Letter to the Town Council about Open Bidding before Vendor Chosen for Solarize Watertown

Presentation to Town Council:

There are three possibilities for financing solar panels. An owner can purchase them outright. An owner can take out a loan to finance them. And an owner can allow the roof of their building to be "leased" for the production of solar energy. This third option is called a Power Purchase Agreement or PPA.

Next Step Living gave Watertown a Purchase option and a Solar Loan option. It did not give Watertown a zero-down PPA option, which is the solar leasing option. SunBug and Corbin gave Watertown all three options: a Purchase option, a Solar Loan option, and a zero-down PPA option as was requested in the RFP

Although, at first glance, it would seem that the RFP does not require the installer to offer a zero-down PPA to the community as evidenced by the following paragraph, the Attachment BI makes it clear that a zero-down PPA is to be offered. Here is the RFP language:

"In order to participate in the Program, the Installer must provide a dollar per watt ($/W) “Purchase Price” for solar PV systems that will decrease by defined tier levels as the total contracted capacity of solar PV within the community increases. For Lease or PPA projects, the Installer must provide a base dollar per kilowatt hour ($/kWh) Lease/PPA Price, as well as financial incentives for customers that sign a Lease or PPA for solar PV systems as higher tiers of contracted capacity within a Community are reached. As such, proposals will not only be evaluated on the Installer’s ability to provide the highest quality design and installation services, but also on the ability to deliver a tiered pricing structure for the purchase of systems and a tiered financial incentive for Leases or PPAs. See the Pricing Proposal and Adder Form (Attachment B.1. and Attachment B.2.) for more information on the specific pricing tiers."

However, in the pricing requirement Attachment B1, there are rules about how the installers present their pricing. This is to create a level playing field for the selection teams to decide between bids. All bids are to use the same assumptions in order to price it's per kWh PPA price. This is in place so that those looking at the bids can compare apples to apples. That language in B1 is the following:

"Provide a Lease/PPA price for a system that produces 90% of optimal production. All Lease/PPA Prices should assume $0 down upfront. In addition, provide the contract escalator that company applies to projects."

Next Step Living did not follow these rules. Thus, Next Step Living by not offering a zero-down PPA was able to make its per kWh PPA price look much better than SunBug's or Corbin's. Town Council's WE3C advisory committee should have immediately disqualified Next Step Living and considered only Corbin/Onforce and SunBug. Instead, they chose Next Step Living, which requires the homeowners of Watertown to pay $3000 for the lease option.

Unlike the other two bidders, Next Step Living's bid gives financing options for obtaining the $3000 if the home owner wishes a PPA, but after either a year or eighteen months, that loan will require interest payments. This loan (and subsequent interest) will be added to the overall debt load of the homeowner. Thus, if that individual wishes to make another purchase using credit (appliance, car, home), this debt could negatively impact the amount and terms of a loan he or she is able to obtain in the future.

In addition, there is an NSL adder of 75 cents per watt for "Whole-home, low-interest financing." That is a $4000 adder on a typical 5kWh system. And there is also a statement about 25 cents per watt for "financing coordination support, which applies only to systems financed through Next Step Living partners other than the low interest loans." What is this exactly, and is this another finance charge? Does this mean that there is an additional 25 cent/kWh adder for every homeowner who is already paying $3000 for what should have been a free or zero-down option to begin with?

The PPA or solar lease option with zero-down is particularly attractive for multi-family homes, which Watertown has many of. The zero-down option allows the homeowner to "lease" their roof. If the owner wishes, for no cost, solar panels can be placed on the roof and connected to the units of the tenants. This creates an opportunity to tap solar and sustainable energy sources, gives the renter a break on their electricity bill, and makes the unit a more attractive rental option. On an owner-occupied multi-family, the owner can buy his or her system, and with a zero-down option, lease a system for the tenants. Both types of systems can exist on one roof. None of this is possible with the bid Town Council's advisory committee selected.

Solarize Watertown insists that the guidelines for Watertown are the ones that worked well for other Mass Solarize communities. Actually, what happened in Watertown happened in no other solarize community. All the other communities using this solarize process had zero-down options.

The Mass CEC and WE3C (Solarize Watertown) are victims of deceptive sales practices. But the real victims are the citizens of Watertown, who even with the tax benefits, don't have a "free" solar leasing option. Thus, our citizens will be paying thousands of extra dollars for the privilege of letting their roofs be leased because an advisory committee of Town Council chose Next Step Living. How is this a good deal?

Next Step Living Quality

Next Step Living is an enormous sales organization. It subcontracts out all its work. Thus Next Step Living has no installation quality, because it doesn't install. It does not "own" its process and recently has been infused with eighteen million dollars from the following four companies:

Black Coral Capital, Massachusetts Green Energy Fund, Vantage Point Capital Partners, and The Windquest Group.

The CEOs of these companies were at Bain and use the Bain model, which was described in detail by The New Yorker magazine when it ran an in-depth article on Mitt Romney.

Our other bidders included locally owned solar companies. These companies actually install and do not subcontract out residential installations. They own the process from start to finish and directly employ the people who actually do the installations.

On Angie's List, Next Step Living is the only solar company with a C grade. This is not anecdotal; there are over 150 reviews in total. It is literally the worst-reviewed solar company in the area. SunBug has an A rating with Angies's List Service Award for the last two years. OnForce/Corbin was not reviewed.

Additionally, on Yelp and other independent online review sources, Next Step gets reviews well below average while other solar companies fare much better.

Last but not least, other bidders gave us more options, including a choice of "local" with an American made panel and a Mass made inverter. Not so Next Step Living, which gave us a choice of an inverter made in Phoenix, AZ, which by their national standards may constitute local, but is not our "local."

Jaclyn Tager

[Editor's note: A petition asking to temporarily halt the Solarize Watertown initiative can be found on the town's website at: http://www.ci.watertown.ma.us/documentcenter/view/14579 ]

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