I feel like “going solar” is something people talk about possibly doing at some point, but the actual process of doing it seems a bit nebulous. Most people seem to know they have the ability to buy or lease solar panels, but the option I didn’t know about, that I’d bet others don’t know about yet either is a Power Purchase Agreement (PPA).
Our family just went through the process of getting solar for our home through a PPA in the past two weeks, and I thought it might be helpful to other Fresnans (who are enjoying their share of Central Valley sunshine anyway!) to know more about what the PPA process was like, the commitments and the benefits.
What exactly is a PPA?
In a PPA, a homeowner is provided all the necessary equipment and panels needed to produce the vast majority of the home’s electricity by a solar energy provider. The solar provider maintains the equipment and ensures it is in good working order and operating properly. The homeowner pays the solar provider for this energy, but at a low rate that is guaranteed for the length of the agreement. The homeowner does not own the panels, but there are no upfront costs or maintenance costs to worry about either.
How do I know if going solar will save me money?
If your electric bill averages $150 or more per month, you’re likely a good candidate for a solar PPA. Our family’s bill had risen to an average of $300 a month (ugh!) with PG&E. PG&E’s rates change the more energy you use as they bill in “tiers”, so once a homeowner uses a specific amount of power, they move from one tier to another, beginning at tier 1 and ending at tier 4. As they cross each threshold of power use, the rate per unit increases. Homeowners who are spending $150 or more for power are likely operating in a high tier for a large portion of the month. Solar providers who offer a PPA, offer a low, locked in rate that doesn’t fluctuate if more power is used, thus saving the homeowner money.
Example: For our home, August is our most expensive month – we use an average of 1200 kilowatt hours of energy in that month (yikes). That puts us in PG&E’s 4th tier pretty early in the month, and our rate becomes more than 30 cents per kilowatt hour. With our solar PPA, we will only pay 15 cents per kilowatt hour*, all month long. This will cut our bill for electricity almost in half in what is typically our most expensive month of the year.
What’s the PPA start up process like? What can I expect?
For our family, I called the solar provider for a consultation. We had an initial appointment in our home with a representative from the company and he was able to plug in the information from our previous PG&E bills to determine what our bills would look like if we decided to use their solar system instead. Once we determined it made good financial sense to move forward, we signed preliminary agreements and a survey team was scheduled to come check out the logistics (our roof, angles, how many panels we’d need to produce the amount of energy our house uses, how that number of panels could fit, etc.) and send that information to the corporate office so a panel design could be optimized and drawn up. Then, our representative came back out, showed us the plans, went over final details and we signed our PPA. Less than a week later, our panels were up on the roof and operational!
What else should I know?
The PPA agreement is usually for a long-term and it locks in your rate*. PG&E does not offer locked rates like this. Our agreement with our provider is for twenty years. At first that was a little scary to us, but when we thought more about it, we decided locking in a lower rate for a term that long is a good thing, and since we don’t have to repair anything if the equipment has any hiccups during that time period, we won’t have to worry about unexpected repair costs. PG&E can continue to raise our rates to any number they decide, so a PPA just seemed like a wise move. Speaking of move, if you decide to? The solar agreement just transfers to the new owners smoothly. (No liens on the house or anything like that, which happens with a lease.)
[pullquote]August is our most expensive month – we use an average of 1200 kilowatt hours of energy in that month![/pullquote]You have to be a homeowner and have very good credit to qualify for a PPA. In order for solar providers to offer such low rates and still be profitable, they have to ensure they have reliable, on-time paying customers. You also need to have active internet service, as the solar system is monitored online.
Wondering if you’ll still pay PG&E at all? Yes, if you’re using their natural gas. And yes, likely a little bit, as the solar systems are designed to produce a minimum of 70% of your needed electricity (and often up to 90%) but that remaining percentage your panels aren’t making will come through PG&E at their lower tier rate, keeping the cost right about at what you’re paying per kilowatt hour to your solar provider. If your panels happen to overproduce, that energy will go towards future months or pay out at the end of the year if unused.
Oh, and one more tidbit – in case you’re a little nervous about your roof (like we were, since it’s getting up there in age) the solar provider will guarantee your roof remains as water tight as before installation, so you can cross that worry off your list too.
Hopefully, if you’re a homeowner who’s been considering solar this information has helped you to better understand the PPA option. We’re very pleased with our experience and the company we are using, Vivint Solar. Oh, and for the record, Vivint has no clue I’m writing this post, nor are they sponsoring it in any way. I’m just a pleased customer happy to pass along their name and share my family’s experience, in case helps others.
*Edited to add: The rate with a PPA may be subject to increase, but they guarantee you the maximum rate at which it will increase, in our case only 2.9%.
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