LK and Stopsignhank:
You guys, again, have totally misunderstood the entire business model and you have absolutely no idea what you're talking about regarding the contract. I don't owe them money contractually nor am I obligated to pay them a specific amount over any period of time. I am buying my electricity from them instead of the grid at a lower rate. THAT'S IT. There's nothing else to this and all of your fabricated bullshit doesn't apply.
I own several properties in Plano, TX and all of them have over 100 choices for electrical service. Some providers try to offer different benefits, but it all comes down to cost. The average cost is $0.108/kWh and all of the connection fees are approximately the same. I can pick and choose whichever provider I want and all I have to do is pay them for service to be delivered.
Solar City's model is exactly the same. They'll put some panels on my roof and then I pay them for electricity. I don't owe them anything other than my energy usage multiplied by their service rate per kWh. Seriously, this has nothing to do with investing and I most certainly am getting connected to a solar panel system for no cost. I won't own it and I don't want to own it because then I'm responsible for it. No one in this thread said they're getting free money or that Solar City isn't making money. You two idiots are the only ones saying that and no one agrees, but you're acting like we said it and then you're disagreeing with it.
LK, in response to your comment about not understanding math, I own an electrical engineering contracting company and all I do on a daily basis is math. You seem to academically understand certain pieces of this, but you've missed the forest for the trees in a big way. Since my previous example wasn't enough for you two to understand the situation, let's try this another way:
I'm currently paying $0.112/kWh for electricity from the grid and I only have a single option in my area, which is very common. Solar City is going to sell electricity to me for 8% less and I have to give them nothing to make that happen. If I use 100 kWh, I owe my current provider $11.20, but I'll owe Solar City $10.31. There's no other obligation now or at any point in the future. Quite literally your argument about opportunity cost and lost investment income makes no sense in any capacity regardless of how this discussion is approached because I'm not investing any money into this. I'm paying less for a utility with no risk or obligation to anything other than paying my bill. They can sell as much electricity back to the grid as they want and that'll be totally fine with me because I'm still paying less than my only other option would allow.
Maybe you don't understand how wealthy people accumulate wealth and that's causing significant confusion. Not everything in life is an investment opportunity and some things need to be handled by a third party. I'm capable of doing all of this myself, but the trade-off isn't in my favor. That statement is probably confusing to you because you're only thinking about money. When I consider time, risk, maintenance, cost, fees, and lost revenue, it's not even remotely close to worthwhile for me to deal with any of this myself.
Take a look at Solar City's options. You're confusing MyPower, SolarLease, and SolarPPA, which are very different products.
Look. For the past 3 years I have been marketed every solarcity, sunrun, sun Edison, and a few other solar power lease securitzation. Treasurers, cfos, bankers from Goldman, morgan stanley, rbs...etc. I have been marketed the certificates after the tax equity toggle date. I have talked to rating agency analysts from kroll, dbrs, sp, Moodys and Fitch.
You are signing a lease. Period. It is beyond question.
You can find the kbra presale for their latest securitzation on the kbra website. The first paragraph says "the total aggregate solar discounted balance ("asdab"), consisting of the leases and power purchase agreements ("ppa"), is approximately 214.1 million."
Furthermore, a lease is a secured financing (secured by a ucc-1 statement) for a stream of payments thst has principal and interest imbedded in it. The lessee is on the hook, in this case personally, for the lease stream. Meaning they can, will, and have, sue deadbeat borrowers. They can, will, and have, sued for default if you even disconnect their system. The leases are considered consumer leases with a 20 year term. The depend on the underwriting of the borrower for repayment.
To state very clearly, the payment you make every month is a liability to repay the equipment. You are paying for the equipment, nothing else. Your "electricity" payment is not to buy electricity.
If you do not pay, they will sue you. Period. They will repo the equipment and sue you for any damages, arrears, and anything else they can get from you.
To quote the kbra presale for delinquent leases "Day 70: commence the process to shut down system. Send note to customer that the system has been turned off and if he/she does not bring their account current within 20 days, SolarCity will invoice the customer for all amounts outstanding, including penalty payments in the agreement, and suspend performance under the contract until receipt of such payments"
At day 90 they send suspension notice and aforementioned invoice.
Following the shutdown, customers have the option to pay the entire outstanding balance of the lease (all payments due on the projected lease schedule for 20 years) to have the system turned on again.
You see, it is you who misunderstands what you are doing.
This is exactly the problem i, and others, have with this industry. Many users simply do not understand what they are signing up for, how much they are really paying for it, and how much they are really being taken to the cleaners for.
It is a shame. You may be a smart guy, but you are very poorly informed on this subject.
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