The solar panel technology company was started in 2006 with the assistance of Tesla Motors Inc (NASDAQ:TSLA) CEO Elon Musk, who is still the chairman, and has become the biggest name in residential solar power.
The aim of the MySolar program is to make the technology more accessible to homeowners around the country, who may have been put off by the costs of installing solar panels.
SolarCity’s MySolar Payment Program: How does it work?
Currently, those interested in installing solar panels can choose to either buy the panels outright, with high upfront costs but a greater potential return on investment, or use a Power Purchase Agreement (PPA). A PPA means that initial costs are low, but the customer never actually owns their panels and will continue to pay for the energy that they produce indefinitely.
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SolarCity Corp (NASDAQ:SCTY)’s new payment plan combines the two methods. Customers take out a 30-year loan at 4.5% interest, while SolarCity installs and maintains the system at no additional cost. Similarly to a PPA, the customer pays for the power that their panels produce, but the money is also used to pay off the loan. 30 years later, the panels are owned by the customer, and the power that they produce is free.
The finer details are slightly more complicated, but that is the general idea. The plan minimizes the risk to the customer as they will only pay for the power that their system produces and therefore cannot lose money if it underperforms.
SolarCity Corp (NASDAQ:SCTY) plans to extend the MyPower payment plan to customers in Arizona, California, Colorado, Connecticut, Hawaii, Massachusetts, New York, and New Jersey, and its website states that it will soon extend into other areas.
Those interested in the deal will still need to evaluate the potential savings according to energy prices in their state of residence. There are wide regional variations in energy prices, but the average cost is around 13 cents per kilowatt hour.
The cheapest locations enjoy prices as low as 9 cents, but this can rise to as much as 20 in other states. The cost of energy is also increasing at 4-6% per year. All of these factors should be considered when evaluating the benefits of the MyPower payment plan.