As with many recent weeks, news from the solar industry and market shows that solar is blooming despite facing pricing uncertainty and other challenges. While some places are enacting new programs to incentivize solar, some companies and projects are being threatened by a variety of factors, from a slow-moving turtle to falling module prices.

One of the places where falling prices most affected the solar market is Pennsylvania where the state’s solar renewable energy credit (SREC) market slumped because people adopted solar more quickly than expected. The SREC market was limited by how much solar power utilities were required to buy and when there was enough solar, the price of SRECs dropped. Now, the International Brotherhood of Electrical Workers (IBEW) Local 98 and others are supporting HB 1580, which would increase the amount of SRECs that utilities must buy, thereby, increasing the price of the credits, making solar more valuable.

Meanwhile Los Angeles is pushing forward with a solar feed-in tariff (FiT). The city’s CLEAN LA Solar program would create a 150 megawatt feed-in tariff for the city, making it the largest U.S. city to adopt a FiT. FiTs have been essential to the adoption of solar in Germany and elsewhere, although the rapid decline in PV pricing has led to quicker than expected adoption, which has forced governments to lower, and in some cases cease offering the FiT entirely.

Another model to help bring solar to more people is group purchasing agreements. Eugene, Ore., is the latest town to use group purchasing (i.e., bulk buying) to make solar cheaper for its residents. The new Solarize Eugene effort was launched by the nonprofit Resource Innovation Group. Under the model, a preferred contractor is selected to educate the public about solar opportunities and those who want to go solar through the company will be able to get discounted modules based on how many people go solar through the program.

What’s proving to be the most popular options for homeowners to go solar are the third-party PV ownership models. Under such models homeowners don’t pay the cost of owning a PV array up front, they pay it over time, either as a direct lease payment or based on how much power the array produces. And a recent PV Solar Report study of the California market done with SunRun showed that 73.4 percent California homeowners going solar are choosing such options.

There’s no shortage on falling prices for solar, largely because production of silicon-based PV is nearly exceeding demand. But silicon-PV might start to lose market share, according to a new Lux Research report. The report found that silicon carbide and gallium nitride-based PV could comprise up to 22 percent of the PV market by 2020. The materials could be cheaper and more efficient than the current silicon-PV available today. Another novel PV material that’s gaining traction is organic PV. Cambridge’s Cavendish Laboratory recently produced organic PV cells with efficiency levels at 44 percent.

Organic PV offers a cleaner form of solar, but already companies are working to make their PV products as environmentally sustainable as possible. As such, the Solar Energy Industries Association (SEIA) and solar companies are developing the voluntary Solar Industry Commitment to Environmental & Social Responsibility. Under the commitment, participants will make sure they are operating ethically and cleanly. Such efforts will include end-of-life recycling programs and proper handling of hazardous materials.

The desert tortoise again is the centerpiece of environmental debate in California. The imperiled reptile has led Natural Resources Defense Council, Sierra Club and Defenders of Wildlife to sue the Department of the Interior (DOI) over its approval of the 663.5-megawatt Calico Solar Project of Bureau of Land Management-managed land near Barstow, Calif. The organizations contend that the project is on land with too many threatened species, chief among them the desert tortoise.

 Source:  CleanEnergyAuthority.com

With the news that the LA City Council has granted LADWP the power to enter into feed-in-tariff agreements, here is some news on how FIT’s are working in Europe and other parts of the U.S.

Solar cells adorn the roofs of many homes and warehouses across Germany, while the bright white blades of wind turbines are a frequent sight against the sky in Spain.
If one day these machines become as common on the plains and rooftops of the United States as they are abroad, it may be because the financing technique that gave Europe an early lead in renewable energy is starting to cross the Atlantic.

Put simply, the idea is to pay homeowners and businesses top dollar for producing green energy. In Germany, for example, a homeowner with a rooftop solar system may be paid four times more to produce electricity than the rate paid to a coal-fired power plant.

This month Gainesville, Fla., became the first city in the United States to introduce higher payments for solar power, which is otherwise too expensive for many families or businesses to install. City leaders, who control their electric utility, unanimously approved the policy after studying Germany’s solar-power expansion.

Hawaii, where sky-high prices for electricity have stirred interest in alternative forms of power like solar, hopes to have a similar policy in place before the end of the year. The mayor of Los Angeles wants to introduce higher payouts for solar power. California is considering a stronger policy as well, and bills have also been introduced in other states, including Washington and Oregon.
“I’m seeing it with my own eyes — it’s really having a good effect on our local economy, particularly in these hard times,” said Edward J. Regan, the assistant general manager for strategic planning at Gainesville Regional Utilities in Florida. He said he had gotten calls from other cities and states since announcing the policy.

The new payment method is referred to as a “feed-in tariff” in Europe. It is, in essence, a mandate by the government telling a utility to pay above-market rates for green electricity.

It shifts the burden of subsidizing green energy from taxpayers, as is common in the United States, to electricity ratepayers. And the technique includes assurances that a utility will pay the high rates for a long period, often 15 to 25 years.

The surge of interest in the payment system is a recognition that despite generous state and federal incentives, the United States still lags far behind Europe in solar power. Germany, where feed-in tariffs have been in place since 1991, has about five times as many photovoltaic panels installed as the United States, though they still account for only 0.5 percent of electricity in that country.
In the United States, said Wilson Rickerson, a Boston energy consultant, “a lot of people simultaneously reached the conclusion — who’s moving fastest internationally? And that’s definitely been Germany and Spain.”

In Gainesville, the new policy has already sparked a rush to put up panels. John Stanton, a retired civil servant living there with his wife, put 24 solar panels on his roof in late January, as city leaders sped the policy toward approval. Gainesville’s municipal utility will pay Mr. Stanton and other homeowners and businesses who generate solar power more than twice the standard electricity rate, guaranteeing that rate for 20 years.
Wind power and other sources of renewable energy are generally included in the European payment systems, but solar — as one of the costliest renewables — has benefited the most. Payment rates in Europe for wind are substantially lower than for solar, according to Christian Kjaer, chief executive of the European Wind Energy Association.

If a utility commits to paying a higher rate for renewable power over a period of years, it can offer those with solar panels or wind turbines a steady return that helps defray the initial cost of the equipment. “If you put your money in, you know you’re going to get it back,” Mr. Rickerson said, referring to Germany.

But requiring utilities to pay extra for green power has a direct impact on ratepayers. Homeowners’ electricity bills will rise 74 cents a month in Gainesville, or about half a percentage point of the average homeowner’s monthly bill.

“It was the thing that sort of put us over the top,” said Mr. Stanton, who gained an appreciation of European energy policies after living in Italy for more than a decade.

Mr. Regan said that homeowners with panels received a payment under the new policy that works out to more than a 25 percent premium over the city’s other incentives, which include rebates and a more modest rate payment.
Wind power and other sources of renewable energy are generally included in the European payment systems, but solar — as one of the costliest renewables — has benefited the most. Payment rates in Europe for wind are substantially lower than for solar, according to Christian Kjaer, chief executive of the European Wind Energy Association.

If a utility commits to paying a higher rate for renewable power over a period of years, it can offer those with solar panels or wind turbines a steady return that helps defray the initial cost of the equipment. “If you put your money in, you know you’re going to get it back,” Mr. Rickerson said, referring to Germany.
But requiring utilities to pay extra for green power has a direct impact on ratepayers. Homeowners’ electricity bills will rise 74 cents a month in Gainesville, or about half a percentage point of the average homeowner’s monthly bill.

“Seventy cents — what’s that? A Coke?” said Mr. Regan, of the Gainesville utility.

Opponents of feed-in tariffs like Marcel Hawiger, a staff attorney for the Utility Reform Network in California, say that the policy would hit poor people the hardest by raising their electricity rates because a relatively high percentage of their income goes to pay utility bills.

“Why should we use regressive taxation to support the most expensive form of renewable energy?” Mr. Hawiger asked.

The solar programs have sometimes proved so popular that costs can spiral out of control. Last fall, blockbuster growth forced Spain to cap the number of solar installations it would subsidize. Ontario, which has had a feed-in tariff since 2006, also suspended its program last year after being oversubscribed, but wants to restart the policy.
Even in Gainesville, homeowners wanting to put solar panels on their roof are now out of luck: a few days after introducing the policy, the city reached its cap on solar payments for this year and next. Meanwhile, a handful of utilities around the country are already doing similar things voluntarily, albeit on a tiny scale.

For now, at least, solar-power advocates do not believe they have the votes in Congress to adopt a national feed-in tariff system like the ones in Germany and Spain. They are putting their hopes, instead, on proposals in Congress to mandate that a certain percentage of electricity comes from renewables.

Source:  New York Times

Q: How much does a residential PV system cost?
A: In general, the bigger and more complex the system, the more it will cost. PV systems with batteries cost about 30% more than systems without batteries. Grid power is reliable so most people get an on-grid PV system without batteries. For example, a home in Southern California Edison territory consumes $250 per month utility electricity.  A 3.23 kilowatt PV system with a 300 square feet PV array will save on average $150 per month. This PV system will cost $11,560 and save over $128,000 in electricity during its 25-year power warranty. A larger PV system will cost more but will produce more energy and save you more money. Call SES and get a free quotation for a PV system designed to meet your needs.

Q: How much money will a solar electrical system save me?
A: A properly designed and well installed PV system can save you over 50% and up to 100% on your electric bill. Send SES a copy of your electric bill and get a free estimate.
Q: What is a solar electrical system?
A: A solar electrical system is a clean, quiet, long-lasting generator with no moving parts that produces electricity from sunlight – even on cloudy days. A solar electrical system is also known as a photovoltaic or PV system (photo = light; voltaic = electric power). A PV system literally spins your electric meter backwards to give you free solar electricity during the day and also at night thanks to net metering.

Q: How does a PV system work?
A: The main parts of a PV system are solar modules and inverter. Solar modules are made with solar cells encapsulated in tempered glass and framed with rigid aluminum. Solar modules are assembled into panels called the solar array. Solar arrays are fastened to metal racks that are fastened to your roof or to the ground. The solar cells are solid-state semiconductors made of silicon and trace amounts of phosphorous and boron. Sunlight strikes the solar cells causing electrons in the cells to move in one direction producing direct current (DC). The electrons then flow through wires that connect the cells. Many solar cells are connected together to produce the voltage and current needed to power the inverter. The inverter is a solid-state electronic device that converts solar generated direct current into alternating current (AC) to power your electrical equipment and appliances.

Q: What is net metering and how does it work with a PV system?
A: Net energy metering (NEM) is a special billing arrangement that provides credit to utility customers with PV systems for the full retail value of the electricity that their PV system generates. Your utility meter keeps track of how much electricity you consume how much excess electricity your PV system generates that is sent back into the utility grid. You pay your utility only for the net amount of electricity used. During the day, your PV system can produce more electricity than you use. The excess power automatically goes through the electric meter into the utility grid spinning the meter backwards to credit your account. The new digital meters electronically measure electric current flow in both directions. Excess solar production is carried over from one month to the next on an annual basis. Net metering optimizes your solar investment rate of return and allows you to install a PV that can zero-out your annual electric bill.

Q: What types of PV systems are there?
A: There are 4 types of PV systems: direct, off-grid with batteries, on-grid with batteries, and on-grid without batteries. Direct PV is simply a solar panel connected to a DC device like an attic fan that is not connected to your building wiring or the utility grid. The fan operates only when the sun shines. Off-grid PV with batteries is used to power millions of homes and electrical devices around the world that do not have utility power. Off-grid PV with batteries use special batteries designed to be charged and discharged for many years. The batteries in an off-grid PV system store energy to provide autonomous power at night and on cloudy days. On-grid PV with batteries operates similar to off-grid with batteries except that the battery stored energy is used to provide emergency power during grid power outages. Batteries and other parts increase PV system complexity and cost 30% or more than on-grid PV without batteries. An on-grid PV system without batteries is the most popular urban and suburban solar solution because it costs less, is virtually maintenance-free and trouble-free and offsets costly and polluting grid electricity.

Q: What are the differences between PV systems with and without batteries?
A: The primary differences are cost and complexity. We are all concerned about power blackouts, but utility power is reliable in most urban and suburban areas in southern California so very few people need the extra expense of batteries. If your utility power is unreliable, you have 3 options. You can purchase a fossil fuel generator for occasional emergency power. Solar Electrical Systems can design and install an on-grid PV system with batteries for you that will power your important electric loads (lights, refrigerator, communications, etc.) during a utility power outage. SES can also design a separate battery and inverter system without PV that will provide you with uninterruptible power for special electric loads.

Q: Will a PV system give me power during a grid power outage?
A: Only PV systems designed with battery back-up can give you power during a grid power outage. PV systems without batteries turn off automatically during a grid power outage to prevent possibly injuring workers repairing the grid power. When grid power is restored, the PV system turn on automatically.

Q: What happens with a PV system at night?
A: When there is no sunlight, the inverter automatically switches to standby mode and you get electricity from your utility company. The next morning, when light strikes your solar array, the inverter turns on automatically to provide you with PV power.

Q: What types of PV systems does SES offer?
A: SES offers PV systems with and without batteries for both on and off-grid applications.

Q: What is a Power Purchase Agreement (PPA)?
A: A PPA is a long-term agreement to purchase power from a company that produces electricity. PPAs make it possible to benefit from solar electricity without having to buy or lease the generating equipment. Ask SES about its PPA and leasing programs.

Q: Why do you list good, better and best PV systems?
A: There are at least 3 ways you can benefit financially from a PV system. SES thinks that owning a PV system from the start has the best economics. However, you may find it better to purchase the solar electricity or lease the equipment and perhaps buy the system later. Or you may think that getting the solar electricity savings is good for you and are not interested in owning the PV system. You should get immediate savings on your electric bills whether you buy or lease an SES PV system or buy the solar generated electricity.

Q: How does the solar rebate work?
A: The California Solar Initiative (SCI) is a 10-year solar rebate program that subsidizes and reduces the cost of your PV system. The CSI program began in 2007 with high rebates that reduce to zero by the end of 2016. SES discounts the price of your PV system by the rebate so that you save money up-front and do not have to pay income tax on the rebate. SES also handles all the rebate paperwork for you.

Q: Are there other solar incentives?
A: Yes. In addition to the California solar rebate, homeowners and businesses are eligible for a generous 30% federal tax credit. There are additional solar incentive for commercial PV systems like accelerated depreciation and other tax breaks that turn a commercial PV system into a profit center with an excellent return on investment. Both residential and commercial PV systems add value to your property but do not increase your taxes because PV systems are property tax exempt in California.

Q: Can a PV system produce enough power to run my air conditioning, refrigerators, pool pumps and other devices that use a lot of power?
A: Yes, but PV is not usually used to power separate circuits for specific equipment. Instead, the PV systems is connected to the main bus bar in your electric service panel to offset all power consumed. In this way, there is no negative effect on equipment like motors that have large startup and operating current consumption.

Q: How long do PV systems last?
A: A well-designed and properly installed PV system can last for many decades. PV systems installed in the 1970s are still in operation. Since solar modules have a 25-year power output warranty, most people plan on at least 25 years operation, but the first silicon solar cells made by Bell Laboratories in the 1950s are still operational so 40 to 50 year lifetimes for the early PV systems are not unusual.

Q: What are the warranties?
A: Solar modules have a 25-year limited warranty on their power output. Inverters have a 10-year limited warranty. SES provides a 10-year turnkey warranty on all the California Solar Initiative PV systems that it installs.

Q: What maintenance is required?
A: Your on-grid batteryless PV system is virtually maintenance free. There are no moving parts and nothing to lubricate or adjust. Rain keeps the solar array clean or you can rinse off dust and dirt with city pressure water from a hose.

Q: How much roof area does a PV system require?
A: The south-facing roof of most homes has enough space for a solar array that will produce 100% of the energy used in the home. Every 100 square feet of solar array will produce about 1,000 watts of PV power and generate an average of 5 kilowatt-hours per day.

Q: Are batteries required?
A: No. A grid-tie PV system does not require batteries. Any excess power produced during the day is deposited into the grid at full value to be withdrawn later automatically thanks to net metering.

Q: Do PV systems work at night and on cloudy days?
A: A PV system without batteries produces power from daylight. Full sun produces full power. On cloudy and even rainy days reduced power is produced. Your PV system is designed based on climate data which takes into consideration changes in the weather.

Q: How do I get a quotation for a PV system for my home?
A: Give SES your name, address, phone number, email address and a copy of a recent electric bill and we will email you a preliminary quotation based on the aerial photo of your home or business and your electric consumption.

Q: Do I need a building permit for a PV system?
A: Yes. All electrical work over $500 and all PV systems must have a building permit to be eligible for a solar rebate and tax credit. SES is a licensed contractor which is also a requirement for some electrical work.

Q: Who does all the complicated rebate and permit paperwork?
A: SES does all the paperwork, from system design and engineering, to rebate, permit, and utility interconnection application. We also answer all your questions to demystify anything that seems complicated.

Q: Do I need approval from my homeowner’s association?
A: Maybe. Consult your homeowners’ association covenants for details. California prohibits homeowners’ associations from restricting PV systems.

Q: Can Restrictive Covenants and Homeowner Association (HOA) rules stop me from putting a PV system on my roof?
A: No. California has a Solar Rights Act that prohibits a homeowners’ association from restricting installation of PV systems. The Solar Rights Act also allows homeowners to install solar on open ground space.

Reduce your electric bill so your solar power system will work more effectively.

One of the smartest things you can do today is go solar, and the smartest way to go solar is to reduce your energy usage as much as possible at the same time.  If you do, solar may allow you to eliminate your electric bill completely, instead of just reducing it.  Here are some smart ways to save energy and money:

• Replace your air conditioner with an energy efficient Energy Star air conditioner.
• Replace your noisy, out-of-date refrigerator with a sleek Energy Star model.
• If you don’t need your spare refrigerator, just get rid of it. If you do need it, make sure that refrigerator is an Energy Star model.
• Tankless water heaters are more efficient and cost less to run than traditional water heaters.
• Set your water heater temperature setting no higher than 120 degrees.
• If you have a pool or spa, replace the pump with a variable speed model.
• There’s tremendous savings in running the pool or spa pump during off-peak hours (before 10 am and after 6 PM). Make sure you only run the pump(s) as needed and no longer for additional savings.
• Cover your pool or spa with an insulating cover to keep the heat in. It also keeps the pool free of debris and animals during periods of extended non-use.
• Take a bite out of vampire power. 5% of the total power used in the U.S. is due to standby power.  Plug devices into easy-to-reach power strips and turn them off when not in use.
• It’s easy to forget to turn off the lights, so why not put them on a timer? You can also use motion detectors to turn the lights off when no one is in the room.
• Replace all your windows with double pane windows.
• Insulate you walls and roof to save even more on your energy bill.
• Replace indoor / outdoor incandescent bulbs with compact, energy-saving fluorescents.
• Replace your old thermostat with a programmable model.
• Lower heater setting to 65 degrees at night (Lowering the temperature from 72 degrees to 65 degrees can save you 10% on your electric bill.)
• Ceiling fans can be a great alternative to air conditioning on mildly warm Southern California days.
• An attic fan is absolutely essential to any house’s climate control strategy.  In the summer, an attic fan prevents damage by pushing super-heated air outside and cools the house overall. In the winter, it keeps the attic cool to prevent damage from over-running the heater.
• We’ve learned to rely too much on air conditioning.  A whole house fan can keep you cool and happy on most days.
• Change your furnace filter often to keep the air not only clean of allergens and contaminants, but also to maximize airflow.

Leasing the Sun

With low or no up-front costs, solar leases are increasing in popularity among homeowners who can’t afford to purchase a PV system outright or don’t want the
burden of ownership and maintenance. But the concept is still relatively young and not all of the kinks have been worked out.
Being able to recognize a good deal, or a bad deal, is an important part of successful solar leasing. It’s all about the “fine print.”

Between the Lines

So what should you look for—or look out for—in a contract? It would be due diligence to talk to your attorney and accountant before signing a lease. Alternatively, you could solicit contracts from multiple vendors and compare the
verbiage.  Make sure you understand the type of agreement you’re
considering. There are different types of “leases”—some are true leases and some are power purchase agreements (PPAs).
With a solar lease, you lease the solar equipment; with a solar PPA, you are only paying for the energy the system generates. In both cases, the PV system installed on your home is owned and maintained by the lease or PPA provider, and is
connected to the grid so you can buy any additional energy you might need from the utility.
Your paramount concern should be whether the contract can be amended and what, if any, rights you have in those cases. There are cases where lease companies have amended the original terms and raised rates for one reason or another—if the contract allows amendments, then you might have no recourse and have to take whatever comes your way. Most contracts, even those outside of the solar
market, have a clause that stipulates the contract can be transferred in certain events, such as the company’s sale, bankruptcy, or dissolution. The legalese tends to be too complex for the average homeowner to understand, and the devil is in the details as to what that clause might mean for you down the line. In most cases, the PV system cannot be repossessed, and the homeowner cannot be held liable for
the company’s debt.
When evaluating any solar lease, keep your expectations in check. Often, the investment rate of return on buying a system outright is substantially higher. After paying for the lease payment and accounting for any extra power you might
buy from the utility, the savings on a solar lease are somewhat small, usually $20 to $50 per month. However, those savings might increase over time as electricity rates rise—plus, there is the potential savings that come from having a third party
monitor, maintain, and guarantee the system.

Choose Wisely

When evaluating a solar leasing company, take your time and consider all available information and choices before signing—it’s a long-term relationship and by no means a small decision. Don’t be pressured into signing a contract, such as
being threatened by losing out on government incentives for not acting quickly.
A good starting point is the company’s track record.  How long has the company been in business, what kind of reputation does it have, and how many leases have they sold?
Most lease companies are only a few years old. The biggest and oldest probably have made more than 10,000 leases and, in the process, worked out a lot of kinks. New leasing companies are showing up regularly, and while some of these might end up being real winners, apprehensive consumers may want to stick with more established companies.
Another factor is how long the company’s program has been active in your state. Many of the larger companies have started leasing programs in one state and branched out into other states. While participation is necessary for these programs to grow and survive, you may not want to be a guinea pig for a company navigating the incentives and guidelines in a new territory. Sure, you might get a more favorable deal, but the trade-off may be long lead times on installation, potential administrative snags, and/or undeveloped customer relations. While a contract protects you, it is important to remember that it is only enforceable if you are willing to take legal action.
A key consideration in selecting your leasing company is the PV system installer they use. There are essentially three types of solar lease companies: stand-alone financing companies that partner with installers; module manufacturers that offer leases through a network of independent dealers; and full-service shops that provide everything—financing, design, installation, and monitoring.
Depending on which company you choose, you may have little control over which installer you work with. Some companies pick an installer for you, and there could be a wide range in capability. For any solar energy project, you should work with a licensed and qualified installer. Just as you would with any contractor, be thorough and ask the rightquestions.
• Does the installer have the required licensing for your
area? (Ask for proof.)
• Which products does the company use?
• Does the installer use subcontractors, or their own installation crew?
• How long has the company been in business, and what certifications (such as “NABCEP PV Installer” certification) does its staff have?
• Can the company provide references from other homeowners?
You also should ask how the installer assesses a project and designs a system. The installer should first discuss the project and your energy needs, and then survey the roof, identify shading issues, determine the amount of energy that can be anticipated from an installation, and lastly, specify a system and lease.

Lease, Finance, or Buy?
Industry Experts Weigh the Options

Residential solar leases and power purchase agreements (PPAs) can significantly reduce, if not eliminate, up-front costs to homeowners. Under a solar lease, the homeowner makes monthly lease payments that are offset by electricity bill savings. Under a PPA, the homeowner purchases the electricity generated by the PV system. In both cases, the homeowner continues to make monthly payments
to the local utility for additional electricity needed. At the end of the contract term, the homeowner normally has three options: purchase the system, extend the contract, or request that the system be removed.
In addition to third-party finance options, there are other non-mortgage options for purchasing a PV system—dealer financing and unsecured loans. In all cases, the credit quality of the homeowner is considered. Availability, and terms and
conditions for all of these financing options can vary.

The least-expensive way to get a PV system is to pay cash. This way, you
keep all of the benefits. The second least-expensive way is to take out a home-equity loan, which typically has low, tax deductible interest. In this case, you pay interest on the loan, which shares some of the energy savings with the bank. If the
cost of the loan payment after factoring the tax deduction for the loan interest is less than the savings on your electric bill, then you are way ahead—in a few years, you will own the system outright and no longer have a loan payment.
The third least-expensive way to get a PV system is a lease or a PPA. Your monthly cost will usually be more than a bank loan payment because you are now sharing the benefits with at least two other parties: the company providing the lease/PPA services and the investor/bank funding them. Generally, the more parties involved, the less the customer’s benefit will be. Some lease/PPA monthly payments may match or even be below the loan’s cost, but remember, once the loan is paid off, you own the system. At the end of the lease/PPA term, you’ll have the option to buy the system at fair market value. By then, there will likely be no incentives available, but the cost should be substantially lower than a new system.
This cost/benefit trade-off makes sense in another way—with cash, the homeowner takes on all of the risk. With a loan, the bank is taking a little bit of risk. With the lease/PPA, the provider is taking anywhere from a lot to almost all of the risk on the deal. The more risk one takes, the more they expect to
be rewarded.
The most expensive way to get solar is to do nothing now and wait until all of the incentives are gone. So, if you can’t buy with cash, take out a loan. If you can’t get a loan, do a good lease or PPA.

Even if you can secure other solar financing, a PPA or lease is worth considering. Although raising your own financing is usually cheaper in the long run, if you don’t want to worry about maintenance and repairs, the turnkey nature of these
programs can be attractive.
This is also an advantage if you think you might sell your home, because the new homeowner may be less comfortable with solar technology and may like a third party to take care of everything.
The relative value of a lease or PPA depends on the particular terms, which are not uniform. I tend to prefer the PPA format because a PPA company makes more money as its systems produce more energy—an incentive to keep the
systems operating at peak performance.
The simplest way to compare financial advantages is to use “internal rate of return” (IRR). This gives you the effective interest rate earned on your investment. If you had the choice of solar financing option A, with an IRR of 3%; option B, with an IRR of 2.5%; or keeping the money in the bank earning 2% interest, then you’d be better off with either solar option. Option A is better than B because it has a higher IRR.
It’s risky to rely upon the vendors’ savings calculators to compare, because they will tend to use the assumptions that make them look best, so you would not be comparing apples to apples.

There is no “best” financing option for a residential PV system—it depends upon an individual’s financial situation, motivations, and the incentives available.  Many states, utilities, local governments, and nonprofits offer direct cash incentives (a grant, rebate, or performance-based incentive) to reduce the cost of residential PV systems—which may make buying outright an affordable option. State tax credits and deductions may further reduce the cost, as does the federal 30% tax credit, which is available to all U.S. taxpayers with a tax liability.  State loan programs may also be available, and some homeowners may be able to finance a PV system via a home equity loan. In addition, an innovative financing mechanism called Property Assessed Clean Energy (PACE) program, is available in a handful of jurisdictions (see “Keeping PACE”).
If a homeowner cannot buy or finance the up-front cost of a PV system, third-party, or retail, PPAs are available in21 states. Where PPAs are unavailable, solar companies may offer leases instead. With a lease, you’ll pay per kilowatt
(kW) installed. With a PPA, you pay per kilowatt-hour (kWh) generated.

New financing methods are making solar more affordable and available. Solar financing choices are now similar to options for buying a new car or home. Homeowners have to look carefully at their individual financial situations. For
some, the cash or financing option makes sense—you’re buying your electricity up-front for decades, and lowering or eliminating your utility bill. Recent studies show that PV systems boost home resale value—a Lawrence Berkeley National Laboratory study released this year found that for a homeowner in California, an average-sized, relatively new PV system adds $17,000 to the sale price of a home.
Leases are also soaring in popularity. In 2011, more than a third of all residential installations in California and Colorado were leases. Just two years ago, only 10% of residential installations in California were solar leases, and there was no market for leases in Colorado just a year ago. With many of the same benefits as purchases, but avoiding the up-front cost and maintenance, solar leases will continue to be attractive to homeowners.
As with any major home improvement project, do your homework. Ask contractors about their experience installing PV systems and check references. But no matter the financing mechanism, the decision to go solar can be cost-effective.

-Kelly Davidson

What Makes a Good PPA or Lease?

So you can compare programs, get multiple bids. In most parts of the country, there are enough lease and PPA companies to enable you to review at least three potential contracts. Then analyze the following points:
• Payment escalation rates. Over the last 20 years, the national average electric rate increase has been about 2.5% per year. Make sure that the contracted rate of
increase for the system’s payments is no more than 4%. Do the computations to make sure that your payments will remain reasonable through the term, which may be10 to 20 years.
• End-of-term provisions. Make sure the buy-out at the end of the term is an option, not a requirement, in case you don’t like the offered price. This allows you to negotiate based on what a new, replacement system would cost. Make sure that if you request the system be removed, they will do so at no cost and agree to
restore your roof to good, attractive condition—with the exception of unavoidable fading of the roof where not covered by the PV array.
• Midterm transfer/buy-out terms. The agreement should allow you to sell the home and transfer the system contract to another party if they can meet the credit standards. It should also allow you to pay off and terminate the agreement for a reasonable price—either with retention or removal of the system—if your home buyer doesn’t qualify for or doesn’t want the system. Make sure there are no
“hidden” transfer fees.
• Reasonable performance guarantee. The system should be guaranteed to perform within a few percent of what the NREL’s PVWatts calculator shows—unless it can be shown to be different due to shading, local climate, etc.  Evaluate the terms of maintenance, repairs, and system monitoring. What maintenance will be your responsibility, and what will be managed as part of the agreement?
What specific services are you entitled to, who performs the services, and what kind of replacement equipment can be used should your system require it?
• Insurance. Some companies require you to add the system to your homeowner’s insurance. If so, talk with your insurance provider before you sign, and understand
the costs and coverage.

These “reasonable” requests will keep the customer in control and the contract flexible, making a higher-quality lease agreement. In return, the customer should expect to have higher monthly lease/PPA costs when compared to a cheaper, inflexible (i.e., risky) lease or PPA.
—Andy Black

Source: Homepower Magazine