you expecting solar to blow up down there with grid parity this year? haven’t read much about that yet, but think i did notice some mention of it in the EPIA report.

also, on that graph, would recommend doing some for 25-, 30-, or 40-year time scales as well. clearly, people want their money back sooner, but solar modules are pumping out electricity for 30+ years from what i’ve read, and aren’t many warranted for 25 years now? and just makes for a nicer and even more accurate graph.

I still don’t think it correct to say that you are installing solar for $1.85/watt. It’s $1.85 plus future payments.

In your program the buyer has to come up with less initial money, then pays for the ‘your profit’ part over a number of years with a portion of the money saved on utility bills.

Without reviewing a number of your contracts and without knowing the unknowable – the future price of electricity – it would be hard to determine if this is a better or ‘not as good’ a deal as borrowing the money from a third party and owning outright, making the loan payments out of utility bill savings.

It does sound more attractive than the standard lease program in which the customer makes lease payments for 20 years and then may or may not have the option to purchase the system at the end of the lease period.

As with so many things, the devil is in the details. A careful customer would have to crank through the numbers for all the options to see which works best for them.

Assuming that your plan is ‘roughly equal’ to outright purchasing and lease
to buy programs I think it’s a good option to put on the table.

It would seem to lower the bar for some people who would like solar but are
made hesitant by the initial cost. And if it gets more solar on roofs and
cuts fossil fuel use, that’s a good thing.

Thank you for continuing this discussion

There are two possibilities:

1) Charge close to cost price for the system and share the savings with the client over 20 years. In the first year, there are no savings and no additional payment to the installer. But the customer locks in their price – and we make a sale.

In the second year when the price goes up, say 15%, then this might equate to R12,000 per annum. This R12,000 gets split 50/50. The client saves R6,000. This continues for 20 years.

2) We are at Grid Parity in South Africa, so theoretically we don’t need to do 1. The PV Grid Tie selling price is substantially (33%!!) higher than $1.85, so one could sell a system to the client which locks their price in for 20 years, and which makes me a profit today.

3) You have used Eskom’s cost price. What you need to use is the homeowner electricity price, which in the City of Cape Town will be R1.50 per kWh for someone using 1,200 kWh per month. R1.50 per kWh is approx 17.6c per kWh. See my graph at https://p.twimg.com/AjcSP8mCAAAUHAm.jpg:large which shows how our prices have changed.

See last year’s tariff at http://www.capetown.gov.za/en/electricity/tariffs/Pages/default.aspx Add 16% for this year.

Regards,
David

Looking forward to those numbers.  I think I made a large mistake in my model which I posted at 8:21AM.  I left out the $1.85/watt.

OK, is this not the way your system works?

You charge $1.85/watt.  For a 5kW system the buyer comes up with $9,250 which covers your costs.

Then for the next 20 years the buyer pays you $X/mo to cover your profit.  They pay you what they would save the per month based on first year electricity prices.  Their payment is locked down regardless of what happens to electricity prices.

The advantage to the buyer is that they have to come up with less money up front and are protected against future electricity cost increases.  And at the end of 20 years they own the system and make no more payments to your company.

—

The electricity price in South Africa (2010, via web) was 0.33 rand/kWh or about $0.04/kWh.  Correct?

Electricity is going up at between 15 and 25% per annum here.

I’ll send more numbers soon.

It’s $1.85 plus 20 years of further income to your company.

Now, I might go with your plan if I couldn’t manage to borrow the money to install a system and make payments with the $200/mo utility bill savings.  At least I’d own the system after 20 years and would get some years of free electricity.  And I would, as  you point out, lock in my monthly costs at $200 rather than watch my monthly go up over time as non-solar owners will “enjoy”.

$200 a month.  If that’s a real number, $2,400 a year.  $48,000 over 20 years.  Bunch of money.

Let’s see what outright purchasing might look like.  

A 5k system at $4.44/watt (current US average) = $22,200.  

Finance that at 6% for 12 years and your payments are $216.64.

After 12 years your system is paid for and you get 8 years more free electricity.

Based on my numbers I’d say you’re getting more like 9% on your loaned money.

(My assumption of a 5k system might be different than what you are offering.  Feel free to present your numbers.)

Thanks for this. It is interesting, but my point is that we need to get the industry moving.

How about $zero cost per Watt? If we are at grid parity and a homeowner is paying $200 per month for their electricity bill, then theoretically the cost per watt is $zero as the homeowner will simply pay the Solar Leasing company $200 per month.

It’s just in this case the $200 per month will never increase.

Regards
Davod

Guys, honestly, you should know better, there’s no such thing as kilowatts per hour, it’s either kilowatt-hours per hour or 1.3kW continuous equvalent.

The kilowatt is a measure of power, it is an instantaneous measure of an energy flow rate, not a quantity of energy over time. Energy and power are not the same thing.

This may sound pedantic, but how can we educate the general public when the educators don’t know the difference?

Now, I don’t want to knock you for offering that deal. It’s basically a ‘lease to own’ after 20 years with a sizable ‘up front’. It would allow someone who doesn’t have enough cash/credit to own outright, but it shouldn’t be sold as a “$1.85″ program.

It might be an excellent model to add to the buy/lease mix, but it’s not $1.85/watt solar.

However, if you are actually installing or $1.85/watt you don’t need the extra incentive that this prize is creating in the US.  We need to get down from >$5/watt. 

Want to tell us how the price got so low in SA so fast?  You’re ahead of Germany, it would seem.