Solar PPA?

I was at Lowe's the other day and got roped into setting up an appointment with SunRun (to get a $50 Lowes gift card) and because I was curious about their PPA program.

After almost 2 hours... the gist of the program is this (as I understand it):

1. SunRun installs the system at no cost and sort of becomes your energy provider via the solar panels.
2. They get your average rate and bill, and charge you a monthly (could be lower, same or slightly higher depending on if you get Powerwalls and how large of a system, etc). The payment will go up every year 3.5% and this is set for 25 years.
3. They will cover the entire system, warranty, monitoring, repairs, replacements for 25 years... they own it, not you.
4. You can buy the system for fair market value at different points in time (I forget when).
5. If you sell the house, you will have to transfer the contract to the new owner (who will have to accept the same terms).

The idea is electricity rates will only go up (as they have in the past few years), but you are paying a reduced rate that only goes up 3.5% a year. If you get Powerwalls, you will have protection during blackouts and the ability to charge your EVs and power your home at night when the panels are not generating.

The one thing about SunRun is the monthly payment is fixed, other PPAs it's variable because you are just paying the reduced rate and the payment is based on usage but SunRun is saying that excess use or less use will result in overage/credits as if you owned the system so that should work itself out (sounded a bit ambiguous to me).

I think mostly everyone here has financed their solar systems and most of the Internet seems to be against PPAs

The only draws for me is the no money out of pocket, the ability to have Powerwalls (we did have a few short blackouts recently) and being greener (yeah morekaos!). If the annual cost is the same as what I'm paying now... is it worth it?

Looking at my bills... I use about 27kwh a day on average. Not sure how big a system that is but I think my bill averages out to 29cents/kwh and they are quoting a rate of 22.5cents/kwh. How big of a solar panel system do I need for 30kwh/day and what would that cost?

But then when I own it... how good is the maintenance/warranty/etc?

Most of the owners here can probably tell me how much hassle it is to own.

The catch is you're paying 25 x 12 x your current monthly bill for a solar system (roughly, you need to increase the monthly bill by 3.5% each year for 25 years, but because of inflation, it's a rough estimate). Do that math and figure out the dollar amount. Figure out what kind and size of system that would buy if it were direct and what that cost is. Compare it to the one SunRun is trying to sell you. I bet you will be surprised (hint, SunRun's system will be much smaller).

Depending on your assumptions, the payback for buying solar direct is usually around 10 years. The fact that they want you to pay 25 years is a red flag.

Think of it another way. How does SunRun pay for it's costs plus a profit? By the spread it makes between the cost of the systems it installs and the payments it collects from customers. As the customer, you're paying for the cost of the system plus SunRun's overhead and profit.

Also, if you sell your house, the buyer might not be into that solar contract.

If you really want solar, buy direct. As far as system size goes, the solar company will help with the analysis. System generation varies based on sun/cloud conditions, angle of the sun relative to the panel, duration the sun is shining, and shade from nearby structures, to name a few. Your usage varies as well depending mainly on how you use the high drawer devices (A/C, EV charging). The aim is to match the generation and usage.

NEM 3.0 killed the economics of solar panels. Don't bother sizing a system to sell electricity to the utility provider - they will pay you wholesale price, around $0.05/kwh. Size it to cover your usage only. Definitely dig into how NEM 3.0 works. I haven't much, but that's important. It might even make better sense to pair your system with a battery.

You really won't see a great ROI with solar, esp if CA proceeds with lowering the price of electricity and adding a fixed monthly fee based on your income. If you're thinking of solar as an investment or to save you money on your electricity bills, I don't see it out performing a low fee well diversified portfolio over 10+ years. If solar makes you feel good, go for it, but don't sign up for a scheme like SunRun. Buy it direct, own it, and be careful financing at today's rates.

First of all, SunRun is expensive. When I was installing solar, we looked into SunRun first because it's a big company and we would get Costco gift card. They quoted me about $42k for 9.6kW system. In comparison, we went with Elevation for about $25k. Tesla is charging around $2.7 per watt, so it comes out to around $26k+ as well. For a 9.6kW system (24 panels), you get around 40kW on a good day. Less during winter. If you only need 27kW, maybe 6.8kW system or so.

Cielo comes with 4kW system (11 panels). I'm planning to add maybe 12 more panels and 2 Powerwalls (thanks to NEM 3.0) to store the energy for evening use. It used to take 7-10 years to recover the costs, but it's closer to 13-15 years now thanks to NEM 3.0. If you go with PPA, then you don't get to claim 30% tax credit for the solar costs (and battery) since you're not paying any solar costs.

I can't really say much about maintenance or warranty since we've only had it for just more than a year. So far, there hasn't been any hassle. Yet.

Thanks for the replies... I am sure SunRun is overpriced and I'm doubly sure that the salesguy overestimated what I need because the math doesn't even work out for what he said it was.

He admitted that their profits come from the Fed credits (since they own the system) and the recurring revenue from the PPA,. which I do think they over estimate to make more money but I'm wondering about leases or PPAs overall because I've always been wary of purchase.

I did some napkin numbers crunching and if I were to buy a $30k system (using CalBear's numbers) and an $18k Powerwall and get a 30% credit... a 15-year loan at 8% is somewhere around $330 (give or take)... and that's close to whatever PPA plan Sunrun is quoting me. My average bill is currently $290/mo.

So I can probably purchase for the same amount or less than the PPA and be done in 15 years... but would I rather use that money for some upgrades we want to do?

This is what has always prevented us from buying solar before... other things that have a higher priority.

CalBears96 said:

If you go with PPA, then you don't get to claim 30% tax credit for the solar costs (and battery) since you're not paying any solar costs.

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Excellent point, I completely forgot about that.

Also, PPA raises price annually, at least mine does.

vsfan said:

Also, PPA raises price annually, at least mine does.

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Yes.. I think they said it was capped at 3 or 5% each year with the sales pitch of "but SCE could raise you rates more than that".

I got another PPA quote from a broker who sells for 3 different solar companies. I'm going to see what SunPower options are as they seem to be one of the highest rated companies

irvinehomeowner said:

I got another PPA quote from a broker who sells for 3 different solar companies. I'm going to see what SunPower options are as they seem to be one of the highest rated companies

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SunPower is just as expensive as SunRun. I got the same size system as CalBear (9.6kW for $25k and only $17.5k after the 30% tax rebate).

My Sunpower quote was significantly cheaper than SunRun for a larger system (but this was PPA).

I guess that was the problem though, SunPower went bankrupt.

Once again, I decided to wait on solar. Our E-bills have been at their highest... I remember we rarely went over $100 a month but not we are looking at a possible high of $500+ and have had several $400+ bills this summer.

We do have multiple EVs now so I think we really need to figure out a solar solution.

irvinehomeowner said:

My Sunpower quote was significantly cheaper than SunRun for a larger system (but this was PPA).

I guess that was the problem though, SunPower went bankrupt.

Once again, I decided to wait on solar. Our E-bills have been at their highest... I remember we rarely went over $100 a month but not we are looking at a possible high of $500+ and have had several $400+ bills this summer.

We do have multiple EVs now so I think we really need to figure out a solar solution.

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Do the math, NEM 3.0 isn't worth it from what I remember, it takes a long time to break even, battery storage is worth the look at now if going solar, but not sure if that tech has matured enough or if they will make significant enhancements in the near future.

*The changes to California's net metering policy cut the value of solar energy credits by about 75 percent for PG&E, SCE, and SDG&E customers.

akkord said:

Do the math, NEM 3.0 isn't worth it from what I remember, it takes a long time to break even, battery storage is worth the look at now if going solar, but not sure if that tech has matured enough or if they will make significant enhancements in the near future.

*The changes to California's net metering policy cut the value of solar energy credits by about 75 percent for PG&E, SCE, and SDG&E customers.

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I just feel that with NEM 3.0, you probably would not break even. If I had an older home that's not mandated to go solar, I probably wouldn't.

However, since my home is a new construction and solar panels had already been put in, I have no choice but to add battery storage. Currently, I have a 4.07kW system. I'm thinking about adding more to probably around 9.6kW that my old home had and add two Powerwalls, which means I have no choice but to go with Tesla for the upgrade. Fortunately, Tesla solar panels are among the cheapest, at $2.90/W. Used to be $2.70/W.