EcoSouth Solar Blog
Here is news and thoughts of the EcoSouth team regarding all things solar. No information contained here should be relied upon for its accuracy without independently verifying it.
I was cold-called the other day to see if I was interested in having solar installed for *FREE*!
Now, being in the solar game for 14 years, and never having encountered a true 'free lunch' yet, I thought I would just ask a few questions and get some idea of how this offer would work. It seems that, yes, the solar truly is installed for *FREE*!, but you then pay for the 'solar electricity you use' at a reduced rate.
The thot then definitely plickened.... (as Prof Spooner may have said)
I had the presence of mind to keep civil whilst I insisted on my questions being answered, despite the caller taking advantage of every fraction of a second of empty air-space to continue his sales-spiel-patter-schtick unabated. I found out that:
- you stay with your normal electricity retailer and pay their bills (just like anyone else with solar)
- you start receiving the 7.6c per kWh for exported power (just like anyone else with solar)
So what about the solar you use yourself? Does someone come around to read the solar inverter as well as the normal electricity meter to determine how much solar power you have self-used?
It appears that no, of course not, the solar company has a very, very accurate calculation of how much power a house your size, and with the same number of occupants, would use.
So my question to the caller;, you estimate the account for the customer each bill?
No again, I was assured the solar company calculation is very accurate, and (by implication) works out lesser than what you would pay for the electricity from the electricity company.
At this point we parted company, as the caller disagreed with me calling it 'an estimated account', which I did do, but that was because he was going about presenting it to me as a 'reduced electricity cost' apparently per bill.
What it REALLY appears to be is a classic 'solar lease', or rental-purchase:
- you allow the solar company to install a system on your roof, to the size they recommend
- they calculate the size of a lease payment, such that they can show on paper that 'the system pays for itself' in 'X' number of years
- of course, their paper calculation would have to show that you end up paying less outright per quarter for *some* of your electricity, and that at some stage in the future (how many years?) you would actually own the system.
Sounds good, but only if you don't think about it, is my opinion!!
There are so many ways in which the balance can be tipped in the lease company's favour.
To begin with, I say it is disingenuous for a salesperson to talk as if they are 'cutting your power bill' where in fact they are signing you up for a very specific binding contract, where you make regular, fixed payments, regardless of your actual electricity usage. Make no mistake, they are doing this because they can make a *good* profit out of it, at your expense.
The main variable is just how much solar you will actually use, during daylight hours. This is the big one, as every kWh you use from solar (ie during daylight) is one you did not have to buy, ie you save around 28c (currently) per kWh.
So it is very much in your interest to use every kWh of solar you can, IF you can use it during the day when it is available instead of at night.
But suppose in your house no-one is home during the day, and only your fridge is running? This would be very minimal savings at the 28c rate, and instead you would only be receiving 7.6c for most of your solar. That's a big difference in the payback rate!!
The leasing company could easily offer you a lease rate based on you using more solar in the day than you actually do. How would the average person know this?
Now add all the other variables that the leasing companies love - clauses to make sure that whatever happens, they are not out of pocket.
Supposing you have a leased system and you want to sell your house? Will you have to (at that time) buy the system at some high price? The classic one here is that the lease company gives the system an unrealistically high retail price to begin with, and you are offered some depreciation on that price per year. But it still works out that any depreciated price you would pay to get out of the lease, would be way above true market value - they win again.
The onus is still on you to make sure your system is performing - will they instruct you on how to take inverter kWh readings once per quarter? - It makes no difference to the solar lease company if your system does not work at all! They still expect payments - they would have no reason to do anything about your underperforming system if you did not check and notify them.
The biggest disadvantage of any leasing system for domestic purposes, is that the amount you end-up paying over the years is *very* much greater than fair market pricing. This is why it is so attractive to leasing companies - they know that solar produces so much value over even part of its 25-year-plus lifetime, that they would be crazy not to lock customers into lease payments for as long as they can.
But you do not have to do this! *You* can have the decades-long benefit of a solar power system that you own yourself. Rather than saying yes to 'free solar', you would be better off saving your money, and waiting until you have enough to purchase a system. You will most likely save many thousands of dollars.