Calculating savings on existing solar lease/PPA

No calculator for this should be made, because no one should buy a home with an existing solar lease. You should never fall in love with a house. There are lots of houses available for sale without solar leases or paid off solar installations.

I agree. My daughter and her husband fell in love with a house with a PPA. I tried to get them to insist that the seller prepay it or take it to his new home which was an option under the lease. Because they fell in love with the house, they didn't want to be too demanding. They are paying the price now. There is an option that they can exercise in two more years to purchase the system but I am not confident that it will be at a favorable price. My son in law is analytical and they will have 3 years of data to do the analysis.

Thanks for the feedback. Buying a house with an existing solar lease or PPA is certainly complicated. It can be hard to figure out whether the solar lease or PPA is resulting in savings as compared with the utility rates applicable to the home. Then there is the question of what happens when you want to sell the home later. Many buyers will want the seller to buy-down the rest of the lease or PPA, which is the cleanest way to handle it. But that can result in spending many thousands of dollars. Plus, it is never allowed before year 5 of the lease or PPA for tax reasons (the solar company would lose the proportionate amount of the federal tax credits if ownership of the system transfers to the customer before year 5). Transferring the lease or PPA to a willing buyer requires the consent of the solar company, plus typically a credit check, and can slow down the escrow process.

All of that said, I don't think it's fair to say this should never be done. The solar panels are a fraction of the total value of a home. So if you have a bad solar lease or PPA that is costing let's say an extra $200/year over what the utility rates would be, and you live in the home for 10 years, that is $2,000 in total out of pocket costs. Is that really enough to walk away from a home that otherwise meets all of your needs? Especially considering that is probably 1% or less of the total home value?

To me, the biggest issue is what happens to the lease or PPA when you want to sell the home down the road. However, as long as you are past year 5 of the lease or PPA, and have cash on hand or access to credit to finance the possibly double-digit thousands of dollars needed to buy-down the agreement before the home sells, then it should not be an issue that slows down a home sale.

My friend is a realtor in California and I can tell you horror stories of people trying to sell houses with a solar lease. My advice is to not buy a house with a solar lease and I would say 99% of people here would agree. I would also worry about the end of the lease. What will happen to your roof? Will they leave the solar panels there or will the take them off and leave your roof in horrible shape? My advice is to stay AWAY! Talk to a trustworthy realtor and they will tell you the truth, buying a house with a solar lease is a stupid thing to do.

Seems like reality is dawning on the solar lease scam as it is on the unreliability of the B.S. about residential PV (owned or otherwise) increasing property values. 1X/awhile a lease makes sense, but most of the time, lessees get screwed.

If you own solar in my area, it definitely raises your property value. It is probably the best home improvement you can make in Central California. My realtor friend says it is almost a 100% return value for a house if you own the panels. People specifically ask for houses with owned solar and pay a premium for it. It is also used for appraisals and it helps quite a bit there as well. The Central Valley may be one of the best places for solar since we have high electricity costs due to air conditioning. I can speak for the rest of the US, but putting solar on a roof returns a higher value than any remodel in the house in my area.

Regarding what happens to the roof at the end of the lease or PPA - this is almost always addressed one way or the other in the agreement.

In many cases, the solar lease or PPA will require the solar company to remove the solar panels at the end of the agreement and restore the roof to its original condition (excepting ordinary wear and tear). For instance, here is what the Sunrun solar lease agreement provides on this (this is the form filed by Sunrun in March 2018 in its regulatory proceeding to be able to offer a solar lease in Florida):

"End of Term Warranty. At the end of the Initial Term or at the end of a Renewal Term, should either you or Sunrun wish to end the Agreement, Sunrun will remove the Solar System at no cost to you and return the Home to a condition similar to its condition prior to installation of the Solar System, excepting ordinary wear and tear (including, but not limited to, wear and tear resulting from local weather conditions) and wear and tear that can be expected due to the presence of the Solar System on the Home for the 20-year term (including, but not limited to, uneven wear and tear and uneven discoloration)."

(Emphasis added.)

I got an appraisal in Sonoma County six months ago and the appraiser gave me an increase in value based on the value of the solar system.

Thanks for mentioning this. Did you receive 100% of the value of the system in the appraisal or some lesser amount? I know it's common to receive less than full cost when it comes to home improvements. Curious what you received for the solar system.

I remember the appraiser saying he would use 50%.

Interesting. Thanks.

I am interested in how these guarantees will play out in the next decade or so. The oldest SolarCity leases are from about 2008, I think, which puts them 11 years in at best. Still another 9 years to go before we begin to see how these companies will hold up their end of the bargain at lease end.

my guess is in another 9 years they will try to sucker someone into another lease or sell them for dirt cheap. The cost of removing and trying to sell the solar panels can't be economically worth it. Today one can buy used 5 year old santan or sunelec panels for 20 cents a watt. What are 20 year old solar panels worth then? 3 cents a watt? 20 year old inverters same thing maybe $100 if that. The only thing of any value is the racking system which is custom made for that roof and not easily moved.

I can't speak for leasing but purchasing is a plus here in Ca.