Request for assistance: help me find the traps in a solar ppa agreement

W

winnie

Senior Member
Location
Springfield, MA, USA
Occupation
Electric motor research
I've been in analysis paralysis on a solar install for my home for about 5 years now. My _ideal_ would be to dump the money into a replacement garage and garden canopy structure with a perfect south facing roof, combined with straight up purchased solar. Well I don't have the funding to for the construction, and I've analyzed myself to the end of the tax credit for an individual purchased system.

So I let myself get sold on the blog standard PPA agreement where the finance company takes all of the tax credits, they own the system, and then they 'sell me power'. I know that over time this is more expensive than just buying the system outright.

This is not a DIY project; I am going to have a professional handle all of the permitting and installation work.

I am looking for input on the contractual side of things because I'm seeing several red flags, and want to know if I am just being paranoid or correctly skeptical.

1) The estimate software provided a basic system design, and that basic design is what is used for the rest of the contract. and is used for the pricing. But the sales rep says 'looking at your roof, I'm sure we can put at least two more panels on at the same price'. I then have his handshake assurance that the system will produce more than the contract says. Is this likely true or not? (My thoughts: solar panels are cheap, and if the geometry is correct then the incremental cost of adding them is small compared to the total system cost, and by adding a couple of more panels they get that much more headroom over their production guarantee, so this 'freebie' might actually have value to the solar company. But I think the big factor here is that it is a sales tactic, making it look like the company is giving me a special deal that I will loose if I don't sign now now now)

2) The rep kinda sorta said that they guarantee their estimated production and if the system produces less then they have to pay me. But the actual threshold for this production guarantee is total production over a two year period, and the threshold is 85% of the estimated production. Ok, so the guarantee is only 85% of the estimated production value, not the estimated production value. How reliable are the estimated production numbers? Do they inflate them a bit to make the numbers look good, or are they conservative so that they don't have warranty claims?

3) The contract documents don't say anything about panel level optimization or monitoring. Should I assume that this is a simple string inverter system with no optimizers? Are optimizers actually important (urban setting, shading from buildings and trees). I know that optimizers mean greater production, but are they actually worth it?

4) The rep said that in the final contract I would need to sign that nothing was promised outside of the contract, and of course I would have to affirm this. So the rep is telling me to lie on the contract with the finance company. *big red flag* My question: is this _typical_, and understood as acceptable, or is this the trap that I think it is?

5) The rep wanted me to forward the docusign email back to them. second big red flag. The e-mail itself says that it should never be forwarded. Is there a legitamate reason that they would want the email?

If you'd prefer, please DM me.

Thanks
Jonathan
Are there other things I should be
If you would be willing to
 
1) I don't love the sales tactic. If he means it (more for the same price) he must put it in writing. That said, I think he's probably not BSing you on the system production. See next answer.

2) Production estimates are conservative so that they don't have warranty claims. Dealing with production warranty claims is the last thing the PPA company wants, their business model is designed to eliminate them. The production estimates are very reliable, especially over a 2 year period, which is exactly why they did it that way. My guess is that the 85% threshold you mention means that the production estimate is accurate; a different company might cut the official estimate by 15% and the guarantee 100% of it, but this company has probably decided that a larger estimate looks better and most people don't read the fine print like you. In 15 years in this business I've never dealt with a problem of a system not meeting estimated production when it was working properly; properly done PV Watts estimates really are that good, and not that hard to do. This is one part the PPA company will be diligent in holding the contractor accountable to. Note: Bill savings may not be linearly proportional to production, that depends on many other factors, but I think you know that.

3) The contract documents don't specify any equipment? Or just don't clarify if the equipment uses micros or optimizers? This is a lot less important if you don't have shade or too many azimuths. In my opinion it depends on site details.

4) Not sure I understand what you're saying, but that sounds a bit wrong. If you have separate documents with the contractor and the PPA company, they should match. OTOH, perhaps if they don't you'll just have two panels (but which ones?) that aren't owned and covered by the PPA. But I don't know why the contractor would do this. My guess is they don't intend to come through on two extra panels.

5) Not something I've ever heard of, sounds fishy.
 
I got quotes for my house. One was for $50k based on me guaranteeing them the full tax credit, even if for some reason I did not get it from the feds.
But the tax credit cannot exceed the tax owed. Being retired my taxable income is not very high, so I would have owed them over $10k more.

The second quote was for $17k, but even that would have been more than a 7 year payback.
 
At this point I'm assuming Jon's installation won't happen this year and that the PPA company takes the tax credit. The commercial tax credit goes for another couple years which is how, by officially handing taking ownership of the system for a few years, they can take the tax credit (not to mention depreciation). Any kickback (legal) that Jon gets does not involve his direct dealings with the IRS or his personal tax situation.

jim dungar said:
The second quote was for $17k, but even that would have been more than a 7 year payback.
Click to expand...

Gosh, what a terrible investment.
 
Yes, the tax credit issue is what it is. I can't get it as an individual with an owned installation, but the PPA company can get the tax credit if they own the system and I lease it from them.

@jaggedben really confirmed my gut feeling: if it isn't in writing it isn't real.

1) Basically the sales person took a 'hard' number of '$3.75 per watt', and said 'I can't go below that'. Of course, this is the nominal DC capacity of the system, and says nothing about the balance of system, and says nothing about how the various costs are apportioned.

Quoted a system with a certain number of panels, and then said 'but wink wink I will make sure you get more panels'. I get that this is increasing the DC:AC ratio without changing anything else in the system, so is relatively cheap.

2) Ok, I can trust the production estimates.

3) The contract documents specify the panels and the inverter, but do not mention optimizers. The inverter is a string inverter, and one roof face will have shading issues. The other roof face is probably just fine with the string inverters and the panel diodes to deal with shading. The contract does state that the equipment can be changed up to the time of installation at their discretion.

4) The supplier contract and the PPA contract match, but neither match what the sales person verbally offered. Apparently in the final PPA contract I have to sign that the sales person didn't promise me anything not stated in the contract.

5) Agreed, sounds fishy. It basically would enable him to add my signature to stuff.

-Jonathan
 
Oh man, why not just take out a HELOC and hire one of the solar installers who hang out on this very forum.

Just wash that fish smell right out of your hair and pen.

You have a three day right to cancel ANY home improvement contract in California. ANY contract. Not sure about your area. But get ready to use it if you can.

Given how well you're reading the contract, and your knowledge of the aspects like shading, I can't see how you'd be satisfied with a bottom feeder pitch solar trunk slammer job like you're lining up for.
 
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Most places around me price 'by the watt', meaning that they don't break out the separate costs but instead charge by the DC rating of the system.

The structure I'm considering has a roof that faces east/west, with significant shading to the SW.

The numbers don't come close to penciling in without the 30% credit at current HELOC interest rates.

I'm actually surprised about how well the numbers do work with the EW roofs. My bad for not taking to heart the concept of 'more cheap panels' aimed wrong. Had I considered this 6 months earlier....

-Jonathan
 
winnie said:
I've been in analysis paralysis on a solar install for my home for about 5 years now. My _ideal_ would be to dump the money into a replacement garage and garden canopy structure with a perfect south facing roof, combined with straight up purchased solar. Well I don't have the funding to for the construction, and I've analyzed myself to the end of the tax credit for an individual purchased system.

So I let myself get sold on the blog standard PPA agreement where the finance company takes all of the tax credits, they own the system, and then they 'sell me power'. I know that over time this is more expensive than just buying the system outright.

This is not a DIY project; I am going to have a professional handle all of the permitting and installation work.

I am looking for input on the contractual side of things because I'm seeing several red flags, and want to know if I am just being paranoid or correctly skeptical.

1) The estimate software provided a basic system design, and that basic design is what is used for the rest of the contract. and is used for the pricing. But the sales rep says 'looking at your roof, I'm sure we can put at least two more panels on at the same price'. I then have his handshake assurance that the system will produce more than the contract says. Is this likely true or not? (My thoughts: solar panels are cheap, and if the geometry is correct then the incremental cost of adding them is small compared to the total system cost, and by adding a couple of more panels they get that much more headroom over their production guarantee, so this 'freebie' might actually have value to the solar company. But I think the big factor here is that it is a sales tactic, making it look like the company is giving me a special deal that I will loose if I don't sign now now now)

2) The rep kinda sorta said that they guarantee their estimated production and if the system produces less then they have to pay me. But the actual threshold for this production guarantee is total production over a two year period, and the threshold is 85% of the estimated production. Ok, so the guarantee is only 85% of the estimated production value, not the estimated production value. How reliable are the estimated production numbers? Do they inflate them a bit to make the numbers look good, or are they conservative so that they don't have warranty claims?

3) The contract documents don't say anything about panel level optimization or monitoring. Should I assume that this is a simple string inverter system with no optimizers? Are optimizers actually important (urban setting, shading from buildings and trees). I know that optimizers mean greater production, but are they actually worth it?

4) The rep said that in the final contract I would need to sign that nothing was promised outside of the contract, and of course I would have to affirm this. So the rep is telling me to lie on the contract with the finance company. *big red flag* My question: is this _typical_, and understood as acceptable, or is this the trap that I think it is?

5) The rep wanted me to forward the docusign email back to them. second big red flag. The e-mail itself says that it should never be forwarded. Is there a legitamate reason that they would want the email?

If you'd prefer, please DM me.

Thanks
Jonathan
Are there other things I should be
If you would be willing to
Click to expand...
I agree with you on all the red flags. I highly recommend you get quotes from some other contractors, preferably local. A contractor should explain what specific equipment is included, brands, model, capacity, etc. They should provide a modeling/simulation report that shows expected production, and they should be able to answer any question you have clearly and honestly. If you are in Massachusetts, your electric rates must be more than 30% higher than rates here in Ohio, maybe even double, so I would think the payback where you are is relatively attractive even without the tax credit. The most attractive payback will come from a purchased system where you find the least expensive source of financing. All the financing programs out there are a big ripoff, with the finance company charging high fees to the installer to get you mediocre rates. And the PPA and/or lease is likely to cost
 
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