Purchase Electricity from the Utility
- Purchase Power from the Utility grid
- Old Term: usually the rest of your life, plus 30 days, or electric debt forever
- Term, today: until you switch to one of the below
- Still the most common way to get electricity
- Pay for the power you use
- Higher rates for heavy users
- Rates changed frequently by regulators
- Payments each month: variable, unpredictable
- When Utility rates rise, you pay more
- Made popular by consumers with no other option
The Utility’s Electric-Debt-Forever plan is still the most common way to buy electricity in California; buying from the grid, if you’re connected to it, is always an option.
Even on one of the other plans, below, if your brother-in-law moves into the guest room, raising household demand for electricity, the Utility will gladly sell you more, if you’re connected to the grid.
But for most people, it’s not a deal they would ever have made if they’d had a choice at the time they first made it. All three of the following solar options offer better limits on the price of electricity. They can even raise the appraised value of a home.
Because residential solar makes use of free real estate provided by the homeowner, homeowners share in the savings.
Power Purchase Agreement or PPA
- PPA with a 3rd-party’s system on your property
- Pay for all the electricity the system generates
- Use (or sell to Utility) the electricity it generates
- Significant savings possible, compared to Utility
- Term: usually about 20 years, with exceptions
- Rate increases are limited by agreement–no surprises
- When Utility rates rise, you save more on production
- Additional electric production available from Utility
- Like switching cable/internet service providers
- Made popular by consumers who want to save, not own
Generate Electricity; Lease the Solar Equipment
- Lease a third-party’s solar equipment located on your property
- Pay lease payment, set in advance–no surprises
- Use (or sell to Utility) the electricity it generates
- Term: usually about 20 years, with exceptions
- Significant savings possible, compared to Utility
- When Utility rates rise, you save more on production
- Additional electric production available from Utility
- Made popular by consumers who want to save, not own
Generate Electricity; Own the Solar Equipment
- Purchase solar equipment and install it on your property
- Easy 100% financing, nothing down, low interest*
- Use (or sell to Utility) the electricity it generates
- Financing options include: 10, 12, 15, 20-year terms
- Fixed principal and interest payments amortized
- No prepay penalty; cash accepted, none required*
- 30% Federal tax credit offsets income tax liability
- When Utility rates rise, you save more
- Additional electric production available from Utility
- Made popular by consumers desiring $0 electric bill, someday
- *A few people pay cash and skip the financing
Properly sized, a solar installation purchased on this last plan is designed not to leave you in electric debt, forever.
Homeowners should be sure to consider their anticipated time frame for staying in the home before they purchase residential solar. Be sure to ask your solar expert how each option affects a real estate transaction before you commit. If they don’t know, ask a real estate or escrow expert. Most transaction problems come from inexperience, and most could have been avoided.
If you are a real estate agent, the time to be informed about solar home transactions is before you take a listing. Listing agents and sellers need to market solar homes correctly if they want to maximize the sales price.
Buyers need to understand what they’re getting before they buy. Even appraisers are not always aware of how much value should be given to a solar home with an electric cost that beats the Utility.
Be sure to check back here for more details on these topics, or subscribe to my occasional newsletter, Solar-Electric Real Estate Update. I’ll be focusing on topics that will assist consumers and real estate pros to go solar, happily.
