Buying vs Leasing Solar - What Sunrun, Vivint, and Sunnova don't want you to know!

what's up guys it's julian here your san diego solar expert back with another super valuable video no bs here that seems to be obviously what this whole solar industry is a bunch of guys just giving you some like non-value sales pitch so once again trying to you know give you as much free value as possible today i actually brought my buddy tyler here tyler's tyler's been in the industry for uh several years as well as me he actually has sold ppas a lot more than i have in the past and so i wanted to bring him in to this video to you know really get his insight onto some of the details on how a lot of these solar companies are ripping you off well thanks julian yeah i'm really excited to share all this information with you guys so that way that you guys can avoid getting uh you know put not in a very good situation with these power purchase agreements i've been doing solar for close to four years now and when i first got started the only value proposition i had to offer was a sunrun ppa i didn't know what i know now and the only people in my professional opinion that should get a power purchase agreement are those that are retired that are on social security fixed income and they absolutely need to cut down their their monthly expenses in order to live a decent life for those of you who don't know a ppa stands for power purchase agreement and the reason why power purchase agreements even came into existence was because banks were not always offering financing for solar and the only way to go solar was to pay a cash and especially 15 years ago solar was way more expensive so you know the average solar system was like 60 70 80 000 and you know only if you were either rich or just super pro environment and you were going to you know put out all this money that you know is going to cost you way more basically to to go solar than not now it's you know it's money it's a money saving thing it's flipped of course but um the only way to go solar was to put down all this money so um the ppa came into existence sunrun actually invented the ppa and uh it it solved the the problem of not being able to get solar without putting down you know eighty thousand dollars but soon afterwards just a few years later banks got on board with financing uh solar systems and then you know really that that made the ppa obsolete you know because now you can go solar still zero down of course but with way you know obviously way less cost over time the common argument that a solar salesman might make to you that is trying to push a power purchase agreement on to you and your family they might say something along the lines of well at least it's a cheaper payment compared to the utility company and specifically where we're at currently today in sunny san diego that's really easy to do because the utility company here is charging anywhere between 32 34 38 40 cents a kilowatt and now it's based off of what time of day you use your electricity and it's we're gonna we're in the most mature market in the in the industry as far as you know what's what's currently happening so the power purchase agreements were a really really big push about four or five years ago because the market was still uneducated but now that the market's becoming more and more educated when people are going to go sell their house people are now getting like essentially their power purchase agreement if they were to get a power purchase agreement they're getting their power purchase agreement used against them in their sell of their home and then they're getting stuck in a position where they might need to pay off this really expensive power purchase agreement uh that's a 25-year contractual obligation for either you or the next homeowner that's gonna somebody's gonna need to pick up the tab so that's a big thing and then in addition to that they use the cheapest equipment possible to maximize their potential earnings they will tell you like well hey there's no maintenance we have this production guarantee which are both absolute garbage but like essentially what these ppas are is it's financially i'll be getting yourself to like three times more than what you could be getting your solar system for if you were to buy your system with cash or if you finance the whole project with no money down all right guys so here we have a cost over time graph to show you the differences between doing a loan versus sticking with the utility and doing a ppa so color color coordinated make it easy on you so first we have buying your system with a loan now of course the cost here we've written 35k that's obviously arbitrary to you know which how big of a solar system you're buying they're all different costs uh but let's just say um you know theoretically in this case that the loan over the course of 20 years costs you 35 000 now let's say for a ppa same size system but at the end of the day if you add up the the the cost of the payments it's going to be almost twice as much and that's when it's a flat rate now when you're dealing with an escalation rate this is actually how the math works out if you have a 2.9 percent escalation and you have a basic basically a 200 a month payment it will end up to be about 60k in cost over the 25 year period and with it with the escalator it'll be almost 90 000 by the end of 25 years now of course these ppa options cost less than the utility which is how they you know sell you on it they say well it's a better option and it is but the fact that you can get basically higher quality equipment at a at with usually better warranties at a cost that's literally sometimes less than half it really it makes it makes absolutely no sense and and and only in the very most rare cases of like tyler said earlier no tax liability fixed income and just need relief from from the utility that it makes sense to do this but buying the buying the system is going to give you way more savings over the long run so there's a lot of issues with getting a power purchase agreement for your home um the first thing is it's very expensive compared to owning your system outright either through cash or financing uh oftentimes the solar company that's offering a power purchase agreement is going to use the cheapest equipment if possible meaning like the cheapest panels oftentimes from china or like outdated equipment that they can get for as cheap as possible that they can buy in bulk and then they use string inverters oftentimes which are going to fail but they they say well hey there's there's no maintenance cost there's none of this it's a service based company when on all actuality they're going to charge you three to four times more than what your system should cost to take care of your system it it doesn't make sense there and then some people are even getting talked into doing these escalated payment plans where it's supposedly starts lower than what you're paying today but then by the end of the 20 or 25 year contract that you sign you end up paying two two and a half times what you're you're originally quoted and sometimes these the solar guys are going to frame it like well if you're going to be moving in three years four years five years that's not going to be your problem that's going to be the next homeowner's problem the next homeowner is going to need to pick up that tab somebody's going to need to be paying you know two to three times more than what they should be paying monthly if they were to finance their system it literally just doesn't make sense so the other thing is is every payment that you make or even if you pay off the system altogether it's not your asset it's you're essentially agreeing to another service you're agreeing to taking on a liability it's essentially like the idea of saying that you really like like the idea of having a landlord and you want another landlord to take care of your solar system and they're going to tell you like hey you have to pay us every month or if you want to get out of this contract you have to pay us a large lump sum of money that is more than what you could have done if you originally made a different decision and of course in in the two cases of with the ppa or the utility the money that you're spending is not adding any equity or value to your house with with the purchase system a lot of the times you you get the money right back out of the house when you go to sell it it's kind of like buying a car it ends up being like a collectible or maybe it's similar like how it is right now where you buy the car and then still worth almost what you bought it for it's basically like you drove around 10 years for free because you got to sell the car for the same price as you bought it for and so that's especially with the getting the tax credit you really only need to reap 74 of your cost back to literally have gotten free power for the time that you were in the house and if you need to sell your house for example let's say it's a 20-year loan and you 10 years goes by you you sell the house what happens in this case the new buyer actually values the next 15 years of life out of your system and ends up paying you for the system and and you end up ahead or not actually having any cost because you got your money back in the case of the the ppa you basically have to convince the buyer of your house to take over your remaining debt and if they don't want it then you have to pay it all off which is a common scenario unfortunately right um a lot of the sales people say oh it just easily transfers and in reality you have to basically convince the buyer to take on 60 to 90 000 in liability that you chose for them all right so when you buy the system i mean if you're talking to good companies they're going to be like showing you like hey this panel is better for these reasons or or we use these inverters for these reasons and when you do a ppa they're really only concerned about one thing and that is installing a system for as cheap as possible and so not only do you basically have to pay way more money for a ppa versus buying the system but you're also getting usually cheaper stuff or there are different components to the system than this but these are the main two the panels and the inverters most people just know about the panels of course but inverters are way actually more important than the panel with premium panels versus like cheaper panels there are in my opinion three stats about a panel that you need to look out for the first one is the actual not just the standard test condition rate what or watt rating but what the normal operating module temperature uh nmot or noct is and that's like what the real world watt rating is um the other is the degradation rate so certain panels over their life uh for example if we're dealing with a more premium panel like an lg rec or panasonic they're going to degrade less than 10 percent over a 25-year period which is actually quite quite great now the cheaper panels are like mid-grade panels they're going to be somewhere in the usually like 15 to 20 percent degradation so you know you see like q cells right around 85 percent um a lot of the there's a lot of other brands that are just a few percentiles lower uh with their degradation and then temperature coefficient and temperature coefficient is how well the panel performs outside of its ideal temperature range panels get really really hot up on this on the roof and they don't you know electronics don't perform as well when they get really hot so certain panels do better against the heat and so uh those will give you more power even if the you know two panels have the same watt rating if one has a better temperature coefficient it's going to actually give you more power um tyler you want to tell us a little bit about the string or the centralized inverters versus the micro inverters yeah sure uh so with a power purchase agreement they're going to use the cheapest stuff that they got they're going to buy it in bulk whatever is available most often times stuff that's currently outdated stuff that's been sitting around for you know one two three years because what their goal is is with the power purchase agreement is to lower the cost of the system as much as possible promise you maintenance on something that you technically don't own so why would you ever care what you're gonna get and then they're gonna they're gonna maximize their potential profits but once you've identified a good company to go with and you're to pick up the loan provider you're picking the loan you're picking the equipment you're making sure that you're getting a micro inverting inverting system versus a centralized system the biggest problem with getting a centralized inverter is that there will be more than one time that the solar company or yourself will need to figure out how to swap that out to replace it literally like in our experience between 20 and 25 of the solar edge inverters fail within the first three three years and we have to go replace them and it's this huge hassle with the micro inverters i've literally only seen a couple of them ever fail and they were they both failed on the same system they're right next to each other the first day of operation so i've never seen a micro inverter fail outside of a week of working and that's that's after like years so yeah if you do a ppa they're gonna put a string inverter on the side of your house it's a it's a nightmare to put yourself in this situation with this equipment because if the solar company takes a week to come out and service your equipment or a lot longer or longer because it's sun run or it's vivid or vivid's out of business and sonova so nova doesn't even have crews it's like whatever ppa provider that you're considering getting equipment from there they have no financial response obligation to come out and service your equipment quickly because that you're going to pay them monthly regardless of whether or not the system's cranking out electricity or not so when they're when your system goes down and it's now 10 15 20 years down the road and they've been raking your money like they got you on the hook you're stuck so with picking a lump like a ownership business model like picking the company that you're going to choose to buy a solar system from either through cash or financing you get to pick the loan you got to pick the company you get to pick the equipment the the inverters that you want you get it you get to make an educated buying decision and that's the kind of people that you're going to be dealing with when you start talking to the folks that are more on this side of the coin versus selling whatever it is that they've been taught to sell because they don't know any better yeah guys like what happens a lot of the time is you'll have the a ppa and you know your your payments whatever 300 bucks a month for it yeah you're saving money because it used to be 500 but your central inverter goes down sun runs impossible to get on the phone they they take three months to fix your inverter you have to continue paying your solar payments even though your system isn't even working because you have you know there it's on autopay or whatever and then now you're raking up your your bill from the utility company and now you have two bills at once and then sun run once every two years they they're gonna pay you for lost production basically it's it's it's the same rate that you're paying for their power but it's not that you it's not the amount that you had to pay the utility so so you're so you're losing money now and you're not even getting all your money back and and they're just nonchalantly you know willy-nilly getting your project whenever they have time or it's convenient for them because they're too busy installing other systems that they're going to rake in another 20 to 100 000 we're going to talk about the terms that come with a ppa and how rigid they are so with the p power purchase agreement you're locked into a 25 year payment plan what that total cost comes out to be is whatever the payment is that you set up today times 12 months for the year times 25 years and it's this crazy astronomical number compared to what you can do on the other side of this board and if you were to try to pay off this system early there's a an extra cost that sunrun sunova vivint they've baked in that if you want to get out of their contract you're gonna have to pay a p premium rate so that's what a power purchase agreement is do you want to talk about the loan so when you finance the system you get the freedom to choose whatever term length you want i i sell loans between five years all the way up to 20 years now the the beauty of that is most people they they can pay their system off in a reasonable amount of time and then actually live in the house with no no actual payment for the solar because you know i would say on average people do like an eight-year loan and they drop their payment immediately for only eight years and then they see you know they see the light at the end of the tunnel you know it's paid off they're in the clear it's just like a paid off car now with a ppa 25 years now of course you know eventually 25 years is gonna come and go but it's gonna take a very very long time for you to ever basically have no payment and with a solar loan you know i'd say on average eight to 12 years is what a good loan length would be where you can still drop your monthly expenditure and save money and build your equity way faster than doing a ppa which obviously doesn't build any equity and of course if you need to get out of your loan especially if you've done a same as cash non-buy down loan uh you can just write a check for the principal balance and you're done and and now your home value has shot up dramatically versus with a ppa it is literally a liability on your house and if you you know need to get out of it early you're going to pay a fee or at best a lump sum of all of the remaining payments at once and then you're left with a cheaper system that isn't even worth as much even if it is owned at that point in time if you're still watching this vid uh we really appreciate it we know it's getting kind of dark here you've been watching the the camera get progressively darker as as the video has gone on so we're almost at the end here so real fast the last thing with the difference between the ppa and the loan is that when you do ppa or or when you do a solar system there's a 26 federal tax credit attached to the solar system now if you do a ppa the company you're going through sunrun vivint uh obviously sunrun owns vivint now but or sonova any of those companies they get your 26 tax credit you pay your payment and don't get any tax benefits with a loan and you owning the system you get the tax the federal tax credit so that just adds to to your savings because you know twenty thousand dollar system really is like a fourteen thousand eight hundred dollar system after you get the tax credit so uh and by the way the tax credits are going down over the next few years it's 26 this year in 2022 four percent lower next year 22 2023 and then it's gone as of right now and there's a lot of talk about this changing but as of right now this is the the step down plan so uh once again thank you guys so much for watching the video if you need to contact me once again my name is julian my phone number is 760-473-5878 feel free to reach out to me if you have any questions about going solar anywhere over the united or anywhere all over the united states

Channel: Julian Todd-Borden

Views: 49,858

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Id: Up0P4E2TCv4

Length: 18min 47sec (1127 seconds)

Published: Sun Feb 20 2022