Clean Power

Published on September 6th, 2015 | by Zachary Shahan

64

SolarCity’s MyPower Home Solar Prices Far Above Average, Pick My Solar Finds

September 6th, 2015 by  

Originally published on Solar Love.

There’s no doubt about it — SolarCity is king of the hill in the US rooftop solar market. A lot of people are inclined to “hate on the king,” especially those who might be competing with him. For a long time, we’ve had commenters complain about SolarCity, saying that it fleeces customers and is a total ripoff. While not arguing that these people are wrong, we simply haven’t had any aggregate hard data or reports to confirm this… until now.

rooftop solar

First of all, let me get a very important and counterintuitive disclosure out of the way: I’m a SolarCity investor. In other words, you can be sure as heck I’m not writing this piece to bash the company for selfish purposes. Furthermore, I’m also not planning to sell my SolarCity stock anytime soon, since I think it has competitive advantages that could very well keep it in the throne of a fast-growing market. But as an investor and a person who cares a great deal about society as a whole, I wasn’t happy to find out about this story.

The data and its interpretation come from Pick My Solar. Pick My Solar is a unique and objective startup. It takes in data from potential solar customers, then gets bids from various solar installers in the area, and then evaluates the bids based on a variety of factors before recommending a few options to the customer. This is unique since most solar lead companies simply send the customer on to installers and leave it to the customer to evaluate and decide who to go with. Comparing the options provided by competing installers, the Pick My Solar crew began to see a pattern — SolarCity’s prices were well above the pack.

In particular, Pick My Solar highlighted SolarCity’s MyPower solar loan bids. It found that those bids (only in California) came out 34% higher than the California average. The difference was nearly $10,000 for an average system! (No, I wasn’t using the word “shockingly” in a light manner.)

In a July article about the finding, Pick My Solar wrote: “The cost-per-watt on SolarCity’s MyPower contract is always consistent, no matter what the size of the project. They price systems ranging from 2.5kW to 10kW or larger at the same $5.10 per watt (cash or financed). Having no discrepancy in price is an obvious red flag. Overhead, permitting, engineering, and transportation are generally consistent costs, no matter what the project size – which means more dollars are going to profit margins on larger projects.” Yes, it is again shocking that SolarCity’s per watt price doesn’t change with large differences in system size.

Sadly, that’s not the end of the story. SolarCity is also behind the curve when it comes to turning on a solar power system. Pick My Solar found that most solar installation companies in California get the system turned on within 2 to 4 months once the contract is signed. “SolarCity is an outlier here, known to take six months or more to install a system due to backlog and inefficiencies. The MyPower contract confirms this exasperated timeline, stating that the installation will be done within 12 months!”

On the plus side, the 30-year timeframe of the MyPower warranty leads the industry. But Pick My Solar also noted concerns about the unspecified brands it uses for the solar equipment as well as the roof warranty. You can read more here.

Image via Shutterstock


Check out our new 93-page EV report, based on over 2,000 surveys collected from EV drivers in 49 of 50 US states, 26 European countries, and 9 Canadian provinces.

Tags: , ,


About the Author

is tryin' to help society help itself (and other species) with the power of the typed word. He spends most of his time here on CleanTechnica as its director and chief editor, but he's also the president of Important Media and the director/founder of EV Obsession, Solar Love, and Bikocity. Zach is recognized globally as a solar energy, electric car, and energy storage expert. Zach has long-term investments in TSLA, FSLR, SPWR, SEDG, & ABB — after years of covering solar and EVs, he simply has a lot of faith in these particular companies and feels like they are good cleantech companies to invest in.



  • Ghadian Daban
  • neroden

    Econ 101 is full of bullshit. Luckily I knew some real economics before I took it…

  • neroden

    SolarCity is providing financing to people who can’t get financing from other solar companies.

    Their business model is basically loan-sharking! Consider the extra price they charge as, well, interest on the loan.

    I’ve been told repeatedly that SolarCity is a terrible choice if you want to buy a system, but if you have no capital and have to *borrow* to get a system, they are often the best deal out there…

    Now, how this business model will work out in the long run? I have no idea. Sometimes loan-sharking is highly successful. Sometimes all the borrowers default on their loans, and then it’s a terrible deal for the company…

    • Bob_Wallace

      “A loan shark is a person or body who offers loans at extremely high interest rates. The term usually refers to illegal activity, but may also refer to predatory lending with extremely high interest rates such as payday or title loans. Loan sharks sometimes enforce repayment by blackmail or threats of violence.” – Wiki

      I someone doesn’t have a good credit rating then, by definition, are higher risk and higher risk calls for higher returns (higher interest rates) in order to offset the higher risk.

      There may be ways to borrow money at a lower rate if one has a good credit rate. If not, it may be Solar City or nothing.

  • David n

    Run away from monopolous utilities to a company that wants you to sign multi-decade contracts. That’s like moving from Public TV to Comcast (IE, no change at all). You can do better Musk.

  • JimBouton

    I have had four people in my neighborhood show me their SC offers and they’re much higher than mine (4 cents per kwh back in 2013) by a significant margin. I think SC realized that they could charge higher prices, so if people are still buying, than why not?

    I went with SolarCity over purchasing a system mainly on price, but I did like that I was only responsible for the power and not the equipment (maintenance and reporting) in a PPA.

    • Interesting. I often remember your story/deal, which has been a counterbalance to the typical story of SolarCity’s prices being much higher. Hard to know the entire rationale behind it without being in the rooms of the top decisionmakers while discussing the matter.

  • Bradley Wiskowski

    SolarCity’s MyPower loan is great. 4.5% APR without having to perform a Debt-to-Income ratio check is unheard of. With a full 30-year warranty that covers everything INCLUDING the inverters! It’s a FICO 650+ sign-and-drive. Love it!

    • newnodm

      1) Average home ownership is 8 years
      2) Why would you want to sign a 30 year agreement with any corporation?
      3) The $10K premium over other sellers will never be recovered in maintenance.
      4) In 10 years a new system will probably not cost $10K.

      The reality for most people is that Solarcity will need to be paid off when selling the home. Since a thirty year loan is almost all interest in the beginning years, the payoff will be at almost full price.

      • neroden

        Great deal for SolarCity… if their borrowers are creditworthy.

    • neroden

      4.5% APR on a loan which is $10,000 more than it really needs to be…

      ….could be very profitable for the lender. If the borrower doesn’t default.

      If you have cash or a good enough credit rating, you’d want to go with someone else.

      The thing is, SolarCity is very clearly targeting the low-credit-quality buyer, who needs to get a loan and doesn’t want a debt-to-income ratio check done. It’s a business model.

  • David Morton

    Totally bogus hit piece. You are comparing apples to oranges. Solarcity is different from its competitors in very major ways that you just ignore.
    Also “The difference was nearly $10,000 for an average system! ” is a flat out lie. Your calculations are ridiculous and you don’t even explain them

    • newnodm

      Yet you fail to mention the “major ways” solarcity is different.

      • neroden

        They lend money. That’s the major difference. They’re actually competing with banks, not with solar installers.

    • Not sure how you can call it a hit piece (as I stated at beginning, I’m a SCTY investor, and I have no intention to buy or sell as far into the future as I can see — so I have no reason to write a hit piece). I also don’t know why you are calling it bogus. What is bogus about it?

  • UKGary

    $10,000 price difference between SolarCity and the average?

    Shocking – In the UK if you shop around you can BUY a 4kW system outright for $10,000. What’s more, you will generally have it installed far faster – often within a month or so.

  • Larry

    Is this Analogous? You have a choice to purchase a Cadillac or a Chevrolet. Both are manufactured by GM. Both have similar warranties. Bells and whistles packages are similar. One sells for substantially more than the other. Buyers choice-no one puts a gun to their head in the showroom.

  • Phillip Kopp

    This is a very bad realization if you consider FTC and the fact that solar cities margins are less than the $10k overpricing. I.e. The company is a house of cards losing money hand over fist, just like the rest of Elon Musks companies. All perfect shams to make him a multi billionaire while losing all their money in the process and loving him all along. What a joke. Wake up people. For the last 5000 years there’s been a simple term for this. It’s called a SCAM!!!

    • Bob_Wallace

      Falls short of standards set for this site…

      • JamesWimberley

        But we are all keen to make money working from home with Google ….

  • Jeff

    You think SC’s competitors are offering lower prices out of the kindness of their own hearts? You think that if they could offer SolarCity’s prices they wouldn’t? It’s capitalism people, supply and demand, there is nothing “wrong” with SolarCity charging higher prices if their brand name allows for them to sell at a premium. The implication that there is something ethically wrong with this is laughable. economics 101.

    • wattleberry

      Ordinarily I’d have no argument with that but, like health, lighting, heating and power are in a special category where the law of the jungle has to be tempered because they can be life and death issues. A classic example was in a recent UK spring when an unusual late cold spell resulted in 30,000 premature deaths amongst the oldest and least pecunious people.

  • GlennM

    Hi Guys,
    While I agree with the conclusions that SC is too expensive, I tend to disagree that SC should drop prices.

    We live in a “capitalist society” SC should charge as much as the “Market” will bear, the fact that their customer base is growing so fast, that they are the largest and that there is a waiting list means that they are NOT “overcharging”.

    They are a commercial organisation tasked with making as much money for their shareholders as they can, they are not a charity.

    Many, many Americans lease cars, few pay all the cash up front, although the interest and lease charges significantly inflate the price. A “dollar down and a dollar a week” seems to be the American way.

    I own an IPhone…friends say the “android devices” from Kamakusuki corp are better value for money…I am sure they are, but I want a “big brand” there is comfort in having a big organisation behind the product.

    We all know the SC and everyone else is heading for a 30% cut in price at the end of 2016….if their order book is full they would be nuts to cut prices before then.

    Having said all of that I am sure their prices will over time be more aligned with the competition as the “Market” becomes more educated, just as the “Apple premium” has become much less over time.

    Regards

    GlennM

    • wattleberry

      And now an integral component of the trading arena is Internet discussion, one weapon in the perpetual anti-monopoly war.

      • GlennM

        Better information is always good for trading and commerce.

        However I do not understand your reference to a “perpetual anti-monoploy war ?”

        PV is one of the least monopolistic industries the planet has ever seen. The barrier to entry is relatively low, there is a plethora of IP and technologies available from dozens of research groups around the world. As many have commented PV has the opportunity to “democratize” power and break many monopolies.

        No matter how well Solar city does they are unlikely to monopolise anything ?

        The future is bright… and solar powered.

        GlennM

        • wattleberry

          Fine, but PV is still in its infancy and no sector is immune from monopolistic drift, to me, in association with political lobbying, the only real weakness of capitalism. As with democracy, no system is ever ‘safe’ and has to be constantly subject to scrutiny to avoid tyranny.

          • GlennM

            Cannot disagree with that….

            “The price of freedom is eternal vigilance”

            Leonard Henry Courtney, 1st Baron Courtney (6 July 1832 – 11 May 1918)

    • Marion Meads

      Their sales tactics would need some oversight. It is like bullying people into signing the expensive contract.

  • Shane 2

    Good for Elon’s profits.

  • Bryan

    Not to boast, but I am probably the single most active contrarian to the TPO financing model, having posted thousands of comments, published hundreds of videos and hundreds of active websites concerning the TPOs much higher cost to the consumer.

    For the past 5 years with the TPOs numbers growing at an unbelievable rate, I had not seen much in the way of results in getting through to the public’s mindset and have had my moments of giving up on the endeavor of educating the public on fair market value pricing. But I now believe that my efforts are finally paying off. I am finally witnessing a shift both in the media and in comments posted by consumers.

    Both the media and consumers, finally seem to be coming to the realization that solar leases, PPAs and balloon payment loans with their annual payment escalators are three of the most expensive means of having solar on their homes and businesses. Rates as low as 7 cents per kilowatt hour are now available from local dealers across the country while the TPOs are still quoting 12 to 15 cents per kWh.

    I am of the opinion that once the consumer’s mindset has reached a fast approaching tipping point regarding the true fair market value pricing of solar, you will witness a rapid collapse of the TPO business model. As an investor in a TPO company and the author of many great articles, I greatly appreciate your honesty in writing this article. It shows, once again, without a doubt, what a great, non biased media organization Cleantechnica is.

    • Matt

      TPO always shows up as big reason why US pays so much more than Germany for home solar.

      • And “acquisition costs,” which could be a good place to stuff some costs you don’t want showing elsewhere.

    • Omega Centauri

      So few people know how to do a cost/benefit analysis, nor have confidence in the technology, that they are easy targets for the salesstaffs of the large TPO outfits. Even those who buy or take a loan, are attracted by the siren song “we will monitor and maintain it for you”. Even as someone who knows better, I figure having a big name standing behind the product will probably help when it comes time to sell the product.

      • Exactly…

      • Marion Meads

        It is hard to argue the Third Party Ownership salespeople even after I showed them on a spreadsheet why I would lose 10 times more money for the 25 year contract compared to having to own it by buying from their competitor, and then financing via property tax, to give me a net effective cost of $1.20/Watt installed.

    • Thank you much. I believed the argument, and I think referenced it many times, but is great to get this info from Pick My Solar.

      Of course, if I think at some point that SolarCity is losing its competitive advantages, that Silevo isn’t as promising as expected, or that SolarCity isn’t changing course enough on its offerings, I’ll pull out. Luckily, I get to watch what it is doing quite closely since I cover it for a living. 😀

      • Brooks Bridges

        Please let the rest of us know immediately. I have shares. I too am sorry to hear this report. But easy to believe:

        I had an unpleasant experience with them when deciding to go solar. I said I definitely wanted to buy, not PPA. The two sales people I dealt with were shallow and would not clarify the “facts” in the quote relative to taxes, SRECs, and payoff time. Said they do 200 PPAs for every buy. I said good bye.

        I thought the PPA route might be fine for people without funds to buy. But this article – lets just say I’m very disappointed.

        • I definitely will. I think SolarCity still has some strong competitive advantages and has good aims. But it’s a complicated company and it’s hard to be a fan of an overpriced product. Others here seem to be, bcs “capitalism,” but that’s not really a decent argument in my book.

          Honestly, we get a pretty big number of complaints about them here, but… there are always going to be more complaints when a company gets bigger, and SolarCity is much bigger than its competitors.

          It’s really hard to weigh the company’s pluses and minuses, imho. I have no intention to sell (or buy more) any time in the foreseeable future, but I’m eager to learn more.

      • Marion Meads

        I think SolarCity is priming itself for a class action lawsuit. The way their salespeople are hurrying you up to sign the contract

        Here’s why they should be sued:
        First, they lied to me that you can cancel the contract anytime up to the point before they start the installation.

        Second, they will not send you the formal quotes unless you sign electronically. So I signed electonically, and then received their quotes that I approved electronically, but when I read the fine print, the contract in fact says that I only have 3 days to cancel it, otherwise it would in full force, inescapable.

        Third, you need to snail mail to their Document Processing Center in Las Vegas, and you should have some proof that you mailed the cancellation notice. How come that everything else is electronic including the signing of the contract but not when it comes to cancelling it? The only reason I know about the cancellation is that it is required by law, but then again, 3 days only? And snail mail would need certified mail or proof of mailing the cancellation notice. The only given time for you to mail your cancellation is 3 days! This is not possible with ordinary mail. So I have to use USPS Priority Mail, the day that I received the contract and signed and mailed the cancellation after reading it through, the same day. And mind you, the date all over the contract is one day before you electronically signed it, but was glad that there was a date that I electronically signed it, and it counts from that date.

        And I believe their sales tactics call for a class action lawsuit.

        So if you did not promptly cancel SolarCity’s contract, you’re in it, hook line and sinker! The safe bet is not to call them in the first place. They’re using the same solar panels and equipments same as other installers. Just really pricier.

        • Bradley Wiskowski

          Marion – Sadly, you’re mistaken. SolarCity customers, if they’re unable to overcome any objection from the time of initial agreement signing to installation can cancel their agreement free of charge and no penalty whatsoever. The rescindence notice is written in the MyPower agreements directly above the three day rescindence clause that all sales agreements in each state has.

          Secondly, SolarCity is the ONLY 30-year full warranty, vertically-integrated solar company in the nation with a market share of well over 60% in most demographics. They also are one of the only solar companies third-party escrow-backed by Google, Bank of America, and even Elon Musk. So when other solar companies like Solundra go out of business, we’ll still be around. There’s no subcontract work with SolarCity, ever. They also
          warrant, insure, and replace each home’s inverter at NO ADDITIONAL charge after 10 years when most solar companies use just a manufacturer’s 10-year warranty. So the best bang for the buck is with SolarCity.

          You also may not have noticed that SolarCity is constructing the largest solar manufacturing plant in New York this side of the hemisphere has ever seen in Buffalo, New York! The reason is when the 30% Federal Tax Credit goes away next year, we can grow, scale, and drive down solar costs without subsidies or tax credits below grid parity in every state! And as the Federal Clean Air Act gets mandated by every state, we’ll be there. Fully insured and everything.

          Bottom-line, SolarCity’s done a tremendous job growing, scaling, and making solar affordable and achievable for homeowners all across the map. They didn’t become the best because they’re the biggest. They became the biggest because they’re the best. Proprietary sleekmount systems, strong financial backing, intelligent leadership, and a passion for people is why this company continues to succeed.

          • Bryan

            Sure, but who’s paying for that warranty ? It certainly isn’t the leasing company. It’s the homeowner who’s OVERPAYING for that 30 year warranty with the leasing company’s much higher pricing.
            Today, a homeowner can easily purchase a complete, installed system for less than $2.05 per watt after ITC and purchase an extended service/materials warranty for a few nickels more per watt and pay far, far less than what the leasing companies are charging.
            Module pricing has dropped well below .50 cents per watt and even that won’t save the overweight leasing companies once the ITC is reduced. The TPOs have far too much overhead to keep expanding, let alone stay in business once the ITC is reduced, gigafactory or no gigafactory. Their customer acquisition costs are far too high and with local dealers now offering rates at less than 7 cents per kWh, the leasing company’s days as the king of the hill are numbered.

          • neroden

            I’m not sure. What about all the people who simply don’t have the cash? Won’t they still want leases or PPAs?

            Do you think local banks will start making home improvement loans at low interest rates to install solar panels from local dealers? That seems logical, but it doesn’t seem to have happened much…

          • There have been a lot more loans for solar systems coming onto the market in the past couple of years.

          • Joseph Dubeau

            lip stick on a pig.

    • JamesWimberley

      “As an investor in a TPO company and the author of many great articles, I
      greatly appreciate your honesty in writing this article.” This sentence does not mean quite what you think it does.

      • Ryan Seo

        yeah that part gave me a laugh

    • neroden

      “Both the media and consumers, finally seem to be coming to the
      realization that solar leases, PPAs and balloon payment loans with
      their annual payment escalators are three of the most expensive means of
      having solar on their homes and businesses.”

      Mortgages are also the most expensive way to get a house… it’s invariably cheaper to buy in cash, and it’s often cheaper to rent! Yet people get mortgages all the time…

  • Omega Centauri

    How much of this premium is “justified” by consumer handholding . i.e. we are the biggest kid on the block and won’t go away, we will monitor your system for you, and fix any problems…..? I’ve been surprised by the degree that would be solar customers -even those with technical or construction experience are intimidated by solar, they fear it might go defective and they will be left up the proverbial creek -and might not even know if the system is badly underperforming. So reassurances backed up by the big boys seem to be worth quite a bit in terms of customer confidence. In any case FUD which exploits this lack of confidence in the technology seems to be working.

    • Good question. Not sure. But I imagine a lot of customers simply don’t compare prices and don’t realize SolarCity charges a lot more. Of course, as some others have said, hard to blame SolarCity rather than the customers. If it has ~60% of the market and is simply trying to be financially successful in the long run, and customers aren’t going elsewhere, why change?

      • Omega Centauri

        Well. More money for Elon doesn’t equate to the maximization of the growth of solar. I don’t know how many people I know who wanted to do solar, but balked when they heard the price. If they just tried one (or a few) of the premium installers, that could mean they are giving up needlessly because they didn’t shop around.

        Of course my agument about wanting a handholding contract for possible future sale of the property might still matter. I remember the old adage about mainframe computers “no one ever got fired for buying IBM”.

        • 1st part: yeah, but i imagine they are putting the $$ back into growth rather than hoarding it.

          2nd part: great point.

  • wattleberry

    Can anybody please reassure us by confirming Solar City needs all the profits to invest in R&D ? It’s the obvious explanation .

    • JamesWimberley

      The obvious explanation is that they can get away with it. SolarCity’s actual costs are below $3 per watt, including overheads, according to statements to investors.

      • Marion Meads

        Get rid of the ridiculous unneeded overpaid executives! They can be replaced with an expert system knowledge base for making excellent decisions.

        • Bradley Wiskowski

          The same can be said about Enron. Haha. SolarCity has really strong leadership though. Elon Musk and the Rive brothers who run SolarCity are inspirational, industry-disruptive people.

        • Paul11710

          Marion, the compensation of SolarCity’s executives are publicly disclosed and searchable. They all receive a salary range in the 200ks… not the multi-million figures you are used to seeing from Execs. The public documents also detail how the compensation strategy is in-line with similar business model and industry companies. On top of that all you will see that the CEO SELF-ELECTED NOT TAKE ANY CASH BONUS even though he earned it last year! Those are very reasonable compensation plans for a publicly traded company as large as SolarCity.

          • Marion Meads

            You didn’t know about their stock options… Steve Jobs gets $1/year salary but then the lower tax salary capital gains that the 0.1% of the population gets a break from…

          • Paul11710

            I focused my reply on cash outlays because I thought you were suggesting that SolarCity’s costs are so high because they need to pay vast sums to executives. Issuing equity options to the executives wouldn’t directly affect operational costs that are passed on to consumers.

      • Marion Meads

        The REAL reason why SolarCity price remains sky high and they wanted everyone to be on PPA or lease deals is that they get the Federal Tax Credits which if the base is high, and proportionately are the tax credits. If they lower the quoted price, then their rebates would be lower too.

        The fact is, 30% of the sky high quoted price is equal to their cost of installation but cook the books to report that it is higher than that. We should not be fooled by this accounting Voodoo. 30% of $5.10/Watt is $1.53/Watt. If we use Germany as the standard, that are earning a little bit of profit at installed price of $1/Watt, then Solar City must already be earning at least $0.53/Watt from the Tax rebates alone. The PPA paid by the customers is the real bacon and icing on top of their obscene profit already. So the high prices steers everyone into PPA or lease deals and not into outright purchase where SolarCity earns only a third of possible profit.

        I’d rather have the tax subsidies be stopped as it is being abused by the likes of the SolarCity and hence they will not lower their prices because of this lucrative loophole allowing rebates to installers that will own the system instead of the homeowners.

        • neroden

          I haven’t quite worked out how the tax credits interact with the PPAs/leases, but it’s quite obvious that SolarCity’s business model is moneylending. Anyone who can afford to buy their panels in cash avoids SolarCity.

      • neroden

        SolarCity spends ungodly amounts on marketing. I’m about 1/3 of the way through the annual financial statements.

    • I do think their overall aim is to help the world… while making a good bit of money. I don’t think the Rive brothers are really as concerned about helping society as Musk is, but they seem like decent guys. Looking at their finances like a typical investor does, there are straight financial concerns and criticisms. They’re not sitting on top of the world from that perspective. So there are reasons to get as much money out of customers as the market allows.

      Furthermore, if they want to grow, they do need to put a lot in R&D, and they are doing that. I would not be surprised if the Silevo buy was a Musk idea. In any case, though, it seems like a good idea, but requires a lot of investment. In the end, that arm, SolarCity’s huge share of the market, its ability to adapt and get creative to expand, and Musk as chairman are key reasons I’m a stockholder. Generally speaking, I think the financial case for a financially sustainable future is good, but many investors don’t feel so confident about it, and I guess it does depend a lot on the “default rate” of the customers.

      And again, generally, I’m happy that SolarCity is convincing more people to go solar. That said, I always encourage people to check prices from as many sources as possible, and I think if you do that, SolarCity doesn’t often come out on top. This research seems to confirm that.

  • Ivor O’Connor

    Pick My Solar is quite the interesting business.

    Pick My Solar was founded in 2013 by Max Aram and Chris Blevins. As social entrepreneurs and environmental stewards, Max and Chris are passionate supporters of solar energy. They entered the solar industry with the dream of putting panels on every compatible rooftop in America but quickly determined that customer uncertainty regarding the bidding and purchase process was a major deterrent to industry growth.
    After examining this problem, they concluded that the solar sales process was too difficult for homeowners to navigate, and that all of the various finance options were confusing. Max and Chris made it their mission to simplify the process, drive down costs and provide the consumer advocacy necessary for solar to achieve broad market success.

Back to Top ↑