I think people are confused because prepaying a 20 year lease is highly unusual outside of the highly, shall we say creative, world of solar financing. I'm interested why it was structured that way. Without knowing the details, prepaying for anything for 20 years seems risky. What happens if you sell your house next year? You pre-paid for 19 years of power you will never use?
The choices SolarCity offered me were very clear. They were all 20 year leases. This was the initial proposal. I opted for the "Full Pre-Pay Plan" option:
So if I was in for 20 years anyway I cut it, would I rather pay 13.5c/kWh, 11.0c/kWh, or 6.6c/kWh? Just look at the ROI. It's a no-brainer.
The first two options appeal to most people who don't want to make any upfront payment, which is why they are so popular. But they would be paying more than twice as much for the energy for the privilege. OTOH, if one is able to make the full pre-pay upfront payment, which is still 25% of the total cost of the system if I were to do it myself, I can get power for 6.6c/kWh for 20 years. Seemed to make the most sense to me. Also, there were no other monthly payments or obligations. None, zero, nada. I doubt grid power is going to go less than 6.6c/kWh in the NYC area any time soon. Current grid power here is 16.6c/kWh. I also know that I am going to be in this house for at least five years (that was three years ago), and with a 4.5 year break-even point, I was pretty safe on that bet as well.
This was the standard proposal all Solarcity customers were getting at the time. Several friends and family (even in other states) got the same three lease offers, while only one went ahead with the install on a system about 4 times as large as mine.
Once they started the site-survey here, my system was actually a little smaller than the quote above, this is what I ended up committing to:
So that's $4,139 TOTAL out of pocket expenses. That's it! No monthly energy bills or lease payments.
But it gets even better. At the time (2014), Tesla+Solarcity was offering a $1000 promotion for existing Tesla owners..
Tesla Partnership Date: Jan 7, 2014
New incentive from SolarCity for Tesla customers: “Solar Fuel”
SolarCity offers Tesla customers a $1,000 payment when they install a home solar system. Tesla customers will receive a rebate check in the mail from SolarCity and can use the rebate towards home charging.
I also got a $250 referral check for the system I mentioned earlier. If I apply both of those to my Solarcity payment, that brings the total cost of my system down to $2,889! The system is guaranteed to generate 62,892 kWh of energy over 20 years, so that makes my per kWh
cost just 4.6c/kWh. (If for some reason the system generates less than that level of power, I get a 6.58c/kWh refund from Solarcity.) So far after two years, it's generated 520 kWh above their estimates, which I get to keep for free.
In terms of selling my house, I'm more than halfway through my break-even point (4.5 years). When it comes time to sell, I can pro-rate the cost of the solar system to the buyers for the time left on the lease, for example, let's just say it's 10 years, I could charge them ~$2000 for the second half of the lease. They would have a similar 4 to 5 year break-even point, so it makes sense for them to buyout the lease. Or I could just roll that $2k into the price of the house and say 10 years or solar power are included for free. Since I already pre-paid Solarcity the entire amount, if the buyers don't want cheap solar power for 10 years, I can have SC come and remove the panels early. That doesn't make sense, that's just throwing money out the window. At the end of the 20 year lease, I (or any new owners) have the option to buy out the system at a highly discounted residual value (since SC doesn't have to pay a crew to come and remove the system). And in 20 years, what's the value of the existing equipment once removed? Probably zero or less than zero if there is a cost to dispose. So even after 20 years, the panels will continue to generate power at a very very low cost.
Not really. At least here in California you sign long term contracts with the Utilities, in my case PG&E, with fixed net metering prices. Mine is fixed for 20 years.
That's totally not the case here, I have no contract with the local power company. So I do have a risk of the power company or state changing net metering rules, but highly unlikely, as Connecticut is very solar-friendly and there as community solar initiatives across the state like this:
Home - Solarize Connecticut
But your situation in CA clearly addresses
@timpierc's concern above:
Speaking of power companies what happens if/when the power company changes it's net metering policy retroactively? You're screwed, and now have to pay a lease that doesn't work out financially..
