I just reviewed two solar contracts today, for clients, and here is my opinion:
1- The HERO Program is high risk, low reward (high cost with an expensive second mortgage on the home). It takes more than the 20-year loan term to "break even". The argument for the HERO second mortgage program is that you have a paid-off power plant at the end of 20 years. Okayfine BUT...you lost a significant portion of money over the 20-year term. The repayment costs are three times the average power bill.
A $40,000 solar plant costs about $400/month and generates monthly power savings of as much as $200 (which is high). You are losing $200/month. At the end of the 20-year term, you have cumulative losses of close to $48,000. That will take another 20 years to recoup those costs. I'm sure SDGE rates will rise so maybe...MAYBE the cost recuperation can be shortened from 40 years to 25 years but this is a VERY high risk proposition.
A $40,000 solar plant costs about $400/month and generates monthly power savings of as much as $200 (which is high). You are losing $200/month. At the end of the 20-year term, you have cumulative losses of close to $48,000. That will take another 20 years to recoup those costs. I'm sure SDGE rates will rise so maybe...MAYBE the cost recuperation can be shortened from 40 years to 25 years but this is a VERY high risk proposition.
2- The Vivint Solar Program is medium risk with, medium reward (it has a back-end disconnect charge which is half the cost of the HERO program. That penalty declines to zero over the 20-year term). I call this "the production lease model" because it costs nothing to install, you pay only for the energy you use, and the cost per kilowatt hour (kwh) is about 30% less than SDGE.
If you are buying a home with a production lease (like Vivint), you will get price increases but they are in the contract and thus, predictable. You have to decide whether or not the expected SDGE price increases will be equal to the increases in the Vivint contract. Today, the scheduled price increases of a Vivint contract won't reach the current SDGE prices for 12 years. This means that, if SDGE hold prices at this level, you would start "losing" money with Vivint after year 12. The buyout clause with Vivint however, declines each year so you could get out of it for about $6000. You could also ride out the contract and, over the 20 years, you will still have saved money. I believe however, that SDGE power rates will continue to rise
If you are buying a home with a production lease (like Vivint), you will get price increases but they are in the contract and thus, predictable. You have to decide whether or not the expected SDGE price increases will be equal to the increases in the Vivint contract. Today, the scheduled price increases of a Vivint contract won't reach the current SDGE prices for 12 years. This means that, if SDGE hold prices at this level, you would start "losing" money with Vivint after year 12. The buyout clause with Vivint however, declines each year so you could get out of it for about $6000. You could also ride out the contract and, over the 20 years, you will still have saved money. I believe however, that SDGE power rates will continue to rise
3- SDG&E is low risk, low reward. It is NOT as expensive as you might think. It has no upfront costs and no back-end costs. You pay for electric usage as you go. The one thing you can NOT control is future rate increases
If you are buying a a home with an existing HERO solar solution, you should demand that the HERO lien be paid off in full (even if you have to pay a bit more for the property). Do NOT assume that liability because it's a bum deal.
All in all, the Vivint production lease model offers cost savings and predictable power bills. I am inclined to think that SDGE will always be more expensive than the production solar model but capitalism is beautiful-- competition will make SDGE get more competitive.
HERO is a horrible deal, Vivint is a pretty good deal, and SDGE ain't such a bad deal after all....at least for today.
