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Is leasing Solar Panels worth it? What's the Catch? What am I missing?

Is leasing Solar Panels worth it? What's the Catch? What am I missing?

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  #1  
Old 10-27-13, 12:19 AM
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Is leasing Solar Panels worth it? What's the Catch? What am I missing?

I just talked to a Solar Power company who has the following deal - sign a lease with them for $30 a month for 20 years or so. For that $30, they will install 18 panels on your roof that allegedly put out 5 KW/hour. They will also maintain them if there is a problem, especially with hurricanes and storm damage.

They allegedly say I'll save upwords of $100 a month on my electric bill, especially in the summer, as I'llbe feeding power back in to the grid.

I'm skeptical, but would go ahead with the lease if I save just $50 a month. I'm thinking this deal is too good to be true, that's why I'm skeptical. I cannot see how the company can make money at $30 a month; that's only $7200 after 20 years. The panels themselves cost over $25,000 and installation I'm sure would cost them $500+.

What am I missing here?
 
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  #2  
Old 10-27-13, 01:32 AM
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What am I missing here?
Probably quite a bit.

First of all, how large is this company and how long have they been in business? What is their Dun and Bradstreet rating, if any? Are they the ones that told you the panel cost was $25,000? Did they do a comprehensive solar evaluation of YOUR site? Where did they get the figure of five kilowatts per hour? If that is the ultimate rating of the entire array of panels then the REAL output will be roughly half that and only when the sun is directly hitting all the panels.

What is your current utility rate for electric power. cents per kilowatt hour? What is your utility's protocol for grid-tied solar systems? Does their solar program actually pay you or does it merely issue credits for the solar power delivered to the grid?

Let me make up some numbers. Say your solar array averages out 2 kWh for every hour the sun is shining. Say also that all things considered the sun averages about eight hours a day over the course of a year. That would be roughly 16 kWh generated every day. 16 time 30 (days in a month) would equal 480 kWh per month. Some months will be higher and some lower. I have no idea of what your cost is so let's use a nice round ten cents per kilowatt hour and lets say that you are issued a credit from your utility on a one-to-one basis. That would mean that you would get 480 kWh free from your utility on an average monthly basis. The value of that (at 10 cents/kWh) would be $48. and subtracting the $30. lease payment results in an average monthly reduction of your electric bill of $18. That is a long, long way from saving $100 a month.

That actually would be a fairly high return in some areas. Many utilities will pay you the WHOLESALE rate for purchased power and that could be as low as one-half the retail selling price. You need to find the figures that apply in YOUR area and substitute the numbers. I have no idea of your real savings but I can guarantee you that the deal is far better for the leasing company than it is for you.
 
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Old 10-27-13, 03:11 AM
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Great explanation by Furd.

A 5 Kw array should cost less than $10,000. Depending on your location (how near the equator) will determine how much power that array produces on a yearly average. Here in Maryland, from Fall to Spring the sun is so low in sky I would not expect to get much power at those times. You definitely could have no trees on the south side.

One friend just had an array installed. From what he said, he paid $5000 up front and pays a reduced rate (less than power company would charge) for the power the array produces. He then owns the array after 5 years. It sounds like a good deal but I'm waiting to see what he produces in a year.

I think solar cells degrade about 10% in ten years time.
 
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Old 10-27-13, 06:08 AM
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I did a lot of research into solar cells....Furd did a good job of covering it.

The lease sounds good because your up front out of pocket costs are small if non. But you have to assume that for them to make money on it...there has to be something in it for them. Chances are, they are getting any rebates that might be offered by the utility....

They always paint a rosy picture....and if they are saying "You have to sign right now to get this deal"....walk away. If the offer is not good next week....your getting scammed....

For me, my average electrical use is about $45-50 month...year round....solar does not have the payback for me....

If your trying to reduce your electrical costs....go through your house and look at ways of reducing. How many incandescent lights do you have? How well insulated is your house? Are you using occupancy sensors? (my kids or wife do not know what an off switch is).

Also....look at your usage by time of day. If you have a stay at home spouse (trying to be politically correct here), then a good % of your solar energy would get used by you....assuming you have the right system...it should sync up to your power and give you everything with excess being sent back out the meter.
 
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Old 10-27-13, 08:00 AM
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In general, the return on solar panels is negative without government subsidy. No doubt this company is factoring in some of the subsidy to their financial model, but it is still pretty unlikely to make money for you (we did over 50 solar installs in my town, so have some pretty nice economic analysis). Expect 10 year paybacks minimum - with the subsidy (just what I have observed). Without subsidies forget it.

One item often overlooked is maintenance. Not just the solar panels, but also your roof. I looked at solar panels for my house (large southern facing roof surface), but my roof just isnt well enough designed that it wont have problems over the next decade or two. (its relatively low slope with lots of unique openings). Having panels up there would be a nightmare to doing roofing work. And you cant assume this business will still be in business 20 years from now.

My guess is that you are missing something, and it will be uncovered in the details if you move forward. Your exercise of trying to understand how they are making money is a good one, no businesses work for free (at least not for long they dont). Be cautious is my advice
 
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Old 10-27-13, 09:55 AM
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I think there is something missing in their numbers. Who takes all that off and puts back on if you have roof damage ? Who pays for the roof repair ? Insurance company may say if the panels were not there the roof would not need replacing. If one of those panels blows away and tears up something of the neighbors who is going to pay
We just installed a metal roof with insulation under it ,left two layers of shingles. We then installed 3/4 inch insulation panels on the side of the house and had the thick vinyl siding put on
The total cost was roughly 4000.00 in labor and 5000 for material
Shop around as material and labor is all over the place in quality .
We did away with our central air and went back to window units. Our light bill had been running 400 to 600 a month depending on temp
We are not paying 175 to 250 a month in summer have not been thru a winter yet
I say all this as there may be a better way to save without the panels
We have beed far cooer this summer than the last as well
 
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