solar financing

What You Need To Know When Shopping For a Home Solar System

By Scott Gordon
SVP, Sales, HelioPower

I consider myself among the lucky. I had the good fortune to land a job in solar sales way back in 2007. Back then, times were simpler. The majority of my customers paid for their systems with cash or HELOCS (home equity lines of credit). PPAs (power purchase agreements) and leases were the realm of multi-megawatt commercial and utility installations and nothing of the sort was available for residential consumers.

In the “earlier” days of solar savvy customers compared solar purchases by comparing price per watt. Price per what?

Price Per Watt
Price per watt simply tells you how many dollars you are spending to buy a “watt” of solar power. Think of it this way: if your home requires a 6 kilowatt (KW) solar power system (6000 watts) and you pay $42,000 to have one installed, you’ve paid $7/watt. If on the other hand, if you spent $12/watt the same system would’ve cost you a whopping $72,000! Yes, the same system! Today’s solar leasing products allow some dealers to mask dramatic price differences, such as these, behind “low monthly payments.”

The chart here illustrates the range of prices paid by customers in Southern California Edison (SCE) territory according to CSI (California Solar Initiative).  This data was compiled by a third party, RunOnSun in Pasadena, CA.

In 2007 charts like this weren’t publicly available, so homeowners really had no way to verify whether they were getting a bad, good, or great deal on a solar system unless they compared 4 to 6 bids. Still price/watt held an important place in the conversation between solar buyer and solar dealer. By 2009, “What’s your price/watt?” was often one of the first questions my customers would ask me. By then, price/watt was solar’s APR (annual percentage rate used to compare bank loans).  It’s how you knew you were getting a good deal after you settled on equipment and installation.

Today, the subject of price/watt has all but vanished from the dialog. Why? The advent of now readily available leasing and residential PPA programs allow for the selling of solar systems using ‘savings per month’ in place of price per watt. This approach allows unscrupulous dealers to mask high, some might say, outrageous prices from their customers. Does it matter what your paying if you’re saving money every month? Of course it does.

Don’t get me wrong. There are many reputable dealers who help their customers to go solar through leasing and PPAs, and there’s nothing inherently wrong with either choice, but when dealers mask high prices in leases, consumers end up holding the bag.

This type of thing may have already happened to you if you’ve ever leased a car. Savvy buyers know to negotiate the price of the car before they choose how to finance it and then check the contract numbers carefully to make sure there’s nothing funny going on. Naïve buyers walk into a car dealership and fall for the “What kinda payment are you looking for on this baby?” line. If that’s you, keep reading.

Today, we see the similar tactics infiltrating the solar industry. You go online, get a quote, and you get excited because the solar company you contacted can save you $50/month on your electric bill with their exciting new lease! So you call them up, they dispatch a salesman, and just like that you’ve gone solar. Does it really matter what you paid? After all, you’re saving $50/month, right?

Let’s say the system that saves you $50 cost you $12/watt. If you leased a 6KW system you’re on the hook for $72,000. That same system for $6/watt would’ve saved you $100/month and cost $36,000. Big difference! Which system would you lease? The savvy buyer would’ve asked how much the system cost; how much power they were getting; and compared multiple bids. Such a buyer would by enjoying both significantly higher savings and a much faster ROI (if he put money down).

Questions for Your Solar Contractor
As I mentioned, price/watt is solar’s APR. When considering solar for your home, you need to ask your solar contractor two questions:

1. What is the cost of the system?
2. How many watts am I getting for that cost?

After you have your answer, you take the cost; divide by watts; and just like that you’ve mastered the art of price/watt and are a master solar shopper (well almost, look for my upcoming article Solar Lease Red Flags to become an even savvier solar shopper).

With price/watt in hand, you now know whether you’re getting a good value or being taken to the cleaners. Savings per month is a great way to determine the impact solar will have on your bank account, but a terrible way to shop for it. Price per watt is the great equalizer. Now that you have the power of price/watt to guide your decision, you can shop more confidently for your new home solar  system.

You can reach Scott Gordon directly at SGordon@HelioPower.com.

Agreement brings former SolFocus founding member, Ty Jagerson, to company’s executive management team

Helio Micro Utility (Helio mU), a developer and financier of solar energy projects, today announced the acquisition of Simple Energies LLC, a renewable energy project development company with a 50 megawatt global pipeline.  The agreement brings renewable energy veteran and Simple Energies CEO Ty Jagerson to the company’s executive management team.  Jagerson, who was a founding executive of SolFocus and co-founder of the Xerox PARC Cleantech Initiative, becomes President of Helio Micro Utility; he also steps in to lead commercial and utility scale sales for affiliated company HelioPower, becoming Executive Vice President, Commercial Sales.

Helio Micro Utility, spun out of HelioPower in 2007, works with established financial partners to develop, own and operate large commercial and utility scale solar assets in the United States and abroad. In 2008 the firm worked with Citi Community Capital, a division of Citi, to form the Helio Green Energy Community Investment Fund, a $100 million solar financing program.  The initial project for the Helio Green Energy Fund was The Tech Museum in San Jose, CA. Sister company HelioPower, founded in 2001, has installed more than 1000 solar power systems worldwide. Terms of the acquisition agreement were not disclosed.

Mo Rousso, Chief Executive Officer for Helio mU, said, “By acquiring Simple Energies, Helio Micro Utility expands its pipeline into adjacent solar markets and other renewable energy domains and increases our solar financing strength. Bringing Ty on board in particular adds a seasoned solar industry professional with proven U.S. and international project development skills; this adds the financial acumen we need for this next stage of our growth.” He further added, “As the demand for clean energy continues to accelerate here and abroad, Ty’s expertise will help us scale up in developing, financing, owning, and operating renewable energy assets.”

Ty Jagerson said, “I’m delighted to be joining such a well-established, and well-regarded solar energy team. The track record that Mo and the team have built for performance and profitable growth makes them an ideal match for the renewable energy project portfolio and innovative solar financing products we have developed at Simple Energies.”

By Derek Girling
HelioPower Solar Energy Consultant

This Saturday, April 10th, HelioPower has the privilege of exhibiting at the 1st annual San Bernardino County Earth Day Celebration at the Frontier Project in Rancho Cucamonga. You may not realize it but Rancho Cucamonga represents an ideal solar community on many different levels!

As they say in real estate, the three most important things are location, location, location. Rancho Cucamonga is located on the long, south-facing slopes of the San Gabriel Mountains assuring the vast majority of homes an unobstructed exposure to the sun, which is critical in terms of generating energy and capturing rebate dollars from Southern California Edison (SCE).

Another aspect of the city’s location is the climate. Residents are blessed with comfortable spring and fall seasons and rather mild winters but let’s be clear, summer days can get pretty hot in this territory! This means residents have to either bear the burden of some rather hefty electric bills from

HelioPower solar installation in Rancho Cucamonga, CA

running their AC or sweat it out. Big bills translate into big benefits from solar. Heliopower’s SunRun program enables homeowners to go solar with as little as $1,000. Relief from big electricity bills is only a phone call away.

One of the best characteristics of Rancho Cucamonga is the way the city has embraced green technologies and stewardship of the environment. This is evident at the incredible Frontier Project, a beautiful facility showcasing many of the most energy efficient design elements and technologies. The city’s forward thinking leadership has also extended to residents a $500 rebate on approved energy-efficiency purchases. This includes solar systems and brings the upfront cost of a HelioPower SunRun system down to as little as $500!

If you’re at the Earthday Celebration this Saturday, please stop by the HelioPower table to see how you can start taking advantage of Rancho Cucamonga’s most abundant resource – the sun!

Contact Derek Girling at DGirling@HelioPower.com

By Derek Girling,
HelioPower Solar Energy Consultant

The newest, most exciting trend in residential solar today is on the financing side. Leases and Power Purchase Agreements (PPA’s) make solar available to almost every homeowner. Radio airwaves are thick with companies pitching “No Money Down” or even “Cash Back” offers.

A well structured solar financing agreement should be a Win/Win/Win proposition – A win for the homeowner who gets the benefits of low cost green solar energy without the relatively large upfront investment, a win for the solar installer who grows their business with new customers, and a win for the solar financing partner whose investors generate a steady revenue stream for years to come.

But just like every other offer that may come your way, the devil is in the details!

Solar is a long-term investment and you should be careful to make sure that you’re negotiating the best agreement possible with a reputable, experienced installer. When evaluating a financing proposal from a company, there are several things you should consider when reviewing their agreement.

First, if you are serious about going solar, ask the solar company’s representative for a copy of their agreement. If they are reluctant to provide this to you prior to signing up, be wary. Some companies will not even send out a representative unless you’ve committed to them! Reputable companies are transparent with their agreements and terms and conditions. They’ll strive to make sure you’re comfortable with them before asking you to sign a contract.

Next, see if you can determine how much they are they charging for the system and how much the buyout is at the end of the agreement. Many companies make this information very difficult to discover! One well-known nationally advertised company charges as much as 30% more per Watt than most installers for similar systems. After 10-20 years of making your monthly payments, are they asking you to pay almost half the original cost to buyout the system? Are you responsible for paying to remove the system should you choose not to buy it? Add up the total of the payments and the buyout at the end and see if this seems reasonable.

Are the payments fixed or do they escalate? If it’s a PPA, then the payments should be fixed at a reasonable kilowatt hour (kWh) price for the life of the contract. If it’s a lease, the payments should escalate at a no more than a nominal rate (2.5 – 3%/year) to cover inflation. Anything more than that sounds like a low teaser payment to get you contracted followed by an increasing rate of return for the finance company.

Virtually all homeowners are installing their very first system and are not familiar with the technology. One of the benefits of a financing agreement can be freeing the homeowner from the responsibility of maintaining and insuring a system. Well-structured agreements place the responsibility for the system with the system owner (the financing company) and also guarantee the amount of energy the system should deliver. If the financing company owns the system, but you’re still responsible for the maintenance, walk away!

Speaking of maintenance, what provisions does the finance company make for funding the maintenance? The best agreements stipulate that an appropriate amount of money is held separately ensuring your system is maintained for the duration of the agreement. This also protects you in the event that the finance company is sold, goes bankrupt, or sells your contract to someone else. The best contracts make it impossible for a company to separate the revenue stream (your payments) from the responsibility of maintenance.

Lastly, what options are available to you to get out of the contract?  If you move before the term is up, can you easily and at no cost transfer the agreement to the new homeowner?  Can you buy the system for a reasonable price at anytime? Can you pre-pay your remaining payments at a discount reflecting the reduced time value of money?  Can you continue on a year-to-year basis without purchasing the system when the initial agreement expires?

Remember, a good, flexible and equitable agreement allows a homeowner to get the benefits of low cost green power now at a fair price from a reputable installer with several options to transfer, buyout, or purchase the system. Read the fine print, ask lots of questions and, most importantly, if the representative is pressuring you to sign something you don’t understand, find another company!

Contact Derek Girling at DGirling@HelioPower.com