While at Home Depot this weekend, a SunRun representative approached me to see if I was interested in Solar. I said absolutely for many reasons. I explained that I've been keeping an eye on the cost of solar for many years and that once the cost becomes significantly financially beneficial over the 25 year life of a system, I would most certainly consider it. However, I am not convinced that we've crossed that threshold yet and referred her to my blog post on the subject. She said that leasing the solar system could be a beneficial option. That reminded me of Susan's Solar Quandary.
About a year ago, my dear friend Susan shared with me that she had been approached by fine young man from SunRun that said that he could help her reduce her electricity bill through leasing a solar system. With her current energy provider at the time, she was paying around $75/mo. The highly detailed [sarcasm] quote (see picture below) provided by SunRun indicated that he could reduce her bill to $73/mo and relatively speaking lock in her rate for the next 25 years through a lease.
I reached out to the young man and asked for a sample copy of the lease terms. He wouldn't do that but he did eventually confirm the following points:
- Lease term: 25 years
- 2.99% annual rate increase (escalator)
- Is there a fee for taking off and putting back on the solar system when the roof needs to be replaced? Yes but he didn't offer a cost
- Could it cause issues with future buyers of the home if the buyer's lender requires the lease to be paid off before the buyer an acquire the home? Yes
- How is the system sized? The system is covered to cover 90% of current usage
- If she goes over the estimated usage for which the solar system is sized, are there any overage charges? Yes, they charge additional at around market rate at the time
- Is there a penalty fee for buying out the system early? Yes but provided no details
I asked Susan if she had checked the market rate at Power To Choose to see if another energy provider might be less expensive than her existing provider. She had not. I guided her through this process and found another provider that offered a rate significantly lower rate that would reduce her monthly bill at current usage from $75/mo to around $53/mo.
This created a moral question for me regarding SunRun. If SunRun knew that the market rate at the time was around $53/mo, why did their estimate only reflect a slight reduction in her monthly energy cost?
Setting the moral question aside for a moment, let's run the numbers over 25 years to compare Susan's current rate vs SunRun solar estimate, vs switching to a market rate plan. Here were the numbers at that time if we assume consistent annual usage.
Notice that with only 2% overage, Susan's annual cost is never less than the current cost and with the built in 2.99% annual "escalator" increase, the cost of her energy with SunRun doubles by year 18 and is nearly triple by the end of the 25 year contract. If by contrast, she switches to a market rate through Power To Choose, her rate reduces from $75/mo to $53/mo immediately and may increase only moderately over the same time period.
The important thing to take away from this post is that the details matter. Before signing up for Solar do the math to find out if you will get a good return on the investment over the warrantied life span of the system. And if you are considering a lease, make sure that the long term cost don't quickly exceed market rates.
Hope you find this informative and helpful.
Blessings!
