As your repayment rate per kilowatt hour increases each year, you pay a little more interest each year, until your panels generate enough to repay the loan. If you commit to a bigger purchase like Solar, don`t you want to know exactly how much you`re willing to pay before signing on the polka dot line? In comparison, the SolarCity MyPower loan resembles a disguised power purchase contract (PPA). Homeowners pay off the loan at a variable rate, depending on the amount of electricity generated by their solar panels each month, as they would pay for a third-party PPP. And as with a leasing or PPP tariff, the pro kilowatt hour rate increases each year, supposedly to keep up with rising electricity costs. We have not seen any other credit that looks like this in the market. Where SolarCity has put itself in a corner The problem for SolarCity is that it has built its business on financing solar installations itself. Leases are held by SolarCity and can be crushed to different financing parts, with SolarCity retaining the residual value. The result is very high margins – provided that leases and credits work as a contractual arrangement — and generate a lot of value for SolarCity shareholders. That is what she tried to do with credit. Ultimately, this credit program is cheaper than the lease offer, the “power purchase contract,” where customers pay 15 cents per kilowatt-hour and increase by 2.9% per year.
They will continue to offer the leasing option to customers, although in most cases it will be more expensive to rent than to own. “The only reason you go with a lease is if you pay low federal taxes or not,” “In that case, the second year would not apply 30% tax credit,” he added. SolarCity and other national solar rental companies don`t always tell you who actually makes the equipment they install on your land. If you want to do it, it`s less important – you don`t have the system, and the third-party provider is on the hook for maintenance and offers you performance guarantees. However, the SolarCity MyPower loan does not allow you to get information about the devices used in the installation, even if you buy the system. There is growing evidence that solar loans for residential buildings will ultimately be the main source of financing, which is changing the leasing-dominated sector we see today. GTM Research predicts that leases are expected to increase from 72.3% of the market in 2014 to only 46% in 2020, as lower costs and increased credit offers converge to make buying solar energy more affordable. Transparency is the key to finding the right solar option for your property, and SolarCitys MyPower Loan doesn`t offer it.