for one of each) is already an expensive proposition -- if it is costly to have the panels removed for this work, that's another thing to consider. As far as damage, my concern is more along the lines of possibly weakening the roof at attachment points and suffering premature leaks that manifest sometime down the road.

I don't yet know anything about the company that is hitting our subdivision with a sales force now, but the electric company just recently started promoting this in our monthly bills. While there have been companies working in this space for a long time, most of that time it was a very small niche. Scaling up to mass-market levels is not something every company can pull off as we've seen in the past, particularly in the telecommunications industry. Occasional failures would likely be absorbed by other players (with no real change on existing consumer contracts) but right now we have a president hostile to this industry that could do serious damage to all companies should he focus his malevolence on them.

If I do get this, I'm going totally try the antenna thing. :lol:
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Re: Solar Power. Talk to me.

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Generally, removal/replacement if reshingling is needed costs a few hundred bucks.
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Re: Solar Power. Talk to me.

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In my area there are probably at least three companies that I know of represented on neighbors roofs and in talking to them most offer the same package. If your current electrical bill is $100 on average I don't know that you would save much in the short term at all and you would tie yourself to a 20 year lease. The catch is that you can't just run the A/C day and night after getting the system if you aren't already paying to do that before getting the system. The pricing doesn't work that way.

I also didn't like the idea of having a solar company climbing all over my roof. IIRC they would fix problems at install (that they might cause) but beyond that it was your problem.
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Re: Solar Power. Talk to me.

Post by Jeff V »

Thanks all. I'm just trying to get somewhat of a grasp on what might be hidden costs. 20 years is a long time to carry an albatross around ones neck if these costs prove to be substantial.
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Re: Solar Power. Talk to me.

Post by Zaxxon »

There shouldn't be much in the way of hidden costs. The risk/cost is the lease. If you sell the house and the buyer doesn't want or doesn't qualify to take it over, you've got to buy it out or find another buyer. Owning the system outright nukes that risk and raises your return, at the cost of up-front capital requirement.
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Re: Solar Power. Talk to me.

Post by TheMix »

Zaxxon wrote: Wed May 08, 2019 1:46 pm Generally, removal/replacement if reshingling is needed costs a few hundred bucks.
I want to say that we were quoted more along the lines of $1500. But that was just speculation at the time. We didn't get specific numbers.

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Re: Solar Power. Talk to me.

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Jeff V wrote: Wed May 08, 2019 1:23 pm Curious you didn't mention them offering a renewed lease, possibly with the installation of a new system (there ought to be lots of advancements in 20 years) as well as removal/disposal of the old system.
Signing a new lease may have been mentioned, but I wouldn't have considered it. I would never sign another lease on a 20 yr old system. As for having them remove it and then purchasing a new system/lease, I did cover that. More or less. I noted that they would remove the system if you didn't want it any more. Then you'd be free to purchase a new system. But the latter decision would not actually be tied to the removal. They would be separate transactions. Though you might be able to work a discount of some kind if they were doing both. Though with the installations on leases currently free, I doubt they'd do much.

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