Solar Rooftop Customers

Solar Rooftop Customers

April 24, 2015 | By Keith Martin in Washington, DC

SOLAR ROOFTOP CUSTOMERS are choosing in large numbers to make direct purchases of solar systems rather than sign long-term leases or power contracts.

According to a UBS research report in March, EnergySage.com, an online platform, estimates that 70% to 75% of customers end up borrowing to finance direct purchases after comparing direct purchases to solar leases and PPAs. SunPower Corporation reported in a fourth quarter release that about two thirds of its customers choose direct purchases.

UBS says solar rooftop companies are not passing through falling solar panel prices fully to customers under leases and PPAs since pricing under such contracts is a percentage of savings from utility bills. It says the cost of a direct purchase was close to $5 a watt three years ago, but has fallen to the mid-$3 range in 2015. System costs vary significantly by state. The following are current average costs for customer-owned systems: California $3.75, Arizona $3.45, Colorado $3.75, Massachusetts $4.10, New York $3.95, North Carolina $3.75 and Texas $3.20.

Some solar companies are rolling out long-term installment sale contracts as a form of financing for direct purchases for customers who do not want to lease or sign PPAs. The installment sale contracts can run as long as 30 years.

However, the scale could tip back in favor of leases and PPAs if Congress extends the 30% investment tax credit for solar equipment put to business use while letting a similar residential credit lapse for homeowners who own their systems. Both credits are currently scheduled to expire at the end of 2016.

Meanwhile, the battle between solar rooftop companies and utilities took a new turn in late March as a prominent solar company filed suit against the Salt River Project, an Arizona utility, accusing the utility of violating federal and state antitrust laws by imposing distribution charges of $32.44 to $57.88 a month on customers who install rooftop solar systems plus demand charges on the kilowatt hours each customer uses during its most intensive 30-minute peak period each month. The demand charges are expected to add another $30 to $125 a month, depending on the season. Salt River is also reducing the amount it pays for electricity through net metering.

The utility is not subject to federal or state regulation over its retail rates.

The solar company says the charges amount to $600 a year for the typical solar customer and represent a 65% increase in such customer’s utility bills. The utility approved the new rates in late February. It increased rates for other residential customers at the same time by an average of 3.98%. Applications for new solar installations have fallen by 96% since the charges were imposed. The solar company has 7,000 customers in the Salt River service territory. It was averaging 400 new installations in the six months before the new charges were imposed.

The complaint says the utility is violating antitrust laws by “using its market power to exclude competition by punishing customers who deal with competitors.” The case is in the federal district court in Arizona. A jury trial has been requested.

by Keith Martin in Washington