The No Bull$#*! Crash Course On Solar
A Basic Rundown Of The 3 Strategies
August 3rd, 2015. San Diego. I just accepted an offer at Sunrun, and I’m sitting at my manager’s desk filling out employment paperwork.
Me: “It’s amazing that this many homeowners have gone solar. I mean, to think….almost a million people have done their part to help stop climate change. It’s just incredible.”
Andrew: “People don’t go solar because it’s green. People go solar because it’s cheaper than what they are already doing.”
It’s funny to think how naive I was when I first started in the industry. I dismissed solar as a tech toy reserved for those with deep pockets. And I don’t think I was alone in that paradigm. I think this misunderstanding prevents a vast number of people from exploring solar in any more depth.
I often channel that empathy when working with folks who aren’t as up-to-speed as I am in solar. From the outside looking in, solar seems like a thing that rich hippies do. Peel back a couple layers of the onion, and you find that solar is for people from all walks of life.
This story is to serve as a simple guide to see which route would work best for you. There are 3 basic strategies to go solar. As long as your house qualifies for solar — more to come on this later, follow me to get notified on new stories— there isn’t much to stop folks from making the switch, most especially including a modest bank account balance. I can say with confidence that there is a path to solar for you, it’s just a matter of finding the right one.
Strategy 1: Drop That Bill Low, Low, Low
Think about how many bills you have per month. Your cell phone. Your car insurance. Your internet provider. With each one, how many different companies can you choose from? At least a few. Competition is typically good for the consumer. In almost every part of our transactional lives, a marketplace with many players keeps prices down and sweetens the deal. Geico claims they can save you 15% on car insurance. Sprint says they’ll cut your cell phone bill in half. DirecTV reminds you to get rid of cable to save money.
For more than 100 years, the power grid has been completely void of this competition. It’s very common in many cities to have exactly one choice for an electricity provider. Don’t like their prices? Hate their customer service? Well you could always switch to Yankee Candles and run your TV with a bicycle generator, I suppose.
And then Lynn Jurich and Ed Foster met at Stanford Business School and hatched a little idea.
When Sunrun debuted in 2007, it wasn’t just another solar installer. Nay. The founders envisioned a dramatically different approach to solar. Instead of charging for the solar system, they decided to only charge for the electricity that was generated. If the utility charged a homeowner $.40 for a unit of power (we call it a “kWh”), Sunrun would charge $.20. Same product, lower price.
It’s called a “PPA”, which stands for “Power Purchase Agreement”. Sometimes it’s referred to as renting or leasing.
It then became a simple question for homeowners. When given a choice between expensive dirty power, and renewable affordable power, what would you take? Over 100,000 homeowners agree that buying electricity from Sunrun is way more affordable and practical than buying it from the power company.
It’s ironic really. I get a lot of people that are apprehensive of solar because they presume they can’t afford it. Frankly speaking, those are the people who need solar most. If your average power bill is $150, wouldn’t you rather pay Surun $120 for the same amount of electricity?
Strategy 2: Thanks For The Free Solar, Power Co.!
How much did you spend on electricity over the last year? How about over the last decade?
Whether you have paid one power bill or one-hundred, you have exactly nothing to show for it other than check stubs. Show me what you’ve earned for paying all those bills. Point to it. The power’s been used. It’s gone. Your hard earned cash was sent to the power company for a product that you used up long ago.
So here’s a fresh idea…how about instead of paying for power, you take those same funds and allocate them towards paying down a loan on a solar system? You’d use the solar system to create your own juice, and kick the utility to the curb.
Let’s say you are spending $1,000 per year on power, and a solar system would cost you $8,000 after tax incentives. To make the math easy, let’s pretend we are in a fantasy world where electricity prices don’t rise every year. (That’s quite a fantasy. Rates go up about 5% a year.) You could either:
- Continue to buy electricity just like you have been, or…
- Make a loan payment that’s no larger than the power bill it replaces
Now, let’s fast forward 10 years. If you had stuck with the power company, you’d have nothing to show for your payments. You’ll be sent a new bill next month. And the month after that. On and on until the end of time.
If you went solar, your solar loan is now paid off, and there are no more monthly payments. You didn’t spend any more per year than you already would have with the utility, but yet now you’ve got a solar system up on the roof. Magic! Consider yourself an alchemist of solar. The panels still have 15 years left on the warranty, and now each and every year you are keeping cash in your pocket instead of paying a power bill.
It’s a smart way to reallocate the funds you’d already spend anyways. Instead of paying your utility a monthly bill for the next decade, wouldn’t you rather spend those funds on a solar system for your roof?
Be sure to thank your utility for the free solar that was paid for with the money that would have otherwise gone to them.
“Getting a loan for solar is the only way I can think of getting something for absolutely nothing.” — Daniel Maduell
The Money Maker
I’m careful to use the word “investment” because I think it’s one of the most overhyped and misused words in sales environments. It’s a misleading label for an expensive purchase to justify it’s cost. A jet ski is not an investment. Nor is a timeshare, nor a car, nor a gold watch. Heck, not even your house is not an investment.
An investment is a place where you park your cash in order to make more cash. And putting cash towards a solar system is one of the most lucrative spots to make your money multiply.
Imagine you’ve got $8,000 to invest, and you get a solar system that produces all the electricity you need. If you were spending $1,000 / year on power, then your initial investment will yield you the same amount annually — $1,000. That’s a 12.5% return. You invested money, and now every year 12.5% of that comes back to you.
I often see solar plans with an ROI as high as 20%. In 5 years, you’ll return all of your investment. And now the real fun begins, you have 15–25 years ahead of you of electricity that doesn’t cost you anything to produce. I’m consistently able to show homeowners plans that save them $50,000 to $100,000 over a 20 year period, compared to not going solar.
Where else can you experience such a return? The Stock Market? Maybe 8–10%, but you’ll have down years that drag that down. A bond? No way! Savings account? Please.
There are very few investments that can return your capital in such a short period, with such little risk. Sure, there is a downside with solar. I suppose the sun may not rise tomorrow. (Technically speaking, we even have a plan that hedges against this risk.)
We’ve got plans where you can eliminate literally all of the variable costs. Like any investment, ongoing expenses can severely limit your return. That’s why many people opt for our plan where all maintenance, insurance, upkeep, and repairs are covered for 20 years. There is precisely $0 in additional expense after the initial investment is made upfront.
Forget about electricity, and forget about climate change. This is simply about making your money work for you. I don’t care what the context is…if someone offers you a deal to make a consistent 10 — 20% return, you take it. Except if it’s from your sketchy cousin Vinnie. You learned that lesson.
To add icing to the cake, solar “income” is tax free. If you make $1,000 in the stock market, you’ve got to pay taxes. If you keep $1,000 to yourself, instead of paying the power company, it’s not labeled as income.
Curious to see what solar can do for your home? Shoot me a text right now. Seriously try it out. 858.23o.2o33
