Being one of the most popular loan packages in the solar market today, it’s remarkable that SolarCity’s MyPower option has not yet received a thorough industry review. The media generally touts it as being the savior to the industry – a true answer to the leasing model. It’s time to go beyond the hype and dive into what’s really being offered.
Since MyPower’s debut in October, 2014, there have been an estimated 17,000 installations. The product allows homeowners to see immediate monthly savings, own the system, and sets itself apart with a 30-year warranty from SolarCity, one of the most recognizable brand names in the industry. Having reviewed dozens of their MyPower contracts myself, I have come to several conclusions.
Pricing is well above market
The cost-per-watt on SolarCity’s MyPower contract is always consistent, no matter what the size of the project. They price systems ranging from 2.5kW to 10kW or larger at the same $5.10 per watt (cash or financed). Having no discrepancy in price is an obvious red flag. Overhead, permitting, engineering, and transportation are generally consistent costs, no matter what the project size – which means more dollars are going to profit margins on larger projects. Pick My Solar bid data has found the average price for solar in California to be $3.60 per watt - 34% less than what SolarCity charges on every system they install (almost a $10,000 difference for an average system).
Warranty’s fine print excludes important protections
MyPower no doubt has one of the best warranties in the solar market. It provides the full bumper-to-bumper 30-year system warranty, covering all equipment and labor. With most installers offering a 10-year workmanship warranty, and some offering 20 years, the MyPower warranty stands out. The warranty does however have one flaw. While most installers include a roof warranty matching their workmanship warranty, MyPower does not. In fact MyPower only warrants the roof for 1-year after installation, but does offer to match any existing roof warranties. This can be a potential problem in drought-plagued areas such as Southern California, where consistent rain has not been seen in years. By the time a homeowner finds out there’s a leak, the 1-year warranty may have expired. It’s also often misconstrued that the warranty covers washing the panels. The contract explicitly states that the owner is responsible for keeping the panels clean, and the production guarantees fall void if this is not met.
Equipment is not top tier
SolarCity is infamous for not disclosing the equipment specifications in their contracts, and MyPower is not an exception. Their marketing pushes hard on the guaranteed cost per kWh, which leaves equipment a moot point. From Solar City’s perspective, offering a system fully warrantied for 30 years and guaranteed production, renders equipment manufacturer irrelevant. SolarCity uses off-brand models to keep their costs low, but they are covering homeowners under the MyPower warranty. However, this takes away the layers of protection on a solar system. With a regional installer, a homeowner faces the risk of the installer going out of business, but may still be protected under the warranty of brand name equipment manufacturers – manufacturers like LG that are not going anywhere. SolarCity displays its own brand name as the forefront on their product, and hides the potentially questionable brand names of the manufacturers. As stated before, SolarCity’s brand name is currently elite in this young industry. But as a 9-year old company that has never had a profitable year, in a tax credit dependent industry, where does the future lie?
The solar tax credit expires in 2016. SolarCity’s balance sheet does look strong, but there are other risks. As utilities attempt to adjust their rate structures in order to minimize the impact of solar, some predict it will lead to tens-of-thousands of contractual PPA agreements that leave homeowners paying more for their solar system than they would be paying for electricity from the grid. Class-action lawsuits in the solar industry could potentially shine a light on bad financing deals.
Timeframe is not within industry standards
A timely installation is always a plus when going solar. The faster a system is installed means less stress and quicker savings. Most solar companies fall in the range of 2 – 4 months from the time a contract is signed, until the system is turned on. SolarCity is an outlier here, known to take six months or more to install a system due to backlog and inefficiencies. The MyPower contract confirms this exasperated timeline stating that the installation will be done within 12 months!
Part 1 Conclusion
The MyPower product stands apart with its 30-year warranty term, but the warranty and equipment offered do have some flaws. The price tag likely doesn’t warrant the additional cost. In Part 2 we will consider some comparable options on the market and take a deeper look at the finance package, which has even bigger surprises hidden within it.
[UPDATE: Since posting this article I've been made aware that SolarCity upgraded to a 10-year roof warranty as of June of this year. SolarCity has also increased the APR on MyPower by half a percent since the its debut last fall.]