Some Customers Are Upside-Down On Their Solar Agreements

Solar PV systems have become a go-to resource for lowering energy costs and increasing sustainability. In California alone, electricity customers have installed over 1 million solar PV systems, approaching 10 gigawatts State-wide. Many of these systems have been deployed under Power Purchase Agreements (PPA), where a power provider finances, installs, owns and operates the system, and charges the site host a monthly bill for the electricity delivered by the solar PV systems.

Given the structure of early solar agreements and changes in the retail electricity market, many customers are now spending more on their solar bills than what they are seeing in utility bill savings. In other words, they are upside-down on their solar agreements because they spend (in total) more for electricity because they went solar. This unfortunate problem is due in large part to the following two issues:

  1. The terms of many early PPAs typically started with high electricity payment rates, as well as rate escalators that increased the solar costs each year. Over time, the electricity rate for the solar PV system has surpassed the electricity rate offered by the utility.
  2. The time-of-use peak pricing (for electric utility rates) has moved from the middle of the day to the evening, reducing the bill savings opportunity of solar.

TerraVerde Energy’s Solar Refi Program Can Help

To address this challenge, TerraVerde Energy can help solar customers remedy their upside-down solar agreement through a Solar Refinancing Program, by

  • lowering solar costs
  • improving operational performance
  • adding backup power systems

Through this innovative program, TerraVerde helps solar customers transfer the existing solar agreements, upgrade the existing solar equipment, and add battery energy storage. These activities will be wrapped under the terms of a refinanced PPA that delivers financial savings and provides energy resiliency.

A Case Study

A recent study of a 2008 solar PPA showed that a customer was losing about $60,000 a year from their solar. This medium sized solar installation (about 400 kW) was structured under an agreement that had an initial solar electricity payment rate of $0.15/kWh, and a rate escalator of 3.75% annually. Upon review of the solar agreements and utility data, assuming the system was performing as expected, we found that:

  • The solar PV system is reducing the customer’s utility bill by $77,000 per year
  • Under the terms of their PPA, they are currently paying $135,000 per year for their solar
  • Thus, they are upside-down on their solar agreement and paying $58,000 more per year for electricity 

In this particular case, TerraVerde’s solar refinancing program will eliminate the $58,000 annual loss and yield over $650,000 of energy cost savings over a 20-year term.

Solar Refi Financial Benefits 20-Year Term
Utility Bill Savings $3,584,997
New Refi Agreement Costs ($2,927,358)
Total Net Benefit $657,639

Over the past 11 years, TerraVerde Energy has delivered over $50 million in energy savings to our clients. We’ve supported the development of over $400 million in energy projects including more than 100 megawatts of solar, battery, and energy resiliency systems. Our asset management group optimizes the financial performance of a portfolio of nearly 400 solar & battery systems.

If you have an existing solar PPA, reach out to hello@terraverde.energy today to find out whether you qualify for a free solar assessment. For qualified customers, TerraVerde will  review your energy usage, historic bills, and solar agreement, and provide you with a no-cost, no-commitment solar assessment.

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