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Mar 08 2016
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SolarCity Pulls Plug on MyPower

By Solar Loans: Financing Rates, Loan Terms, and More No Comments

Several weeks ago, SolarCity announced that they would be abandoning their flagship solar loan product, MyPower.  Considering the product was a pretty poor deal for their customers, this announcement should be caused to celebrate.  However, such a celebration might be premature.  Though SolarCity did announce the development of a newly revamped loan product, it seems unlikely that it will translate to any significant benefit for prospective customers.  Let’s take a look at why this is the case.

MyPower Was a Tough Sell

In 2014 when MyPower was initially rolled out, SolarCity anticipated that 50% of their company’s solar installs would be financed by solar loans by the end of the next year.  However, when that time eventually came, loans only covered a meager 13% of all installs.  MyPower didn’t perform as well as anticipated due to several obstacles that deterred its widespread acceptance.  

First and most significantly was the fact that many potential customers couldn’t qualify for the 30% Investment Tax Credit that MyPower was designed around.  Even if customers did qualify, there was the matter of the highly undesirable 2.9% annual escalator to contend with.  Last of all was MyPower’s, entirely nonsensical 30-year loan term.  Generally, loans have a term of about 10 years, with the more iffy loans carrying a term of 20.  Add the outcomes of recent net metering rulings, with even more pro-solar states such as California only grandfathering net metering for 20 years, and it becomes clear that the 30-year loan term was wildly off the mark.  When considering these factors, it’s almost surprising that MyPower sold as well as it did.  

Not a Good Deal for Anybody

Even if MyPower was widely adopted, that may not have been good news for SolarCity.  In their analysis of the product, Seeking Alpha called MyPower “a proven value destroyer [that] must be discontinued sooner than later”.  According to them, this is because MyPower is riddled with even more flaws than the PPAs that it was meant to replace.  Chief among these flaws is the fact that SolarCity sells its MyPower systems for a minute up-front cost. When combined with the fact that it is easy for customers to keep their federal tax credit rather than surrendering it as intended to SolarCity, it becomes highly possible that SolarCity could lose big with MyPower.  

SolarCity Facing Uncertainty in Changing Market

The last few months have not been kind to SolarCity.  Seeking Alpha and Investors.com have noted that the industry heavyweight has been facing diminishing growth in the face of plummeting stock value, and unfavorable net metering rulings in several key solar states.  Nevada’s PUC ruling, in particular, has hurt SolarCity, as they were forced out of the state due to a quickly evaporating solar market, leaving SolarCity hurting for cash.  

Implications

Considering MyPower’s significant flaws, making it difficult to market and a questionable investment for both customers and themselves, and the increased pressure to perform provided by slowing growth and the latest net metering rulings, it’s only logical that SolarCity moves to eliminate MyPower.  The question left to us is, “What will it be replaced with?”  While we know little in regard to the specifics of what the new loan product will look like, we can venture an educated guess based on the situation SolarCity faces, and what their executives have stated.  

Based on increasingly dire straits they find themselves in, as well as their own stated issues with MyPower, it seems they will do their best to make MyPower’s replacement a simple and easy sell in order to expand their pool of qualified applicants.  To ensure this, the new product certainly won’t rely on the investment tax credit that many failed to qualify for.  It will have a shorter loan term, to be more in line with industry standards of around 10 years, rather than the outrageous 30-year term that deterred so many customers from their last product.  Also potentially up for review is the unattractive 2.9% escalator, that was acknowledged as being a “mistake”.  These changes will remove the three main obstacles SolarCity faced while selling the MyPower product.  However, the changes do nothing to address the aspects of MyPower that made it such a miserable deal for their customers.

In fact, it seems unlikely that SolarCity will do anything to make MyPower more financially sound.  SolarCity executives continue to allege that MyPower is the “best savings [they] can offer”, and assert that the new product will be “no better for a customer in terms of financials”.  Thus it seems that changes being implemented for MyPower’s replacement will only make the new product simpler (for SolarCity to sell).  Considering the incredibly unfavorable financials of the original MyPower product, we wouldn’t hold our breaths in hopes that SolarCity will put out a new loan product that will turn out to be a solid investment.  

 

Mar 04 2016
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PUC Decision May Signal Demise of Nevada Solar

By How Do Solar Panels Lower Your Electric Bill? No Comments

The Nevada Power and Utilities Commission recently weighed in on the state’s net metering debate with bad news for solar customers and the solar industry at large. Earlier this month, they okayed NV Energy’s initiative to raise rates universally for solar customers. Their decision was the latest blow to solar in the ongoing conflict between the solar industry and with its customers, and utility NV Energy.

Back in December NV energy initially proposed a brand new rate structure for solar customers using their service. Their gradual price increase (initially kicked into gear at the end of last year) would eventually triple NV Energy’s solar customers’ fixed rates, while lowering the rate they receive for energy sent back to the grid to $0.02, down from $0.11. The end result of their proposed rate hikes would be a nearly 40% increase to monthly bills. All told, lifetime costs of solar systems would increase by an estimated $8,000 to $9,000 by some estimates, or even up to $11,000 according to solar city. While this is troubling to the solar industry, and those who were considering installing a photovoltaic system of their own, those who are left worst off are those who have already adopted solar.

The new rate structure would not only apply to new solar customers while previous ones are grandfathered in. Instead, the new rates would affect all 18 thousand existing solar customers as well. This particular aspect of the rate hike has led many to deem it a “bait and switch”, as NV energy is seemingly changing the rules of the game midway through. Predictably, Nevada solar customers are furious, with most arguing that they never would have gone solar had they known such perverse price increases were headed their way. Now, panel owners are concerned that they may never recoup their initial investment. Solar has transformed for many from a source of savings, to an additional cost, as rates have risen to levels higher than those for their non-solar counterparts.

The PUC’s decision is not the end of the matter. In fact, has already seen a widespread public backlash. A group called the Bring Back Solar Alliance is leading a ballot initiative to overturn the PUC’s ruling. Their effort has been met with significant encouragement and support, having received over 55 thousand signatures in a short time. These signatures ensure that the initiative will reach the statewide ballot later this year.

In the meantime, solar customers in other states raise concerns that the Nevada ruling sets a dangerous precedent. With almost half the states in the nation considering revisions to their net metering rates, there is a concern that many will follow Nevada’s example, invalidating solar energy as an economical alternative on a large scale. However, another take on the situation is that states will be cautious in their rulings since the Nevada decision received such significant opposition.