Solar company tries new way to make sun affordable
But now solar companies are getting creative, offering leasing plans or group rates for neighborhoods that buy in bulk.
A San Francisco company has come up with a solution that should put homeowner complaints about high upfront costs to rest. For about $1,000 down, SunRun will put solar panels on a customer's house and then sell the homeowner electricity generated by the panels just like a utility would.
The result, according to SunRun, is that the new solar customers will be buying electricity at about half the average utility rate -- 13 cents per kilowatt vs. 30 cents.
That's it. No need to buy the solar panels. You don't buy the nuclear power plant or coal plant that your electric company uses to deliver power to your home. Why do people think they have to own the sun?
"We will buy the system for you" and sell you electricity, Lynn Jurich, president and co-founder of SunRun, told me in a telephone interview.
"A lot of people think the asset is the equipment," Jurich said. "The asset is the electicity, the green electricity."
While 20% of its customers opt for the company's option to buy the panels, the majority go with a solar power purchase agreement, or PPA, where SunRun buys solar panels on the customer's behalf for an installation fee of around $1,000. SunRun is responsible for the maintenance and repairs. Monthly payments for power are based on how much energy the solar panels produce.
Customers turn their homes into hybrids -- they still buy about 30% of their power from the utility, Jurich said.
The only "catch" that I can find, if you want to call if that, is that an 18-year contract with SunRun must be signed. The benefit is that customers are guaranteed that prices won't increase for 18 years. The alternative, Jurich points out, is a perpetual contract with an electric company that will likely raise rates within 18 years.
Instead of buying solar power from SunRun each month for 18 years, customers can pay the entire cost upfront, although they wouldn't own the solar installation. Someone with an average monthly power bill of $150 would pay about $13,000 to $15,000 upfront
The upfront installation costs vary where SunRun does business, depending on area subsidies from local governments and tax incentives that its customers don't have to hassle with. SunRun only does business in California, Arizona and Massachusetts. Arizona only offers a lease plan, where SunRun customers lease the solar installation.
Upfront costs are $2,000 to $4,000 in Northern California, and $1,000 in Southern California, Arizona and Massachusetts. Buying a solar system in other parts of the country without SunRun cost $25,000 to $50,000, according to the company.
In California, where utility customers pay more per kilowatt as they use more power, it makes more sense for people with large electricity bills -- $200 a month -- to have solar power and see its benefits.
Beyond saving on the electricity bill and making the planet greener, SunRun's best selling point may be the no-hassle factor of not having to do any maintenance.
An invertor, which converts power from DC to AC so it can be used in the house, will die in 10 years and costs $3,000 to replace, Jurich points out.
As someone who recently was told by a repairman that it would cost more to fix a broken washing machine than to buy a new one, not having to worry about the solar panels breaking and how much it's going to cost to repair is more than worth the upfront installation cost.
Aaron Crowe is a freelance journalist in the San Francisco Bay Area. Reach him at www.AaronCrowe.net