Financing solar panels

[Tyson]

So we went through the presentation/sales pitch from Solar City today.  At the end he talked about the cost of leasing the panels as well as the cost to buy them.  We are interested in buying.  It would be $10,000 up front with a $3k tax rebate at the end of the year. 

Him:  "You could probably get a really low rate by taking out a HELOC on your home."

Me:  "Oh we have cash".

Him:  Look of confusion. 

Wow, I guess not many people pay cash....

[andreamac]

I love it! Same thing happened when I told my coworker that I got a great deal on my new car since I paid cash ;)

[Icecreamarsenal]

Congrats.  Why did you decide to go with Solarcity?  Was it just pricing?  I've been looking into it and so far my research has shown that SunPower has the best panels.

[Tyson]

We are still just getting pricing from all the major vendors.  Sunrun is up next, and at least now we have a baseline for them to try and beat.  Thanks for the feedback though, we will add SunPower to our list.

[MrFrugalChicago]

If I could get a HELOC for <= 4%, I would do that even if I did have cash. My money is worth more to me in investments than a measly 4%. Same reason I will never pay my mortgage off.

[RelaxedGal]

Adding to the recommendations: We went with Direct Energy and  recommend them if they're in your area.  Solar City is so sketchy, at least the salesmen in Massachusetts.

PM me if you want a referral, I know we get $500 if we refer people who buy from Direct Energy; I assume the buyer gets a discount too but I have to admit I have forgotten since the solar is my husband's baby. Edit: Nevermind, hubby says that we get referral $$ but you wouldn't, so it doesn't help you any.  I do still highly regard them, they came armed with spreadsheets and were the most engineer-friendly/nerdy/numbers-oriented sales of the lot.  They gave good estimates of completion (far out, but accurate due to permitting) and while the sales guy promised one thing, the contractor said they don't do it, but we had it written in e-mail so they did it anyway - it was plumbing work to squeeze in an additional panel.

[homestead neohio]

We had a PV solar array installed in 2015.  After negotiating the price and signing, THEN we began negotiation of financing.  I was referred by a friend who arranged 0% financing over 5 years, so I knew they offered it.  These loans are cut with a financing charge paid up-front, usually built into the system purchase price.  The original price quoted to us assumed no financing cost.  We got them to eat the up-front financing and have two loans at 0.00% (which tells me I could have negotiated a lower price up-front...).  The first was a 12 months loan for 30% of system cost (repaid after tax return received), the second was the remaining 70% over 60 months.  So while we had the cash to commit, we can leverage this money over the next 5 years.  Right now it just sits in savings at 1%, but we might put some in index funds.

We used Yellow Lite (http://www.yellowlite.com/), based in Ohio but serving neighboring states, and get a $250 referral, and you get $250 off for being referred.  PM me if interested.

[Tremeroy]

So we went through the presentation/sales pitch from Solar City today.  At the end he talked about the cost of leasing the panels as well as the cost to buy them.  We are interested in buying.  It would be $10,000 up front with a $3k tax rebate at the end of the year. 

Did the salesperson offer a lease with the option to purchase after 5-6 years? I would be curious if that type of arrangement might be cost effective, since the lessor would get the tax benefit of depreciating the full value of the panels.

[Tyson]

Yes, they did offer a lease with an option to buy later.  And you are correct, you lose all the tax credits if you buy them later instead of up front.

[Tremeroy]

My thought was that since the company would be getting the tax benefits of the credits & would be able to depreciate the solar panels, maybe the purchase price at the end of the lease would be meaningfully less than the cost of purchasing today.

The key to that theory is that the company could depreciate the panels & inverter as business assets, while you could not.

[Edna]

Hi,

Newbie Registered MMM member but I'm a (somewhat) faithful reader for a few years. 

Why now? I read this thread and wondered why I never hear about OPM. It's pronounced like you think, the opiate. It's not a new idea but everytime I say it, I get blank stares. It stands for Other People's Money.  I have become good at borrowing from 'Peter' to pay 'Peter'.   In this scenario, Peter is any Big Biz.  It's simple. Take advantage of those offers for free cash from your CC company and PAY IT BACK BEFORE IT IS DUE.  For nearly 2 decades we have found this trick useful many times during our remodels, or when our Subaru engine blew unexpectedly nearly 3 years ago or when we had a sudden unexpected large legal fee and the list goes on.  If your credit is good, I mean really good, this works everytime.   

I don't have our mortgages paid off fully so that is the only interest we ever pay. The tenants are helping with that.  But why use our money when I can make more money with it?  Keep your emergency 'stache' for when you need cash on hand.  OPM for all the other stuff have to do large stuff under 25K.  That is my self imposed limit. Yours will fit your lifestyle. There is a transfer balance so, I know it's not 100% free.  But it's still OPM. So, the panels would cost you an extra 300.  That's is 3%.  We can make more than 3% on 10K.

Just an option to consider.
By the way, they told us 30K for solar panels.  The idea that you get money back from the utility is not as easy as it sounds. 'Peter' doesn't like giving money back.

MMM: I read your article today in The New Yorker.  I hope your computer servers are ready. ☺And congrats! I am one of your 'older' women readers.

Edna

[Tyson]

Just an update, we interviewed 4 companies - SunRun, Solar City, SunPower and Sungevity. 

It came down to Solar City and SunPower.  Solar City had the best price but couldn't cover all of our energy usage every month due to limited roof space available. 

So we are going with SunRun because they have more efficient panels and are able to cover all our usage each month, even though they are more expensive up front.  When we run the numbers, Solar City and SunPower both have an investment payoff time of 7 years, but SunPower pulls WAY ahead after 7 years due to their greater efficiency. 

Note, this is probably only going to be true for people that don't have a ton of roof space facing the optimal direction.  A buddy of mine went with Solar City because he has a huge south facing roof, so he was able to just add a few extra panels and cover his entire usage. 

Total for our install will be $19k up front, but after rebates will be $12k, and covering 100% of our usage.  In contrast, Solar City was $10k up front and $7k after rebates and could only cover 71% of our use.

Right now we have $5k in cash, and can save about $2500 per month to put toward the panels.  So it'll be a few months before we can move forward.  But still, it'll be this summer.  Very exciting!

[ulrichw]

i don't know if it's too late, but I highly recommend doing more research.

The large vendors usually don't have the bes pricing - they're often 20% or more above what local installers can give you (this is definitely true in my area - sf Bay Area in ca - and from what I eat true in most places)

A good resource can be found at the forum at solarpaneltalk.com.

Generally you'll want to compare bids by the rated kW capacity of the system (before tax incentives)

For examole, my system is rated at 4.48 kW (16 280 watt panels) and cost 12,600 - so it cost $2.81 per W.

This is an exceptionally good deal in our area for a smaller system, but in general, pricing should be in the $3 to $3.50 per W range.

There are other considerations:
- total replacement usually doesn't make financial sense due to how you're credited
- paying a premium for "better" panels usually doesn't make sense unless you are space limited
- panel direction may make a difference in rate of payoff, depending on your utility's reimbursement policies - sometimes it may be worthwhile to put panels in a location that generates less electricity, but at a better time of day

These are just scratching the surface - I recommend that you check out some solar-specific forums before making the jump.

[forummm]

Definitely don't lease the panels. You get a much better deal buying outright. And the smaller installers generally are cheaper. SolarCity and SunRun are usually much more expensive.

[Tyson]

Thanks ulrichw - I checked out those forums and they had a link to another SunPower installer in Denver.  I'm gonna give them a call, hopefully they can beat the price I have currently.

[Icecreamarsenal]

i don't know if it's too late, but I highly recommend doing more research.

The large vendors usually don't have the bes pricing - they're often 20% or more above what local installers can give you (this is definitely true in my area - sf Bay Area in ca - and from what I eat true in most places)

A good resource can be found at the forum at solarpaneltalk.com.

Generally you'll want to compare bids by the rated kW capacity of the system (before tax incentives)

For examole, my system is rated at 4.48 kW (16 280 watt panels) and cost 12,600 - so it cost $2.81 per W.

This is an exceptionally good deal in our area for a smaller system, but in general, pricing should be in the $3 to $3.50 per W range.

There are other considerations:
- total replacement usually doesn't make financial sense due to how you're credited
- paying a premium for "better" panels usually doesn't make sense unless you are space limited
- panel direction may make a difference in rate of payoff, depending on your utility's reimbursement policies - sometimes it may be worthwhile to put panels in a location that generates less electricity, but at a better time of day

These are just scratching the surface - I recommend that you check out some solar-specific forums before making the jump.

Thanks for this; it was very helpful.  Looks like my previous statement of, "Sunpower has the best panels," was anemic at best.

[Tyson]

Actually Icecreamarsenal, if you have limited roof space, then the greater efficiency of the SunPower panels matter a great deal.  In my case Solar City (and everyone else) could only cover 70% of my usage with the amount of roof space I have.  SunPower can cover 100% because they are more efficient.  So I'm going with SunPower for that reason. 

I've read that Solar City is developing a high efficiency panel right now, but it'll be a while before it is available to the public.  And in the meantime I'm pretty worried that the net metering agreements that make solar feasible will get worse.  So I'm pushing ahead with SunPower now. 

[Erica]

We will get Solar when we move. The house would be 1000 sq ft

My husband says he is going to install them. We have 3 batteries at $100 each and 6 used solar panels for $250 ea.

He still needs to buy a generator for the 1-2 months per year it is needed. And maybe a few more batteries, I dunno

I think generators are around $500 ea. We were told this is what we needed by the neighbor

[ulrichw]

We will get Solar when we move. The house would be 1000 sq ft

My husband says he is going to install them. We have 3 batteries at $100 each and 6 used solar panels for $250 ea.

He still needs to buy a generator for the 1-2 months per year it is needed. And maybe a few more batteries, I dunno

I think generators are around $500 ea. We were told this is what we needed by the neighbor

You (or more like your husband if he plans to do the installation) need to go to the forum I previously linked - I'm not shilling for them, but they have some really knowledgeable people who will comment on your proposal for off-grid solar. BTW: Be prepared for some blunt responses.

Upshot - in general an off-grid solution will be very expensive compared to a grid-tied solution. Also, it's not as easy as it seems - piecing random parts together isn't the right path.