Working in the energy industry puts a big target on your chest when it comes to solar leasing deals. In the span of weeks, I have had several friends approach me asking whether they should sign up for a solar panel lease deal from a local company.

With this new assignment, I sharpened my pencil (really a spreadsheet), collected their last 12 months of bills, and calculated their electric costs with and without the solar deal. It’s important to understand that each person is different as shown by their historic energy consumption. For my friends, the cost savings from leased solar ranged between $20 and $200 per year under current rate conditions. The trade-off for the immediate savings (and no upfront costs) is the 20-year contract agreeing to purchase the solar power output at a fixed rate escalating with inflation.

Solar House-01In the few cases I reviewed, the savings weren’t great. Apparently my friends don’t use much air conditioning in our mild coastal climate. But, if you double their energy consumption or add an electric vehicle, the savings would more than double due to the quirkiness of an increasing tiered rate structure.

For the analytical mind, calculating savings is a straight-forward exercise in math once you understand the electric rate structure. But, what captured my attention was why my friends with such low energy consumption were being targeted by solar lease companies? Are the solar lease companies making such large margins on their sales that they profit by saving customers $20 to $200 per year?

In the following weeks, I was also contacted by a company offering me a solar lease program. Like my friends, my analysis showed low savings (I also don’t have air conditioning). Then it hit me. We are being offered the solar deals because our zip codes imply that we are credit worthy enough to sign the 20-year lease.

There are many factors that we should consider when forecasting the penetration of rooftop solar. We should examine payback periods, local rates, and distribution issues. We should also add one more factor into the equation, we should consider which of our customers have a big target on their chests called credit worthiness.

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Mark Quan
Principal Forecast Consultant - Itron
Mark Quan is a Principal Forecast Consultant with Itron’s Forecasting Division. Since joining Itron in 1997, Quan has specialized in both short-term and long-term energy forecasting solutions as well as load research projects. Quan has developed and implemented several automated forecasting systems to predict next day system demand, load profiles, and retail consumption for companies throughout the United States and Canada. Short-term forecasting solutions include systems for the Midwest Independent System Operator (MISO) and the California Independent System Operator (CAISO). Long-term forecasting solutions include developing and supporting the long-term forecasts of sales and customers for clients such as Dairyland Power and Omaha Public Power District. These forecasts include end-use information and demand-side management impacts in an econometric framework. Finally, Quan has been involved in implementing Load Research systems such as at Snohomish PUD. Prior to joining Itron, Quan worked in the gas, electric, and corporate functions at Pacific Gas and Electric Company (PG&E), where he was involved in industry restructuring, electric planning, and natural gas planning. Quan received an M.S. in Operations Research from Stanford University and a B.S. in Applied Mathematics from the University of California at Los Angeles.