Solar Energy Cost Per Kilowatt-Hour
The next time you ask how much a solar system will cost you, you’ll be a little more intelligent about it after reading this blog.
Cost of Solar
The moment you decide that you want solar, the first thought that comes to your mind is more than likely going to be how much is this going to cost me, right?
If you’re looking into a power purchase agreement, a.k.a. PPA compared to owning with a loan or cash option, then you’re going to want to pay attention to the cost per kilowatt-hour. The reason why is because with a power purchase agreement, you’re not buying the system.
Power Purchase Agreement
A power purchase agreement doesn’t cost you anything when it comes to the system. You’re simply buying the power from the system.
Check out these two blogs below that dive a little deeper into power purchase agreements versus a loan option.
If you understand that you’re just purchasing the power, then you don’t need to ask the question how much is it going to cost. The question you need to ask is what is the best rate I can get per kilowatt-hour? That’s the key.
If you decide that owning isn’t something you want to do, a power purchase agreement is the best option.
Let’s use Sunnova as an example.
Done For You
The typical agreement we do with Sunnova that’s most beneficial is going to be a twenty-five-year agreement. They will put all the panels on your roof, install the system, and do everything for you with zero out-of-pocket costs. You won’t pay anything. You don’t pay the deposit, there’s no money down, and you don’t have an escrow account. They won’t even ask you for payment. What they ask you to do is just pay a monthly fee at a kilowatt-hour rate.
Their goal is to beat your current power companie’s kilowatt-hour rate, the average rate that you’re already paying. The other goal is to fix that rate from Sunnova and give you a nice fixed predictable rate over the next twenty-five years. Whatever that rate charge is over twenty-five years, it’ll stay like that. They’re not going to touch it. That’s the agreement. They want to give you a predictable rate and a predictable monthly payment.
Standard Utility Companies vs Solar
With your current power company, let’s use SDG&E or PG&E or anywhere really in the United States. They are going to pretty much change rates when they need to, to stay profitable.
With SDG&E, for example, their rates go up. Their average rate increase per year is in the range of around 7 or 8 percent. Now that’s over the last 8-10 years or so. Over the last few years it’s way higher, but it’s not going to always go that high. There’s been other years where they didn’t increase the rates at all, but the point is, Sunnova is not going to sit there and increase their rates like that over twenty-five years. You’re going to have a nice, predictable rate.
Cost Per Kilowatt-Hour
Sunnova will give you a lower kilowatt-hour rate than SDG&E where you’ll instantly save money without being required to do anything or pay anything up front to get that system on your home. The agreement is you just keep paying Sunnova, just as you would a standard utility company.
Sunnova will maintain the system and do all the monitoring for you. With a power purchase agreement, do not ask how much the system is going to cost, because there’s no answer to that. How could there be an answer to that? You don’t own the system. You’re not buying it. You’re just paying per kilowatt-hour at a lower rate than your current power company with a predictable rate.
When you go to ask a sales rep or talk to a company about switching to solar, ask them how much is it going to cost you per kilowatt-hour. They’ll thank you for that.