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Many homeowners don't know installing solar can cost as little as zero dollars upfront because of an option known as solar power service. © Lianem | Dreamstime.com

Americans are generally in the dark when it comes to what it costs to get their energy from the sun, according to a Harris Interactive poll commissioned by Sunrun, a home, solar power service company. The poll results showed  97 percent of Americans overestimate the cost of going solar, while nearly 8 out of 10 of those who do not already have solar panels say they would install solar if costs were not a factor, and 44 percent would go solar within the next year if that was the case.

While only 3 percent accurately understand that installing solar can cost less than $1,000 upfront, 4 out of 10 U.S. adults (40 percent) think it requires $20,000 or more in upfront costs, grossly overestimating the true cost of installing home solar.

Of course, much of this is good news for Sunrun because it shows there is a hefty market out there for what the company does. Basically, it provides a way for homeowners to go solar without the high upfront costs. Sunrun owns, insures, monitors and maintains the solar panels on a homeowner’s roof, while families pay a low rate for the energy and get a fixed electric cost for 20 years. Similar arrangements have different names. For example, in the commercial property market these schemes are sometimes called solar power purchasing agreements, or SPPAs. The company claims that buying solar power as a service, rather than as a system, has vast appeal. Over the past 12 months, it says market share for solar power service climbed steadily in California and reached about 75 percent of the home solar market in February 2012. Similarly, to date in 2012, solar power service share of the Massachusetts market is over 80 percent.

There apparently is also the momentum of capital behind solar power service with the recent announcement that U.S. Bancorp created a new renewable energy tax equity fund with Sunrun to support the purchase and installation of more than $150 million in residential solar systems across the United States. This is the Sunrun’s sixth renewable energy tax equity commitment from U.S. Bancorp.

The EPA lists advantages and potential disadvantages of SPPAs. Besides the obvious environmental benefits the agency sites many of the same advantages pointed out by the companies that sell them. Some disadvantages cited by the EPA are:

  • More complex negotiations and potentially higher transaction costs than buying PV system outright.
  • Administrative cost of paying two separate electricity bills if system does not meet 100 percent of site’s electric load.
  • Potential increase in property taxes if property value is reassessed.
  • Site lease may limit ability to make changes to property that would affect PV system performance or access to the system.
  • Potential trade offs related to REC ownership/sale.

SPPAs are not widely available yet and there may be some limitations based on your power company. For example, if you get power from an electric cooperative and it does not allow your system to sell power back to it, then either you, or the SPPA provider, won’t get the credit for excess power generated at your home. Then too, this is something we may start to see creative coops offer since it would be a clear path away from fossil fuels while still offering a dependable revenue stream.

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