Hardware Stores Are Secretly Magical

Me splitting wood outside my house in Beacon. Photo credit: Amie Anderson

Me splitting wood outside my house in Beacon. Photo credit: Amie Anderson

After we got a house, hardware stores suddenly gained a kind of mystical, temple-like power.  As someone who had only ever been loosely involved with a few small-scale construction projects in my life, I had always felt a bit overwhelmed and out of my league walking in to peruse the implements of creation and destruction that are doled out at such places.  So I didn’t think much about taking a quick trip to one in order to pick up some supplies a couple weeks after we moved into our new home.

But seemingly overnight, something had changed.  The nails and drills and pipes and caulk that line the walls of these hallowed institutions had gained a newfound purpose.  The two-by-fours shimmered with possibility—the dreams of future compost enclosures and raised beds in which to grow vegetables.  The paint buckets were ways to coat our walls with colors and moods and fuel our dreams.  Everything that came into view was a way to repair or amend or supplement the place that would keep me warm in winter, shelter my friends and housemates, and surround the songs and stories that we would craft there.

I had already learned the hard way that an old used ax from the flea market is liable to break after about fourteen swings.  So it was that I found myself entering the great kingdom of Home Depot to buy an ax (for splitting logs for our wood burning stove), loppers (for pruning our apple trees), and a snow shovel (for…shoveling snow).

But before I reached the shelves to retrieve my journey’s boon, I saw a woman greeting people at the door to tell them about solar panels—they being the newest development in the human manipulation of time and space to benefit daily life (for that is the great mission to which hardware stores are solemnly dedicated).  At this time, I was in prime solar panel research mode, so I stopped in to hear what she had to say.

Matthew McConaughey, Photo Credit: Erik Thureson / Fox Sports

Matthew McConaughey,
Photo Credit: Erik Thureson / Fox Sports

The company was NRG Home Solar.  They’re a national company, and while they’re not exclusively focused on green energy (they have a good number of plants powered by nuclear, coal, oil, and natural gas), they have become a leader in green energy, reducing their carbon emissions by 40% since 2005 with plans to reduce them by another 90% by 2050.  NRG acquired Rooftop Diagnostics last Spring to get into the home solar market.  They offer various financing options both to consumers and enterprise customers, including a solar leasing option.

The woman who had greeted me to talk about NRG was very kind and knowledgable, and wrote down their website for me.  While they do have a great 1-minute pitch video (laced with Matthew McConaughey’s dulcet baritone voice-over), in the end I decided not to go with NRG.  Largely it was personal preference.  The type of solar lease that NRG offers is quite similar to other options I had researched, and the rates and system design may have been comparable (though I never got far enough along in their sales process to get an estimate).

By this time, I had taken the appearance of a solar salesperson on my street in the first week of owning a home as a sign.  I had established a good one-on-one relationship with my solar company of choice, and I was happy to let the various options stew while moving steadily down their sales funnel.

So I got my ax, loppers, and snow shovel, and went home to split some wood.

Afterthoughts:

By various turns of events, I am now technically a customer of NRG.  Just a couple weeks back they acquired Verengo’s Northeast operations.  I think it speaks to Verengo’s well-crafted business model and excellent customer service that NRG would bring Verengo’s forces on-board to bolster business.

It’s part of a larger trend across the industry where solar and green tech companies are being consolidated together.  This wave of consolidation is driven, in particular, by the renewable energy tax credits that are set to be reduced at the end of 2016, but it’s a practice seen in just about every market as growth becomes powerful enough that the larger companies want to maximize profits and add fuel to the fire by acquiring other smaller established companies.

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Introduction, Part 2: What is a solar lease, and is it a good idea? Disclaimers and research

Okay, so solar energy is a good thing and one way to help save the planet.  Got it.  Let’s get practical.  What is a solar lease?  How is it different from buying panels?  What kinds of companies are offering solar leases?  Is it a good idea?  How do companies profit from the arrangement?

This post will attempt to answer many of these questions with my own personal experience and research.  Many of the separate events that spurred on this research will be detailed in a more narrative format in the blog posts to come.  But I thought I’d collect some of the major points (and disclaimers) together into a summary post about solar leases and how I came to choose the company I did.

Disclaimers

First thing’s first, (spoiler alert) the company I chose is Verengo Solar*.  I am in no way affiliated with Verengo.  In fact, in a future post I’ll be talking about my neighbor, Ray—an independent rep with Viridian Energy (a green energy supplier)—and his family’s solar panels, which came from SolarCity (which offers a solar lease that directly competes with Verengo).

Also, full disclosure: it is my personal opinion that a solar lease is a good idea for the average consumer who can’t afford the upfront costs of buying their own solar panels.  No matter how much research I’ve done, that is an inherent bias of all the posts that will follow, and you should do your own research to decide what’s best for you—especially into any specific companies that you’re considering going into contract with.  The goal of this blog is to help with some of that initial research and to show that getting solar panels is a thing that real people do that isn’t as difficult as it might seem.

<Nerd Time>
You’ll also notice that many of the words on this page (and all my other blog posts) are underlined.  That’s because they’re hyperlinked!  I love links.  They’ve made the internet into a collaborative space where people can quickly cite their sources to all kinds of research and media without spending a bunch of time worrying about citation conventions like APA or MLA.  Sometimes when I turn a word into a link it’s a quick YouTube video.  Sometimes it’s a long research paper from a scientific journal on climate change.  Sometimes I’ll link to another post of mine where I explained a topic in more depth.  It is always purposeful and will provide more context on a subject for those who are interested (sometimes, for instance, I may make claims as if they are “just true”; in these cases I’ve chosen not to spend time on this blog discussing the matter and have instead linked to scientific sources that give evidence and analysis for the claims).  This is all pretty common practice in contemporary journalism and blogging, but I figured I’d point it out so that no one (who’s interested) misses out on the palimpsest of external content that’s running beneath the surface of these posts.
</Nerd Time>

The sun today, via the AIA's 193 angstrom channel. Courtesy of NASA/SDO and the AIA, EVE, and HMI science teams.

The sun today, via the AIA’s 193 angstrom channel. Courtesy of NASA/SDO and the AIA, EVE, and HMI science teams.

Solar Panels and Solar Leases

The sun is basically a giant nuclear fusion reactor, constantly fusing hydrogen atoms together to become helium.  Huge amounts of energy are released from this process, primarily in the form of electromagnetic radiation.  You can see some of this radiation as visible light giving color to everything around you, and you can feel the infrared radiation as heat when you’re walking around on a sunny day.

The basic idea behind solar panels is to capture and utilize some of that radiation constantly shining down from the sun.  Solar panels are made up of photovoltaic cells, which are little devices that convert the sun’s electromagnetic energy into electricity.  Harnessing solar energy is an ancient practice, and photovoltaic technology has been getting steadily more efficient and more affordable since the 1950’s.

A solar lease essentially means that I let a company (who owns the solar panels outright) use my roof as a place to stash solar panels for 20 years.  In exchange, I pay a monthly rate and get all the energy that the panels produce.

Of course, the complexity goes on from there.  The main selling point for me was this: I am paying no upfront costs for the inspection, design, or installation of the system.  And once the panels are up, our monthly electric bill will be roughly 1/2 of our average electric bill from Central Hudson—our current supplier (the exact amount of savings, if any, will differ for everyone depending on the state you’re in, the size of the solar array, the previous electric bills, etc).

And of course, there’s the obvious benefit that I’m moving to sustainable electricity immediately and easily—a goal I thought would take years of planning and saving to accomplish.

I will have a predictable electricity bill for 20 years (with slight increases over time that essentially match inflation).

I will never own the panels (I have the option to buy them at the end of the 20 year contract for a fairly low price, but by then they will likely be obsolete).  However, precisely because I don’t own them, maintenance, monitoring, and upkeep are entirely the responsibility of Verengo.  If something goes wrong, they’ll come out and fix it.

And because the panels are connected into the grid, I get paid (by Central Hudson, our utility company) for any surplus energy that the panels generate.  This is, admittedly, kept to a minimum, since the system is designed to match our typical energy usage as closely as possible.  But there is the chance that I’ll be cutting my electric bill even more with money generated from the very electricity the panels produce.

Grid parity in Germany--a similar trend is happening across the US.

Grid parity in Germany–a similar trend is happening across the US.

Where does the money come from, and where does it go?

All this ties into the question of, “How do companies like Verengo make money from a solar lease?”  First, as with any lease, since I am extending my payments over a longer length of time, I will end up paying more than the system would have cost if I had simply bought it today.  However, while I can’t speak for all companies, in the case of Verengo—as they have explained it to me—as of today, they make their money mostly off of the tax incentives from the government (and indirectly from utilities) for supplying renewable energy.  While our panels allow us to personally get up to $5000 in tax rebates for the first 5 years on our payments to Verengo (i.e. essentially free electricity for five years), Verengo gets all the other incentives from the state and federal government (of which there are many), and from the utility directly (since many utilities need to supply a certain amount of renewable energy to meet renewable electricity standards).

Tax incentives are always in flux, but there’s a huge push for renewable energy right now.  And as more and more states approach (and surpass) grid parity for photovoltaics—where the levelized cost of electricity from solar energy is the same as or cheaper than buying from the grid—it’s a good time to go solar.

Verengo will make a profit off of my panels.  They’re a well-funded business, and turning a profit is what businesses aim to do.  But that’s okay with me.  I’m helping them by offering up my roof where they can get tax incentives and some profit from my lease.  They’re helping me by letting me buy cheap, renewable electricity—enabling our home to be one less that runs on electricity generated mostly by a mixture of coal, gas, and nuclear power (by the way, you can find out how clean the electricity you use is here).

Getting solar panels through a solar lease is not a money-making endeavor.  It is not the best return on investment you can get from solar panels.  If you’ve got $20,000-$40,000 dollars in the bank—by all means, go and buy your own panels right now, because there are at least 13 states (some say 46) that are sunny enough with the right tax incentives and utility rates where you’ll be making a 10-24% internal rate of return (IRR), which is better than the average compounded annual growth rate of the S&P 500 over the last 50 years (9.9%).  So depending on how you play it, you could be beating the stock market by selling your solar power back to the grid.

If, however, you’re like me, and wouldn’t even be able to consider the upfront cost of solar panels if there weren’t a third party involved, a solar lease simply means saving money on electricity (since your electric bill is likely to be lower with the panels) and helping the environment at the same time.

Which, when you think about it, is a pretty sweet deal.


*Note: Last week, NRG Energy announced their acquisition of Verengo Solar’s Northeast operations (of which my solar panels will be a part).  I will continue to refer to the company I chose as Verengo for the purpose of this blog (since that is how I knew them over the past few months that these entries describe), but technically I am now a customer of NRG Energy.