Vivint Solar Raises $540 Million Of New Funding For Home Solar Leasing
One of the largest residential solar power providers in the US, Vivint Solar, just announced that it has raised $540 million of new funding via two more rounds of residential solar financing. The funds are provided by two major financial institutions.
In addition to $540 million, a further $200 million of tax equity financing was secured earlier this year and announced in August.
“In less than three months, Vivint Solar has raised nearly three-quarters of a billion dollars to finance our solar projects,” stated Greg Butterfield. “These new financings will enable Vivint Solar to continue its unparalleled growth, while delivering simple, affordable solar solutions to our customers.”
Vivint Solar is, as of now, the second biggest residential solar installer in the US, according to GTM Research — designing, installing, monitoring, and servicing solar photovoltaic systems throughout California, New York, Maryland, Massachusetts, Hawaii, New Jersey, and Washington DC.
The company’s main selling point is the fact that you can get set up with a quality home solar energy system without any upfront out-of-pocket costs . Via a power purchase agreement (PPA), the homeowner buys the power generated by the solar photovoltaic system at a low rate directly from Vivint Solar. As it stands currently, the electricity from such a system is considerably cheaper than what’s available from the grid in most parts of the country. Vivint Solar currently boasts of having upwards of 800,000 customers throughout the continental US and Hawaii.
For more information on the solar energy leasing options available to residential customers, see: Solar Leasing Companies More Diverse Than You Think.
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These types of solar leasing companies, including Solar City are very profitable.
Their installation are subsidized and yet they don’t pass that on to you, so more profits for them. From the government “subsidy”, an accounting gimmick through another company, their installation is already profitable from the get-go. You are guaranteeing them pure profit from the monthly billing. You are also guaranteeing an escalation of price of at least 5% per year over year increase of their bill to you to cover inflation, you know, their executives needs guaranteed raises at your expense.
In return for making them super-profitable, and your house roof uglier, they market that you are helping to save the planet, hook you up with no installation cost, and a paltry savings of 5% to 10% savings of the CURRENT rate, and then they are projecting that the electric utility rates would go unabated at more than 15% per year increase year over year. And you are hooked!
Here’s what they are not telling you:
Based on what is happening worldwide, the price of electricity generated from solar PV are going down. The solar PV and the installation continues to go down. The utilities will feel the pressure, and will be forced to lower their rates. The reality now is that 5 years has passed, and the average electricity rate hasn’t raised that much, it remained at $0.12/kWH. There are planned minor increases in some utilities in some regions, but generally, when the solar PV installed prices would go down, the utility rates should fall. Fact is, SMUD has called out for bids in generating solar PV, and the lowest price that they can get is $0.06/kWH, wholesale renewable energy. Look at what is happening in Australia right now. The solar PV’s are winning the game and the utilities are forced to lower their prices or go solar themselves.
So what happens when you sign that contract of guaranteed escalation of price with utilities like Solar City and Vivint solar? You will be on the hook, and you will regret it the remainder of your life, because pretty soon, your electricity bills would be a lot higher than what the utilities would be charging you in the future because of competition, further technology refinement and economies of scale. When utilities have their price remain steady like in the past 5 years, while you have guaranteed a price escalation for Vivint or Solar City, then in a few years time, you would be paying more. And it would be painful still if the utility would lower their rates to be more competitive. Prices of electricity have fluctuated, and it could become lower given the coming competitive pressure from advances in Solar and other renewable energy.
Because you signed the leasing contract for multiple years, you are on the hook and will not get out of it unless you pay to get out of it.
Today, it might be a good idea, but not in the future. The way the solar PV is evolving and soon the installation getting cheaper, it would really be better for you to either install the solar PV yourself, or pay the project cost through competitive bidding, and as long as the generated electricty of your solar PV is a lot less than that of your utility, it would be good decision. Just do not sign away your utility contract that includes price escalation.
However if the contract says that they will guarantee that your bill will forever be lower by at least 10% or more than what the existing utilities would have billed you, then I’d recommend to sign up. But read the current fine print, you are guaranteeing their price increase independent of what is happening with the rates of current utility companies.
My next door neighbor had a no-up-front-cost system put on his house. He figures it saves him about $70 per month. I think your arguments would be lost on him.
Wait 3-5 years into the future. His savings would be lost, and he would be paying more than what the utilities would have been charging him due to price escalation in the contract.
Ironically, the leasing company would have been paid from the get go because they got the rebates. It will be fleecing out the taxpayers for the initial setup, and then fleecing out your next door neighbor the rest of his contract with guaranteed escalation of electric rate.
It is basically like the credit card. You get what you want for no upfront cost, but there is hell to pay when the interest rates start barging in.
Your next door neighbor did not get a “no-up-front-cost” system. Your next door neighbor handed over their rights to a 30% federal tax credit worth about $10,000 on a typical 6kW system at the leasing company’s inflated pricing. And if there was an available cash rebate, they handed that over as a down payment as well.
What’s worse, is your next door neighbor will easily pay more than double what they could have purchased a system for (less than $2.80 per watt before incentives).
Your next door neighbor would have saved a whole lot more than $70 per month over the term of their lease (rental) had they purchased their system instead.
If your next door neighbor wanted real $0 down solar financing, they should have got $0 down solar loan instead of a lease. With a $0 down solar loan, they would have been able to keep the 30% federal tax credit and any applicable cash rebate.
They would have gotten a much better system price (less than half the leasing company’s price) and they would have gotten tax deductible interest on their payments.
And best of all, they would have owned their system for a much better return on investment than a measly $70 per month savings on their electric bill.
It’s like Marion said a “fleecing”. No, on second thought, a Royal Fleecing”