20 years of 2.9% annual increases sounds high to me.

What kind of solar panels are you referring to? Since you are discussing electric rates, I assume there are photovoltaic panels and those are not cheap. I do not see how these can be installed at zero charge unless the company is receiving a subsidy.

Look the contract over closely; Was anything said about maintenance? How much does it cost to service the panel array when something fails. is your location subject to frequent lightening strikes?

Does the installation include the controller and connection to the power grid? You mentioned 2 rates for electricity: 14 cents and 10 cents per kilowatt-hour (KWH). This difference sounds about right. The electric company is charging 14c per KWH for power delivered to the house and are crediting you 10c per KWH for power that your array may pump back into the grid. The difference is an allowance for using the power company's equipment for selling power back to them. But of course, the power company must be agreeable to allowing you to connect power generating equipment to their grid. A complicated controller is required to handle this connection and power returned to the grid will likely be measured by a separate meter. The controller also converts the DC power generated by the solar panels to AC and keeps the frequency synchronized with the power company. This piece of electronic gear does not last forever and has failure rates similar to radios, TVs, and PCs. Funds should be allocated for servicing the installation.

Also, how old are your roof shingles? Depending on quality and local weather, roofs need re-shingling every 20 to 30 years. I do not know the procedure for shingling a roof loaded with solar panels, but I'm sure it isn't easy or inexpensive.

The other type of solar panel is for heating water. There is no electricity produced and no connection to the power grid. These are more simple than photovoltaics.

This is called a Solar Power Purchase Agreement.

The arrangements came about some years back because solar panel manufacturers produce more panels than the market wants to buy. Why, because for the average homeowner, the economic benefit of owning a solar power system, while getting better as prices come down, is not a home run investment by any means.

So, a vehicle was created, where financial companies will marry an installer with an investor. The panels are bought for a good discount, the installer gets work to do, and the investor gets rebates and tax credits and a rate of return on their money from selling the power. The investors pay to buy and install all the needed equipment, and to maintain it over 20 years, you just agree to buy electricity. They're almost always "free" in this way.

What are the risks? The principal or the installer go out of business and you're stuck. Or, the system has problems and you get into a peeing contest over it. Or, you have a roof leak and need to pay from your own pocket get them to move the equipment. There are other risks too.

I have a friend in the neighborhood who entered into such an agreement a few years ago, in a fit of frustration over his power bill. It's been a few years, and while it's been overall ok, he's not thrilled about it.

My electricity rates are up something like 50 percent in less than 10 years, so 2.9 per year isn't too bad. Depending on where it is, of course. We've gotten hundreds of unsolicited and robo-calls from companies in this business over the years, for that reason alone I'd never do it.

Is the company bonded and insured? Who gets the permits from the city/county building dept. I cannot believe that any company will install panels free? Who pays for the construction? Did you talk to your electric company?
DO NOT let the salesman pressure you to sign papers the day he is at your place. Tell him that you will check things out and will get back to him. How long has they been in business?

I'm wondering what effect this would have on the value of your home. It might be something like an in-ground pool -- a plus for some buyers, and a 'fault' for others. You might also speak to some Realtors before you decide. Do you expect to live in this house for 20+ years?

Senior friends living in northern California paid to have system-integrated solar installed on their home. Their reasoning was that, over time, their electric costs would be cheaper because they'd paid up front; the system would generate 'free' power, with excess 'sold' to the main power company. It was a huge mess to get it installed and connected. The battery portion took up a large part of their garage. They sold the house a year later to move closer to family. I don't know whether solar was a plus or a minus to their buyer.

If I'm doing the calculation correctly, by the 20th year you'll be paying 17.71 cents per KWH.

The company is fully licensed and all permits and maintenance is assumed by them. All inspections are done by both the county and our local utility. The maintenance is fully covered by them in the contract, even to the point of if a panel should get broken by, for example, a limb falling on it or a child playing ball. If the panels need to be removed in order to install a new roof, there is a $500 charge for the labor of removing the panels and storage. The company appears to do business in many states and I have checked them out for online reviews. (Vivint Solar). The person that I mentioned earlier who is happy with the system has lived a few blocks away from us for many, many years. We are not bosom buddies, but our kids went to school together and we served on many school functions togehter. He is also a service manager for a new car dealership who has serviced our car many times. Apparently, he checked them out as much as possible, too. I'm just such a skeptic!

This post was edited by redcurls on Sat, Jan 17, 15 at 15:53

Call your fire department and ask if putting these solar panels on your roof will cause problems accessing your home to put out a fire if need be. Our firefighters are being trained now because there was a concern with them putting out fires with solar panels installed.
Not too long ago in our area houses and farms that had solar panels installed were not allowed to connect to the grid.

I know of a salesman who works for Vivint in San Diego, CA. I don't know him personally but he is married to a girl my son used to date. All 3 of them went to high school together. He moved his family out there from FL about a year and a half ago to work for this company. He had worked for a company that sold home security systems that was bought out by Vivint. Then we went to work for their solar division.

Not that this means anything but he appears to be doing ok moving his large family across the country from FL to CA. Maybe that speaks for the longevity of the company. I think they are only located in certain states.

I would never use solar panels for heat because if they were successful they would be in every neighborhood. And I see to many of them in backyards and scrap heaps.

The panels are leased and if you sold, the new Buyer would have to agree to and qualify to take over the lease.
Some appraisers will not give any value to leased Solar panels on a home and last I heard At this time FHA is communicating they WILL NOT lend on a property with Leased solar panels attached. Although there's no written policy as of today, due to the issues with leases, FHA will NOT INSURE a property with a leased solar system. FNMA hopes to have a policy written to cover this soon.

If you have a borrower or seller that wants to purchase or sell a home with a leased solar panel system and have an FHA mortgage as an option, the seller would need to get rid of the lease which could and would be very costly.

This is information taken from a conversation with other Realtors in AZ.

Just some things to check into before buying.

You're right that an existing arrangement continues with a new owner, there's an unclearable lien on the property (unless the provider is prepaid and bought out, something no one would do).

But some of your info is incorrect. A solar PPA is a different animal than a solar lease. With a PPA, you pay by the kwh at set prices. The owning company uses the panel output plus wholesale purchase agreements to supply the power you've contracted to buy. The equipment over the agreement term is theirs, not yours. You pay for use only, that will vary every month as a typical utility suppy does.

A lease is the same as an outright purchase with financing, you pay a fixed amount every month to amortize the "loan" and whatever happens, happens. Many states and utilities use the Net Zero approach, figured annually, for home solar installations. You pay for consumption in excess of the panel output at the utility's standard prices.

The inducement for PPAs is a discount from normal rates and the hope that the accelerator clause will still keep you under the normal prices. For a lease or purchase, the hope is for a positive rate of return on the homeowner's investment. At today's equipment prices, that's still hard to achieve

After further investigation it appears the the FHA has reversed their decision and will insure homes with leased systems. Apparently it caused quite an uproar, especially in Arizona.

So I guess your equipment would not be leased, they just loan it to you for 20 years? I had not heard of that before so I am not familiar.

A lease is a lease and when I said that the new buyer would have to qualify and assume the lease, that's how it works in Arizona. It makes it difficult to sell a house with 15 years remaining on the lease because new owners are reluctant or sometimes unable to assume the extra payment and the new mortgage. If you are not leasing then it isn't a worry.

We have been approached by Vivint solar who is working with our electric supplier National Grid, here in Ayer, Massachusetts. National Grid has been cutting down trees near their power lines and since several of our trees have come down, we now have a southern-facing roof perfect for the installation of solar panels. Their contract is called a residential power purchase agreement and we pay 0 dollars for the install and maintenance of the panels for 20 years. They own the panels, not us. We will pay .115 per KW for our power and that price increases 2.9% every year. We would receive a credit from their company if our panels produce more energy than we use. They would install a net meter -- basically exactly like the O.P. Redcurls has stated. Now I'm wondering if Redcurls went ahead and installed and if so, are you happy with your system? Please advise.... Thanks.

Please do a search for the reviews on Vivent Solar. A salesman came knocking on our door yesterday and I got rid of him promptly.