The Sunshine State has long thrown shade against third-party ownership of PV systems, but it looks like a fine line danced by Sunrun is bringing light to a new market opportunity.
On Friday, the Florida Public Service Commission (PSC) issued a declaratory statement that a fixed 20-year lease on solar energy equipment does not equate to selling electricity nor being an electricity utility, as such, a fixed 20-year lease is a legally allowable contract – and the lessee is legally allowed to make use of net metering. Power purchase agreements (PPAs) for behind-the-meter solar remain illegal.
The statement highlighted three specific point that drove the PSC’s decision:
- Sunrun’s residential solar equipment lease does not constitute a sale of electricity;
- Offering its solar equipment lease to customers in Florida will not cause Sunrun to be a public utility under Florida law; and
- The residential solar equipment lease will not subject Sunrun or its customer-lessees to Commission regulation.
Sunrun brings solar to multifamily affordable housing
Technically, Florida has always allowed for leasing of energy equipment. However, the law states that you cannot sell the electricity as part of that transaction, only a fixed price on the leased hardware. The logic goes, if you’re selling electricity then you must be a public utility – and if you’re a public utility you have to be regulated by the PSC and follow very specific rules, for instance you must provide electricity to your region 24/7/365. Obviously, a leased solar power system by Sunrun isn’t in the business of 24/7 generation.
This structuring of the law in Florida stems from a 1988 case where a company tried to build a co-generation plant on private land, to feed a single customer. The PSC ruled against it – setting the logic by which third-party ownership would be limited for 30 years. Interestingly, the company was that was told it couldn’t build the plant to feed to individual customer was a subsidiary of an electric utility.
And again, while ‘leasing’ of equipment has always been allowed – the nation’s leaders in residential and commercial solar leasing never ventured into the state. These groups had always focused on writing 20-year PPAs, far longer than a standard equipment lease that ranges from two to ten years. Additionally, no large players thought the legal grey area was worth venturing into.
How Solar Batteries Work
Third-party solar’s domination of the national residential solar market has waned, after peaking at greater than 70% of all installations. However, there are still many homeowners who aren’t interested in or have challenges in owning a PV system, and this should drive more installations. Due to low labor costs, light contractor regulation and relatively strong sunshine – these lease companies should be able to offer a very compelling product.
It remains to be seen how commercial and industrial (CI) development groups will react to this ruling. Again, solar leasing has been legal and CI groups have long had access to more sophisticated finance such as long term bank finance. Therefore the market growth could be muted, or it is possible that many groups has simply ignored the market due to the limitations and may reassess now.
Time to update the projected installation volume models.
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Commercial Solar Guy is a commercial utility solar developer, general contractor for commercial and residential solar, as well a consultant. We construct projects in MA, RI, NY, and soon PA.
Sunrun (NASDAQ: RUN) a residential solar company. Sunrun offers a variety of solar solutions, including solar leases, solar loans, solar systems, and more. It was founded in 2007 and is based in San Francisco, California.
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SunRun Frequently Asked Questions (FAQ)
- When was SunRun founded? SunRun was founded in 2007.
- Where is SunRun‘s headquarters? SunRun’s headquarters is located at 595 Market Street, San Francisco.
- What is SunRun’s latest funding round? SunRun‘s latest funding round is IPO.
- How much did SunRun raise? SunRun raised a total of 986.6M.
- Who are the investors of SunRun? Investors of SunRun include Investec, Sharespost, Foundation Capital, Accel, Sequoia Capital and 10 more.
- Who are SunRun’s competitors? Competitors of SunRun include Swell Energy, GridWiz, Vivint Solar, Flooid Power Systems, REC Solar and 10 more.
- Predict emerging trends
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- Stalk the Smart money
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- Kill analyst data work
Compare SunRun to Competitors
Sungevity is a technology-driven solutions provider, offering service and choice to residential and commercial solar energy customers. Sungevity’s asset-light business model focuses on value-added in-house services for software platform development, project management and customer experience; this FOCUS is enabled by a strong, scalable network of third-party providers for asset-intensive and/or lower margin provision of hardware, installation services and financing.
Borrego Solar Systems installs commercial, residential, and public sector solar electric systems throughout California and New England.
Akeena Solar is one of the largest installers of residential and commercial solar power systems in California.
Orb Energy is a residential and commercial solar system integrator and financier and installer. It manufactures its own range of solar photovoltaic panels and designs, installs, and services solar systems, along with providing critical finance for up to five years to its commercial and industrial customers. The company was founded in 2006 and is based in Bengaluru, India.
Self-funded startup now seeking outside funding aims to build solar thermal systems that supply hot water and heating for commercial, corporate and residential applications. Its target market is green home architects and builders.
Pvflex Solar produces commercial and residential solar panels.
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At a Glance: Sunrun
Specializing in residential solar and energy storage solutions, Sunrun’s primary goal is to make the transition to solar as easy and stress-free as possible for homeowners.
Sunrun’s Solar Advisors are experts in the field and provide one-on-one consultations to guide you through your solar adoption journey. They provide daily system monitoring, free maintenance, repairs, and comprehensive insurance throughout the life of your solar system.
Sunrun’s proprietary software significantly influences its custom solar design services. It generates a detailed analysis of your home’s energy usage and production potential, so the company can design a system that maximizes your energy savings.
Homeowners get bumper-to-bumper warranty that covers their solar systems from top to bottom, including all parts and labor, and free equipment replacement and system repairs. It also includes a guarantee that roof penetrations are watertight for ten years.
This guarantee provides much-needed peace of mind and assurance that the solar system will operate at peak performance.
Sunrun vs SunPower: Solar Power
Let’s look at a few solar panel elements where Sunrun vs Sunpower can be compared.
Sunrun sources their solar panels from third-party suppliers. In contrast, SunPower has partnered with Maxeon Solar Technologies—a reputable manufacturer that produces high-quality solar panels with a proven track record of durability and efficiency.
SunPower offers its own Maxeon Solar line, with A Series, X Series, E Series, and P Series.
Installation Costs and Financing
While Sunrun’s average installation cost is around 3.93 per watt, the figure stands at 4.60 for SunPower. It’s worth noting that the exact installation costs vary depending on various factors, such as roof size, location, and additional services required. For some more perspective, NRG Clean Power typically completes similar projects for right around 3.00/watt. Get a price here.
When it comes to financing options, Sunrun offers lease, loan, and PACE programs, while SunPower offers only loan or mortgage options.
PACE (Property Assessed Clean Energy) is a financing program that helps homeowners and commercial property owners pay for energy-efficient upgrades, such as solar panels, through a property tax assessment. Offered by many local and state governments, the PACE program lends funds for these upgrades, which are then repaid over time through an assessment of their property tax bill.
Effortless Energy Independence with Sunrun
Backed by the prowess of the Tesla Powerwall and LG Chem, Sunrun offers its Brightbox™ solar storage service. The difference between Tesla Powerwall and LG Chem is that the former is for whole-home backup, while the latter is designed for partial coverage.
The Powerwall is a sleek and compact battery that can store up to 13.5 kWh of energy, which is enough to power a standard home for several hours during an outage. Sunrun offers financing options for their Brightbox™ service, so homeowners can get whole home backup with Tesla Powerwall for as little as down.
The company’s monthly and full amount lease of Tesla Powerwall comes with 24/7 systems performance monitoring and maintenance. Brightbox™ also enables homeowners to use stored energy during peak demand times instead of relying on more expensive grid electricity.
For instance, on hot summer afternoons, when air conditioning use is at its peak, utility companies may charge higher rates for electricity. With Tesla Powerwall, Brightbox™ can instead revert to energy generated by solar panels during high-demand periods to power your home. By avoiding the jacked-up electricity prices, homeowners can save on their utility bills.
Without having to pay high upfront costs, homeowners can take control of their home energy, reduce reliance on traditional power sources, and ensure access to electricity even during power outages.
Compare Illinois’ Top-Rated Solar Providers
Each of these installers brings something unique to the table that we believe is worth considering if you’re thinking about going solar in Illinois. Overall, we recommend SunPower or ADT to handle your solar project, but the other providers might serve you better, depending on your specific wants and needs.
The table below includes a quick side-by-side look at SunPower and ADT, and it gives you a glimpse of how they compare to the other top providers in your area.
SunPower combines high-efficiency panels with good customer service and system longevity, which helps promote long-term savings.
The company is on the expensive side, but we feel that the higher price per watt is justified, given the quality of the equipment and service you get.
Why We Chose SunPower as the Best National Provider
SunPower has been a major player in the solar industry since 1985, and it’s best known for its industry-leading panel efficiency — with solar panels now manufactured by its sister company, Maxeon. Maximizing panel efficiency ratings isn’t totally necessary in Illinois, but it can help reduce the size of the system you need to offset your electric bills, which is helpful in a place like Illinois that has below-average property sizes.
SunPower couples its high panel efficiency with outstanding warranty coverage, which is great news in Illinois, where intense tornadoes and thunderstorms can put rooftop panels at risk of damage. The warranty coverage provided is well above the industry average to provide maximum peace of mind.
SunPower accepts all four primary payment options for its systems, which is helpful for keeping clean energy as accessible as possible in an area where per-watt are above average like they are in Illinois.
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What We Don’t Like
The biggest downside to going solar with SunPower is that the price per watt of its systems is relatively high. An array of payment options might keep the company accessible to most, but the total installation costs will likely be higher than most competitors. Still, we believe the price is worth the investment for the quality and performance you get.
SunPower also only installs a single panel brand: Maxeon. While these panels are generally considered the best option in the solar industry, we do like to see companies providing access to multiple brands to make sure there’s something for everyone.
Read our full review of SunPower for more information.
SunPower only carries and installs Maxeon panels, which are manufactured by SunPower’s sister company. These have the highest efficiency rating in the industry — 22.8% — so they can make full use of the below-average amount of sunlight in the Prairie State. Higher efficiency ratings also mean greater energy savings in most cases.
How To Save Money When Hiring A Solar Installer In Illinois
Going solar is expensive. On average, the cost of going solar in Illinois is 14,333 for a 7.5 kilowatt (kW) system after the federal tax credit. Without the credit, you’re looking at an average of 20,475. The reason for the high price tag is, in part, an above-average cost per watt. IIllinois residents pay around 5000.73 per watt for panels, while the U.S. average is 5000.66.
Overall, solar power systems in Illinois cost less than they do in most other states because energy needs are lower than average, so the total system size required is also below average. Still, paying nearly 15,000 for any home improvement can be hard to swallow. Below are some tips for saving money on your solar system when choosing a solar installer.
- Choose a company that provides robust warranty coverage
- Choose an experienced company that is well-versed in local solar benefit programs
- Choose an installer with high-efficiency panel offerings
- Avoid solar batteries and reconsider companies that push them
Choose an Installer with Good Warranty Coverage
The most significant thing you can do to keep your long-term costs down in the Midwest is to choose a company that offers robust solar warranty coverage.
Illinois residents see extreme weather regularly, including tornadoes, intense thunderstorms and above-average precipitation. The tornadoes in Illinois, specifically, are known to cause massive property damage. 2 The extreme weather events in the area can all contribute to panel damage, which means lengthy coverage can help you avoid paying for costly repairs.
Workmanship warranties are also great to have, as they help ensure that the installation is done properly. This is crucial in IL because the sometimes-excessive rainfall can put your roof at an elevated risk of leaking if the panels are installed improperly.
Take Advantage of Illinois Solar Incentives
Next, we recommend you choose an experienced installer that has been completing installations in Illinois, specifically. The Prairie State has quite a few solar perks available, and companies that are familiar with the area are more likely to help you take advantage of these benefit programs. Ultimately, they can save you hundreds or even thousands of dollars.
In the chart below, we’ll provide a list of some of the available solar rebates and incentives in Illinois.
Choose an Installer With High-Quality Panel Brands
You can also save money over time by choosing a company that offers quality, high-efficiency solar panel brands. These include SunPower — the most efficient — REC, Tesla, Panasonic, Q Cells and more.
PV panels usually pay for themselves by generating electricity that offsets your electric bills. Therefore, the more power your panels produce, the more of your energy bills they’ll offset and the more they’ll save over time.
Will Solar Increase Your Home Value In Illinois?
Yes! Installing solar panels is expected to raise your home value by around 4.1%. 5 In IL, where the average home value hovers around 270,000, that’s an expected value bump of 11,070. 6
Home values in IL have also risen by over 10% in the past year, and they are expected to climb in the future. That means the value added by your panels should increase over time, making your investment more and more valuable.
It’s worth mentioning that this value increase and return on investment is usually most significant in high-cost areas. The cities below are some of the most expensive in IL, so customers in these areas will also see the greatest home value benefit.