Understanding the Solar Lease Proposal

We've examined solar leases, but there's another set of sheets that's just as important: the solar lease proposal. This is a 2- to 10-page document typically emphasizing the amazing savings you will enjoy over the next twenty years. Typically, you will see this before you see the lease.

If you have a few companies bidding, then you will have a few of these proposals, so it's good to know how to compare them.
solar lease proposal
Start off by ignoring everything that shows how much you will save over the next 20 years. Company A will say that utility rates are projected to increase 5%, and thus your lifetime savings are $200,000. Company B will decide that utility rates are projected to increase 8%, and thus your lifetime savings are $300,000. Since no one knows what the utility will be charging for their electricity next year, never mind 20 years from now, both projections are meaningless.

Instead, flip through the sheets and highlight key numbers associated with the system’s size, and what you’re paying for it:

The System:

  1. the brand, model number, and quantity of solar panels.
  2. the brand, model number, and quantity of inverters.
  3. the number of panels.
  4. the system size (STC-DC).
  5. the system size (CEC-AC).

The Cost:

  1. Upfront Deposit.
  2. Monthly Lease Payment.
  3. Annual Increase in Lease Payment.
  4. Duration of Lease.

Nine numbers total. And actually, we really don’t need the first four. That’s because the system’s size can be boiled-down to a single number: the CEC-AC  (bullet #5).

The four numbers under "The Cost" should make sense if you've already read Explain the Different Variables in a Lease.


Let's spend a few moments explaining STC, PTC, CEC, AC and DC. The objective: to understand how the same proposed installation can be described in different ways.


The way for a salesman to arrive at the largest - and least accurate - number for the proposed system size is to simply multiple the number of panels by the nameplate rating of the panels.

The nameplate is exactly what it sounds like: the identification on the panel. So, thirty Sharp 240 watt panels would be 30 x 240w = 7200 watt, or a 7.2 kilowatt (kW) system. This simple calculation results in the Standard Test Conditions, or STC rating. This value might also be called the DC-STC rating, since panels produce DC.


That brings us to the PTC, or Practical Test Conditions rating. This rating system measures panel output at a warmer (more realistic) temperature, and almost every STC value drops by 8-13% when converted to PTC. This “derating” can be found by visiting www.gosolarcalifornia.org, and selecting Equipment, then PV Modules.

In the calculation below I'll assume a 12% derating:

30 panels x 240 watt nameplate = 7,200 watt, or 7.2 kW STC

30 panels x (.88 x 240 watt) = 6,336 watt, or 6.336 kW PTC

Since we have not converted the production to AC, either of these values might appear with a "-DC" next to it, with no change in meaning.

DC versus AC

Solar panels create DC (Direct Current) while our homes and businesses operate on AC (Alternating Current). So inverters are needed to convert the electricity. Inverters are typically 92-97% efficient, which is quite good, but still means that the system size will appear to be smaller if it's an AC value.

Here in California, the California Energy Commission (CEC) incorporates the PTC measuring methodology when estimating production. Bids might show the CEC-AC rating, which is the system's PTC rating, derated by the inefficiency of the inverter that has been selected:

6.336 kW PTC x .96 (a typical inverter efficiency) = 6.083 CEC-AC

Still more variables...

Let me add a final layer of confusion. Two installers can bid to install the same exact system on your roof, yet present different numbers for the system's projected annual production. That's because panel production is impacted by shading, orientation, tilt, and even the number of inches the panels are mounted off the roof surface. If one company decides that you have 5% shading, and another company decides that you have 20% shading, the projected annual production will vary greatly.

If you're confused by these last paragraphs, that's OK. You don't need to know the difference between STC and PTC, or AC and DC. You just want to know, when comparing bids, that you are comparing similarly-sized systems.

- - - - -

We've reviewed solar leases and we've reviewed solar lease proposals. As a final step, let's look at different lease companies' web pages, to see what else we can learn.


next page:  BrightGrid's site

Should I Lease a Solar Panel System?
Who Should I Lease From?
Are Some Leasing Companies Better than Others?
Leasing versus Buying
How Much Can I Save if I Lease Solar?
Explain the Different Variables in a Lease
The Escalator Trap
Can I Sell my House, if I have a Solar Lease?
So... Should I Get Solar, Using a Lease?

Quiz: Can you explain this solar lease promotion?
Understanding a Solar Proposal

Assorted Lease Companies' Web Pages:
- BrightGrid
- Solar City
- Solar Universe
- SunCap Financial
- Sungevity
- SunPower
- SunRun
- Vivint Solar

2014 by Bill Fridl. All rights reserved.
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