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To Buy or Not to Buy? Solar System Purchase Vs Power Purchase Agreement
Jun20

To Buy or Not to Buy? Solar System Purchase Vs Power Purchase Agreement

Solar System Purchase vs. Power Purchase Agreement  Long before there were any federal or state funds to help offset the initial investment of a residential solar system, installations were on the rise.  Solar adoption has increased significantly since the inception of the federal solar tax incentive in 2006, which rebates 30% of the purchase price of the system.  In 2007, the California Solar Initiative was implemented to offset all or part of the cost of installation in proportion to the system’s actual or projected performance.  With all of this support from the government, it’s no wonder that more people have gone solar in the last two years than the last twenty years combined!  A portion of these new systems were not purchased by homeowners however. Companies like Sun Run and Solar City offer the benefits of solar without the upfront cost of the system through the contracted sale of solar electricity in what is known as a solar power purchase agreement, or solar PPA.  A solar PPA brings a mini-power plant right to a home-owner’s roof, so there is no additional charge for delivery, which usually accounts for as much as 40% of an average electricity bill.  No delivery charges plus savings from federal and state rebates drive the cost down, making solar electricity rates cheaper than the majority of grid rates.  For more information on these agreements and how they work, see this informative article about SPPAs . Up until recently, homeowners have had no choice when it comes to buying power.   Customers sign up for an indefinite PPA with their local utility when they move in to a new residence and watch their electricity bills increase every year.  Now homeowners have the option to buy their own power plant and create electricity on-site or defer the ownership of the same system to a solar services provider, in which case they tack on another utility bill but potentially protect themselves from electricity rate hikes. So which option will work best for you?  That depends on several factors, including your own values in regards to ownership.  Put simply, for those who don’t have the up-front capital to invest in their own system, the SPPA may make more sense as long as the combination of their post-solar utility bill and the solar bill is less than what they were paying on the pre-solar utility bill.   If ownership is important to you, but funds are still a factor, there are financing options available which will result in a monthly payment towards the purchase of the system.   This purchase option ends up looking very similar to a system lease,...

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Californians leading the country in solar panel installations

image credit: “SMA Solar Technology AG”. In 2008, Californians installed double the capacity of solar power then the year before according to a report released today by the the California Solar Initiative (CSI). Homes and businesses installed 158 megawatts of photovoltaic capacity last year, despite the recession there is still a strong demand for residential solar electric systems. In December 2008 a record number of Californians put in rebate reservation forms, to secure incentives for their solar electric systems. Solar energy is not only successful in California because of it’s sunny climate, but more importantly the rebates they offer. For example, even though Los Angeles has more solar irradiation then San Fransisco, SF has more solar panels installs than LA. Since SF gives out a rebate on top of the CA state rebate and federal tax credit. Incentives are driving the demand for solar panels here in California. Other states have not put together incentive programs that can match California’s rebate program, why do you think that is? With record corporate layoffs this week and the economy continuing on a downward trend, what do you think is in store for solar power in california this...

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