Vivint Offers to pay for solar panels....what's the catch?
January 21, 2014 8:48 PM   Subscribe

This offer feels too good to be true. Is it?

I've recently received an offer from Vivint to put solar panels on my home at no charge, as long as I buy electricity from them at a certain (good) rate. I also must maintain a relationship with my current electricity carrier.

They are paying for and guaranteeing the solar panels. Why do I not feel good about this? I feel good about the tech, but I'm concerned about my home's resale and how this affects it. Naturally, they have good tales to tell, but I need an outside opinion. I won't own the panels and neither will the next owner. This seems....odd.

What would you do? Any experience with Vivint solar?
posted by PsuDab93 to Home & Garden (7 answers total) 4 users marked this as a favorite
Based on some quick googling - you're paying for the energy the panels produce. The only obvious upside is that you're using green energy, and the rate you get (looks like a 20 year contract!) could be better or worse than what you're getting from your current provider.

Kind of a strange setup.
posted by MillMan at 9:03 PM on January 21, 2014

The concept is legit. Look up "solar leasing" and "power purchase agreement" (PPA).
posted by intermod at 9:09 PM on January 21, 2014

It may be legit. Here in Ontario there are companies that will pay you rent to install solar panels on your roof. They sell the electricity to the hydro company and pay the homeowner some annual amount.
posted by any portmanteau in a storm at 9:37 PM on January 21, 2014

Yeah, this is pretty new, but a totally legitimate path towards solar. I just signed up with SolarCity, for instance. They're building the entire system, which is intended to be a whole-home system. They guarantee generation of about 12,600 kW (at first; they decrease in productivity about 0.5% every year, which is accounted for in the guarantee) and locked our rate in at 11.8c/kWh, so I'll pay $125 to them every month for the next 20 years.

Because the system is grid intertied, I am able to over-generate power during winter months (in Arizona) which feed back as credits to the grid. APS, my power provider, will charge about $20 in administrative costs and such, but actual power generation from them, even at night, should be offset by the excess generation I produce at other times during the year.

The net result is that I'm effectively hedging that APS will continue to raise their rates over the next 20 years (which is almost a guarantee; they just tried to lobby the Arizona Corporation Commission for an "efficiency surcharge" because their customers "are too power efficient." Seriously.) and that I'll save significant money if APS's rates climb past 11.8c/kWh.

Right now, I'm paying on a time-of-use plan $0.24477​/kWh on-peak during the summer and off-peak $0.06118​. So SolarCity will cost more than my off-peak generation, but because it's Arizona (and because the wife is home during several weekdays/week during on-peak time) on-peak gets pretty bad. My average rate nets out to roughly 12-13 cents per kWh with APS already, and their rates are disingenuous since they tack on scaling incidentals like "delivery charges" and such that are hard to estimate and not included in their base rates, which is frustrating.

Since my effective rate is close to 12-13 cents/kWh, I'm already doing better with SolarCity, and that's before any rate increases.

They estimate based on roughly 5% energy price increases per year (which is pretty aggressive, but also close to on par with what we've seen the past 5-10 years from APS) I'll save $21,000 over the life of the system. If I were to purchase the system outright from them, I'd save a bit more: something like $25,000, but I wouldn't see breakeven until year 13 after system installation, and that's $26,000 out of pocket, which means it doesn't even account for time-value of money for those 13 years of $26,000.

APS's "equalizer" service, which guesttimates your energy use for the whole year and redistributes your bills so they're all equal estimated $155/month for my new house. SolarCity + APS will be $145/month out the door, so if I stay under 12,600 kWh/year in usage, I'll be saving $10/month right out of the gate.

I like SolarCity because they're fully integrated: they do the planning, the site audit, the permitting, the installation, and the system maintenance and billing. Other providers typically sub contract that stuff out, which isn't the end of the world or anything, but I like optimizing systems like this. The lease also includes a 20-year warranty and insurance policy in place, so if the panels break, are stolen, or something else goes wrong, they're covered. If the panels fail to produce their guaranteed production over a period of two years, SolarCity will refund the difference at a slightly higher prevailing rate: around $0.135/kWh.

Overall, we just moved into a house that has 1941 single-paned casement windows in Arizona serviced by a power provider that likes to jack up rates on a VERY regular basis, especially recently. At the very least, it's highly unlikely their rates will go down, so I don't feel like I'm exposing myself to much risk here.

I've also chosen a plan that doesn't escalate, specifically. They offer some options that do escalate, so they start at a lower /kWh rate, and then increase 0.3c/kWh every year, so that by year 7 you're higher than what I chose to lock in at. They estimated a system-life savings of around $15,000 versus the $21,000 they estimate for my system.

Again, those estimates are contingent on rate increases that they're citing DOE figures on, but which may not pan out as much, so that's something to take into account. But if in 5 years, APS manages to get a baseline increase through such that total effective rates are closer to 14 or 15c, I'm going to be pretty happy with my choice to lease.

There was also absolutely $0 out of pocket, which helps with the decision as well.

Regarding selling the house, I'm able to transfer the lease to the buyer, which, if power rates go up even a little will be an easy sell (and they see houses even with leased solar go faster than non-solar homes on the market typically) or I can pay off the system by determining the number of months remaining and applying a 5% discount, and then including that in the purchase price of the house. They'll also transfer the system to another house if the new house is applicable, for $500-$1,000. This is SC, not Vivint, but I'm guessing the same general principals apply.

Make sure that you have a solid understanding of rate escalation, in any event. You don't want to get bait-and-switched and not realize that your rates will constantly increase.

I figure that even if there's only moderate inflation over 20 years, I'm still coming out ahead with *no* rate increases from APS, cold fusion/unlimited free energy notwithstanding.
posted by disillusioned at 12:26 AM on January 22, 2014 [7 favorites]

This is fairly common in the UK though here it works as follows: the company gets the tariff subsidy while the customer gets whatever share of the solar power they produce for free and then pays for whatever other power they draw from the grid. The subsidy is a bit higher for exported power here though it looks like it's a flat rate in Canada. The other upside for the company is they get land (ie your roof) to generate on, which means they save on buying property. This has been a fairly common approach in the UK, however there is some evidence emerging that it does complicate the selling on of houses, because the buyer will be stuck with a contract to rent out their roof for some time to come. I can't find any hard stats though so this may be anecdotal as yet.

If one company is offering this sort of deal I would be surprised if there aren't others so you might be able to get a better deal, look around.
posted by biffa at 1:35 AM on January 22, 2014

You have to maintain the relationship with the current power company because your system will be grid-tied. Off grid systems are the exception in the current solar boom, because the extra batteries and other components required to be off grid are expensive.

This is a legit type of setup, although like with anything else I would suggest you research the specific company online and any other alternatives. Competing quotes are a very good idea. Even though they'll be handling the equipment and all you'll be doing is cutting them a check every month, it's still an undertaking to get done so you want to be sure you're getting the best possible deal.
posted by azpenguin at 7:10 AM on January 22, 2014

We did this, though not with Vivant. We used SunRun. They paid all the installation costs for both the panels and for the additional meters required (we are on the grid, and needed meters to meter flow both ingoing and outgoing from our home. They provide insurance in case someone gains access to our roof and falls or breaks a pane. We live in a rowhouse and people do occasionally access the roofs of their homes, like to watch fireworks on the 4th of July, so this was something we were leery of. We paid a one-time fee which was a pre-payment for electricity for the next 20 years, and after 20 years the panels will belong to us. The presumption is that in 20 years technology will have marched on, and our panels will not be worth removing and re-installing to SunRun. But, they have no moving parts, and might function well for many years beyond that.

In exahange, we agreed that all of the federal tax refunds available went to them, though we received state refunds (Pennsylvania) that I think are no longer available, since the current Governor is not supportive of alternative energy (we are a huge - the hugest, in fact - fracking state in the country). Although the refunds did not completely cover our expenses to prepay electricity, we are protected against future increases in rates. We were especially concerned about increases for daytime electricity use, which is in place in many states - maybe yours? Not here, yet (see fracking, above . . .)

On edit, we can use whichever electricy provider we want. Not sure why you can't.
posted by citygirl at 9:01 AM on January 22, 2014

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