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That is an interesting business model. Seems like the 20 year contract would scare away some people though.
Interesting business model.
Company installs solar panels on your roof. FREE.
They then simply sell you the electricity that generates, at a rate lower than the grid electric companies do.
Bam. Free solar, and lower electrical bills.
Funny promo commercial:
A bit more detail from a news article:
http://www.nytimes.com/2012/05/10/bu...erts.html?_r=1
This provides a pretty solid NPV to any homeowner.HOLMDEL, N.J. — Jay Nuzzi, a New Jersey state trooper, had put off installing solar panels on his home here for years, deterred by the $70,000 it could cost. Then on a trip to Home Depot, he stumbled across a booth for Roof Diagnostics, which offered him a solar system at a price he couldn’t refuse: free.
Mr. Nuzzi had to sign a 20-year contract to buy electricity generated by the roof panels, which he would not own. But the rates were well below what he was paying to the local utility. “It’s no cost to the homeowner — how do you turn it down?” Mr. Nuzzi said on a recent overcast morning as a crew attached 41 shiny black modules to his roof. “It was a no-brainer.”
Similar deals are being struck with tens of thousands of homeowners and businesses across the country. Installers, often working through big-box chains like Home Depot or Lowe’s, are taking advantage of hefty tax breaks, creative financing techniques and a glut of cheap, Chinese-made panels to make solar power accessible to the mass market for the first time. The number of residential and commercial installations more than doubled over the last two years to 213,957, according to Greentech Media, a research firm.
Major players in the installation business, like SolarCity, Sunrun and Sungevity, are thriving even as the other side of the industry — solar module makers — has been squeezed to the breaking point by fierce compe ion from Chinese manufacturers. In a case to be decided later this month, a coalition of solar manufacturers has asked the United States government to impose steep duties on the imports, arguing that the Chinese companies are violating international trade rules.
“You hear a lot of the gloom and doom about the industry and, you know, ‘The manufacturers are losing jobs, they’re shutting down,’ but if you look at where the actual money is in these systems and where the jobs are, it’s really in the installation,” said Lynn Jurich, Sunrun’s president.
Big corporations like Google, U.S. Bancorp, Morgan Stanley and Bank of America Merrill Lynch see the potential for steady profits in rooftop solar projects and have been supplying the capital to help cover the upfront costs, which typically run $30,000 or more for a single-family home. The investors say they believe the returns, generally 7 to 13 percent, are relatively safe because the solar providers generally sign up only homeowners and businesses with solid credit. In addition, installers say that people tend to pay their electric bills even when facing other financial problems.
“We have customers that are foreclosed,” said Lyndon Rive, chief executive of SolarCity, one of the largest installers. “They’re still paying their electric bill so they still pay us.”
The company has raised more than $1.4 billion to finance its projects and is so confident in its future that it is planning an initial public offering of its stock. The company has declined to comment on the stock offering.
Industry executives even predict that solar leases could one day be bundled and sold as securities like mortgages and other loans.
Some analysts caution that despite all the activity, the sector still faces hurdles, like the high costs of bringing in new customers and getting financing. “It’s not clear to me that anyone yet has cracked the code of scaling the business massively,” said on Pinner, co-author of a recent McKinsey report on the industry.
Solar customers can finance their systems in a variety of ways. Businesses often purchase them outright so that they can reap the savings and take advantage of tax incentives and depreciation.
But homeowners are increasingly choosing to avoid the upfront costs. In California, the country’s largest market, more than 70 percent of residential customers putting in solar this year have opted to sign a lease or power purchase agreement with someone else owning the systems, according to PV Solar Report.
The structure of the deals varies by company and state, but the overall approach is generally the same: Customers agree to pay a fixed monthly charge or rate for all the solar power produced, and the companies that finance the systems pay for the installation and take the value of any tax breaks or renewable energy credits for which the customer would ordinarily be eligible. Some companies concentrate on financing and use local contractors for sales and installation, while others do everything themselves. (rest of the article omitted)
The interesting thing about this is that as you go forward the NPV of any given year doesn't fade, given even moderate electricity inflation.
That is an interesting business model. Seems like the 20 year contract would scare away some people though.
The low initial cost, i.e. free, would probably overcome that.
Combined with a selling point to any buyers when you get around to selling.
The Swiss have something similar. You get a credit at a very good rate from the electric company with which you renovate your roof and cover it with solar panels.
You sign a contract with the electric company that buys the surplus generated electricity during peak hours from you.
The result is that you typically get from the electric company more than what you pay them for the credit. As a result you get your electricity slightly cheaper, you have a new roof (that you own from day one) and after 15 years you still get paid while not owing money to them anymore.
If you want to opt out or switch to another provider you can since you own everything.
Over 70% of Californians Go Solar Using a Service (Don’t Buy Their Solar Power Systems)
http://cleantechnica.com/2012/03/28/...=Google+Reader
typcially pro-carbon-extractor TX is absolutely a non-starter with time-of-day billing, (cash) feed-in rates, and electric utility support for buying power from 3rd-party leased-system installers.
This is move is getting closer to time of day billing, no?
http://www.txu.com/Home/residential/...ody_FreeNights
yes, that's todb, but they aren't raising the price in peak consumption hours, the other half of the low(er) rate for off-peak.
Yeah...it's not a great plan overall. Pricing in my neck of the woods was 11.9 cents kwh...with 0 kicking in after 10:00 pm. I was surprised to see it, tho.
I'm sure it would for some. But cell phone companies pretty much have to force people into 1 or 2 year service contracts, I'd think there would also be people out there unwilling to make a 20 year commitment to anything that wasn't a mortgage.
I still think the concept is a good one, but after thinking about the business idea of it some more I see some pretty big risks. First and foremost being that if this company proves the concept can make money you'd probably see the utilities themselves getting in on the action.
"20 year commitment"
is not a commitment to debt, and no equity investment at risk, so VERY different from a mortgage. It is similar to a phone plan, a commitment to pay.
btw, people who are in default on the mortgages nearly always find funds to pay their utilities.
I wonder about the homeowner's insurance component of this too.
I agree with you, it's not like a mortgage. I just think there's a lot of people who would hesitate to make a 20 year commitment to anything that isn't a mortgage.
Good point.
Mongo hailstorm (which happens every ing 15 minutes up here) = unhealthy solar panels.
True. Since those panels would belong to the company, seems like it would be the company's responsibility to repair them.
I wonder what the added cost to shingle a house is with panels on it? Isn't that normally needed once or twice in a 20 year period?
I think most roofs are expected to have a 30 year or so lifespan
I wouldn't think it would be too much. I'm pretty sure there's just a rack that is mounted on the roof and the panels are mounted to the rack. I'm sure it would cost a little bit extra, but I can't see it being a huge expense to remove the panels and work around the rack.
It really depends on where you live and the type of roof.
They usually don't last that long where I live.
However, it is something to consider, along with "can I sell this house easily before my contract expires," along with insurance concerns.
If anyone is considering this, which may be a practical thing to do, just make sure you try to think of all possible problems before you decide. Don't just jump into it.
I'll bet the contract would require a maintenance team authorized by the panel owners. I'll bet it would cost a pretty penny to do that. Then the coordination...
remove panels...
shingle roof...
replace panels...
I imagine, oddly enough, that the solar panels will probably save some wear and tear on the shingles.
Maybe, but I don't think so. The added shade would probably promote moss growth, wouldn't it?
solar panels certainly provide some protection to the roofing material, but since that material usually last 20+ years, hard to say.
Solar panels do shade the house, so in hot climates solar panels help reduce cooling costs.
Moss on shingles under solar panels? Not in the sunbelt, or anywhere?
A saw an article about roofing shingles that ARE solar panels. It seems that replacing old shingles with solar panels or building a new house with only a solar panels would make sense.
I never thought about the fact solar panels would reduce cooling costs. That is actually great.
If you're looking to do something with solar to help reduce cooling costs, take a look at solar powered attic fans. The wife and I had a couple installed back in early April. We just got our first electric bill w/ the fans installed. Electric usage down 40% from same period last year. Obviously it's not nearly as hot outside as it was last year and that's going to be responsible for a big chunk of that, probably the majority TBH, but not all of it. I'm convinced those things are helping out a lot.
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