Allterra Solar

Financing Your Solar Purchase

In previous posts I covered the basics of PG&E billing and how aspects of your home such as roof material, size, and sun exposure impact solar installations. This article will focus on the way homeowners across California are paying for their solar systems.

First, let us take a look at some recent news in Arizona about Solar Financing.

Solar Financing in the News – Arizona Bill to Disclose Solar Lease Costs

Arizona is considering a bill that will force solar leasing companies to disclose more about long-term costs and implications of leasing solar. Here are some of the key points:

The article raises a great question – what is the cost of financing a residential solar project? What are the best approaches?

In today’s post, we’ll take a closer look at an actual homeowner’s experience and share the numbers he evaluated to make his decision.

Lets get started…

The Example

Jeff, a retired Physics teacher, wanted solar for his home in Monterey County. Here is an image of his home and the criteria that impacted his options for solar:

Based on the home and electricity usage, Jeff has a great site for solar!

Payment Options for Going Solar

There are several ways to pay for solar. Ways to finance solar tend to be broken up into whom owns the equipment.

Ownership – Homeowner Owns Equipment and Receives Tax Credit:

3rdParty Ownership – Solar Financing Company Owns Equipment, receives Tax Credit, and depreciation of solar equipment:

Jeff’s Choices to Evaluate

Jeff found Solar City searching for solar information online and scheduled an appointment to learn more. Solar City proposed two different plans, My Power and Solar PPA. I provide a summary of key points below.

Jeff also heard about Allterra Solar from his neighbor who had Allterra install a solar system and a Tesla EV charging station. His neighbor highly recommended Allterra for their professionalism and approach. Allterra Solar’s proposal is also evaluated below.

Solar City’s My Power – Overview

My Power is a financed purchase program with a 30-year term. Payments are based on the solar system’s electricity production. Homeowners can use the tax credit to pay down the loan and reduce monthly payments.

Given Jeff’s home, usage, and credit score he was presented the following My Power option to purchase solar from National leader Solar City:

Solar City’s Power Purchase Program (PPA) – Overview

PPA is a 3rd Party owned approach. A finance company owns the equipment and sells you electricity under contract for a 20-year term. The electricity rate you pay for solar typically escalates annually. The solar financing company owns the system and receives the tax credit.

Given Jeff’s home, usage, and credit score he was presented the following PPA option to go solar:

Allterra Solar’s Financed Purchase Proposal – Overview

Financed purchase is a direct ownership approach. The homeowner secures a loan and hires Allterra Solar to design, engineer, and build a custom solar system. Homeowner produces his/her own power, buys less from PG&E, and gets protection from electricity rate increases and long-term price trends. Homeowner receives 30% tax credit to reduce project costs.

Given Jeff’s home, usage, and credit score he was presented the following Loan option to go solar:

The Numbers – What $0 Down Financed Solar Approach Won

To compare proposals I had to make an assumption:

Let’s see how the Locals in your community stack up to the largest solar installer in North America, Solar City just moved into Mexico last week:

Figure 1 – Cumulative Payments Over Time

Conclusion

Allterra’s shorter term, fixed interest rates, and lower installation cost made Allterra Solar’s purchase proposal better in terms of total money spent over time.

Jeff elected to use financing and purchase US made solar panels from Allterra Solar. Jeff evaluated a few local loan programs but ended up using a home equity line of credit (HELOC) for the project with an interest rate of 4%. Equity lines of credit remain one of better ways to finance solar.

Jeff felt production guarantees and warranty coverage from Solar City was not worth the increase in cost. Solar is reliable and cost effective, no reason to pay extra for assurances when manufacturers have warranty and production coverage too.

Here are some highlights of Jeff’s choice:

Key Differences – PPAs and Ownership

How can the nation’s largest solar installer be more expensive than a certified small green local business in Monterey Bay?

Easy, Allterra sells solar and focuses on homeowner need.  Solar City focuses on money and investor returns…

There are some subtle and not so subtle differences between owning solar and buying just the power.  Here are 2 advantages of ownership I want to make sure everyone is aware of.

  1. Equity:  Going solar increases the value of your home only when it is purchased.  No studies have been completed proving solar PPAs and leases increase a home’s value.  Only ownership does.  If you are selling your home, buy a quality solar system, the family buying your home will thank you 
  2. Manufacturer Warranty: Only solar equipment owners qualify for manufacturer warranty.  Buying good equipment often comes with great warranty coverage.  Many homeowners are not aware you can own and have assurances too.  Take SunPower, their warranty coverage with buying solar is amazing (http://www.prnewswire.com/news-releases/sunpower-announces-industrys-first-25-year-combined-power-and-product-warranty-169135366.html)

Other differences are related to money. Financing costs add up over time and large publicly traded solar companies will sell financing to benefit shareholders, not stakeholders.

When stakeholders go out and secure financing to buy solar they can make sure terms are fair and transparent.

When you lease solar or sign up for a PPA there is a good chance the financing terms are not fair and transparent… read the fine print and ask questions.

Thanks again for reading…. Email me questions or stop by our office in Santa Cruz or our solar example home in Seaside (my house).

Keep in mind, all of this is easier to explain in person, call us… we would love to help you figure out the best way to go solar.

Cheers,

Nate
COO