Every week there is another offer in the mailbox for a free solar installation. Power your home. Pay zero to the power companies. Sell power back. It’s a Win-win-win (win-win…win). Or is it?
Columnist Sam Asano, writing in the Manchester Union Leader, pointed his flashlight at the offers and discovered something nasty.
The first and the largest issue the signing consumer faces is the fact that once the system gets installed, their residential property would be attached with a 20-year lien. Yes, it is a lien on the property itself, not just on the roof-top solar system. That means the house you are living in, and probably carrying some mortgage on, is now additionally burdened by a lien equal to the install price of the solar system.
This lien is very powerful and in favor of the third-party contractor — the finance company, and not for the consumer.
You cannot separate the debt caused by the solar system from the mortgage debt. The peril of this arrangement would bite you very hard when you want to sell your house.
That lien will probably be sold by the finance company, and then another, making your future sale that much harder to manage, with an unexpected closing cost.
And those estimated savings might never appear either. Rate estimates are estimates, and a wide range of policy decisions affect the cost of electricity.
A writer at Scientific American never mentions the lien on your mortgage. His encounter suggests the solar company will convert the program to a new owner or remove the panels. But what are the odds that a company created to feed off a federal program will be around to do that work? SA doesn’t explore that possibility, but they did discover other unpleasant facts.
Government subsidies will only pay for an array that covers a family’s annual electric usage—if you want to become a net producer, you’ll have to fork out for that yourself. In my brother and sister-in-law’s case, it didn’t matter: the array size was limited by their roof area, anyway. A system of that size would cost about $30,000, before subsidies.
When Pegler explained the zero-dollar option, we Mussers looked at one another in surprise. It sounded like a real letdown. In return for letting SunRun install and maintain the array, my brother and sister-in-law would save 10% on their electric bill. Ten percent? That’s it? To be more precise, they’d commit to buying all the expected array production at a rate of 16.5 cents per kilowatt-hour, versus the utility rate of about 18.5 cents. As my brother later confessed to me, “It’s not really that exciting.”
This is the tradeoff of a free system. Basically, you get to have only one zero. You can pay zero, or you can zero out your electric bill, but not both.
They can’t guarantee rate savings. You are paying some price whichever way you go. And there is still the matter of the 20-year lien, something they will rush you past if they can because time is money. These third party vendors do not have a lot of time. The federal handouts used to back some of these installations are not guaranteed. They are set to expire, which is the reason for the full-court press and the mailbox full of offers. Programs that have the mortgage scam masters at Fannie Mae concerned.
Now, we learn that it (along with Freddie) is threatening not to accept loans if the associated borrowers retrofit their homes with solar panels through a government stimulus program.
But their objections are not exactly what you’d think.
Under the financing programs, a local government borrows money through bonds or other means, and then uses it to make loans to homeowners to cover the upfront costs of solar installations or other energy improvements. Each owner repays the loan over 20 years through a special property tax assessment, which stays with the home even if it is sold.
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Fannie Mae and Freddie Mac, the government entities that guarantee more than half of the residential mortgages in the United States, have different priorities. They are worried that taxpayers will end up as losers if a homeowner defaults on a mortgage on a home that uses such creative financing. Typically, property taxes must be paid first from any proceeds on a foreclosed home.
I can’t imagine Fannie and Freddie caring all that much about taxpayers but there is this other odd bit of news from the Atlantic. Fannie Mae owns the patent for a system of residential emissions trading. A monopoly, so to speak, on any process for buying or selling carbon indulgences based on a homeowners energy using habits.
What’s that all about? Does it figure into solar schemes tapping into Stimulus handouts that include property liens? Does anyone care that those liens come at the expense of stimulus bailouts paid for by taxpayers going to third party general contractors feeding at the federal trough? A trough being protected by green energy pigs using broken window economics to “protect jobs” that only exist because of billion dollar crony bailouts to special interests whose numbers swell with every residential solar install.
Think about that. These installations incentivize a wider adoption of more expensive energy schemes for the rest of us. Electricity rates will necessarily have to skyrocket and remain high or every homeowner who bought in stands to lose money every month.
The increased number of stakeholders (who were bought in with bailout money) will exert influence over policy to ensure their advantage.
Those higher electricity rates will drive up the cost of goods and services, creating a shadow tax on everything and everyone, consuming any realized savings at the meter in short order.
If you are not scared off by the fly-by-night nature of the vendors, the sketchy nature of the incentives, unrealistic savings promises, or even the 20-year lien on your property, how about the loss of value and hidden taxes resulting from rising electricity rates, from which you will never escape?
Do us all a favor. Don’t line up at one trough just so you can spend more to fill others. Throw that ‘great deal’ in the trash. The free solar isn’t free. The only people who win are the big environmentalists trying to kill reliable and affordable energy, the bigger-government crowd looking to use more bailouts to warp and control the marketplace, and the confidence schemers selling solar out of the back of a van until the next great taxpayer-backed scheme comes along.
Free solar is a trap and someone has to pay. It will most likely be you, but it could just as easily be the rest of us.
