Sunny Days 101 - Our new experience with solar energy

For years, we'd discussed the possibility of installing a solar electric system in our home, but have been unable to afford purchasing a system outright, and have been unwilling to commit to long-term solar leasing programs.  We did a lot to make our old home more energy efficient, but never had solar installed there.  Having moved into a house that we intend to live in for some time, we finally bit the bullet and began to explore options this summer.  As of last week, we are generating solar electricity.  With it being December, the sun being low, and the days being short, it's not much yet, but the savings have begun.  I wanted to take this opportunity to share our experience so far, and will continue to document the process in upcoming posts.

Where to begin...

We started by obtaining information from two solar electric installers who have presence in our area:  Solar City and REC Solar.  We tried to obtain quotes from Namaste Solar in Boulder, but they were too busy to get back to us before we made a decision.

Assessment...

Both companies looked up satellite images of our home to determine its orientation and potential exposure to the sun.  We provided each company with a 1-year history of our utility bills (easy to obtain online if you're on Xcel).  Based upon the property having a suitable location for panels and an average cost of electric bills, each vendor supplied a quote.  Solar City was faster to set up a phone consultation, while REC Solar took a bit longer, but sent out a sales rep.

Numbers...

Both vendors offered options to purchase, or to lease the system, and each provided flexible lease options.  Here's how it works:

• Let's say Xcel Energy has been charging you about 10¢ per kilowatt hour for electricity, and your household uses 500 kWh per month.  You're paying about $50 per month for your electric bill (gas being separate).  Ours was 600 kWh average at about 9.5¢.
• Based upon our southern exposure, roof space, and past consumption, each vendor quoted us systems that they would guarantee to meet about 100% of our electrical needs throughout the year.  With Solar City, this was a 4.8kW system with about 22 panels.  REC offered a 5.1kW system, with the same number of a different brand of panels.
• The solar company can sell you a system that is probably too expensive for most of us to buy (they quoted us about $25k!), or they can lease you a system for 10 or 20 years, charging you in monthly installments similar to your electric bill.  We looked at the more affordable 20 year option.
• Solar City did not require a down payment, REC required a minimum $500 down for the lease.  Putting down the bare minimum (or nothing), each company will start your monthly payments slightly below what you're paying from Xcel, but the payments will increase by about 3% per year for the duration of the lease.  So in our example, the first year might cost you 9¢ per kWh, your second might cost 9.27¢ / kWh, your third 9.55, and so on.
• Each vendor had some down payment threshold ($500-1500) for avoiding the rate increase.  So, in the example, you might be able to put $1000 down, to have a flat-rate 9.9¢ / kWh cost for the whole 20-year lease.  It starts higher than the no money down option, but putting nothing down, you end up paying more in monthly payments within in a few years, and slightly more over the duration of the lease.  The more you put down, the less your monthly payments are, and the less you pay over the lease term.  One vendor allowed advance monthly payments on the lease (if you wanted to put down $100 one month instead of $50, for example), the other stated that you could not pay ahead.
• Each vendor gave the option to buy the lease out up front.  This is different from buying the system itself in that you're still leasing, just paying the entire lease up front.  One offered this at $7300, and the was about $8100.    I think this can be done so much cheaper than buying the system outright because, the vendor still owns the system, and can therefore claim the tax credits for it.  You don't own the system at the end of the 20 years, but REC's panels were rated at 30, so they offer a 5-year renewal at the end of the lease period.  Solar City did not.  Each offered the ability to sign a new 20 year lease after the first one expired, of course.

What to choose...

• Buying Outright - Again, probably prohibitively expensive.  They make it even less enticing by only warrantying the equipment for a portion of that 20 year period, so you have to buy warranty extensions to keep the system serviced.  One vendor stated that our inverter would likely go out once within that 20-year period, and replacements would be covered automatically if we chose to lease.  
• Leasing in general - No matter which lease option you choose, you're bound by a 20-year agreement.  If you've paid for the lease outright, this is nothing more than permission for the vendor to monitor and service the equipment.  If you don't put anything down, you are liable for the entire cost of the lease.
• Nothing down - Starts at a lower cost than Xcel, and probably keeps pace with standard utility price increases over the 20 years.  You're paying the same amount that you otherwise would, just getting your energy from the sun instead.
• Down payment to avoid increase - Starts at about the same cost as what you're paying Xcel now, but does not increase over the term of the lease.  You're locked in at a lower flat rate for 20 years, no matter what the utility company chooses to do with their rates.
• Lease buyout - Like buying the system, this is a lot of money for a down payment, but starts substantially lower than Xcel.  The potential savings for this option are several thousand dollars over the course of 20 years against the utility company or each vendor's no money down option.

Enough for now.  Coming up in later posts, I'll discuss the solar company's interface with the utility company, caveats and things you may not consider, why we chose who we chose, and the details of the installation process.