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Is Solar Financing Dead in California?
97 Plays2 years ago
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Transcript
Introduction to Solarpreneur Podcast
00:00:03
Speaker
Welcome to the Solarpreneur Podcast where we teach you to take your solar business to the next level.
00:00:08
Speaker
My name is Taylor Armstrong.
00:00:10
Speaker
I went from $50 in my bank account and struggling for groceries to closing 150 deals in a year and cracking the code on why sales reps fell.
00:00:19
Speaker
I teach you to avoid the mistakes I made and bring in the top solar dogs of the industry to let you in on the secrets of generating more leads, falling up like a pro and closing more deals.
00:00:31
Speaker
What is a Solarpreneur you might ask?
00:00:33
Speaker
A Solarpreneur is a new breed of Solar Pro that is willing to do whatever it takes to achieve mastery and you are about to become one.
Are Solar Loans Becoming Obsolete in California?
00:00:43
Speaker
Are solar loans dead in California?
00:00:45
Speaker
Are they dying in other markets?
00:00:47
Speaker
We're going to answer that question and much more on today's podcast.
00:00:51
Speaker
Welcome to the podcast.
00:00:52
Speaker
My name is Taylor Armstrong, here to help you close more deals, generate more leads and referrals, and have a much better time in the solar industry.
00:01:00
Speaker
We're coming at you, and I am excited because I'm here actually in under construction, building a little new podcast studio in the crib, thanks to my wife helping out with it.
00:01:13
Speaker
Anyone that knows me knows I am like the least handy person in the world.
00:01:17
Speaker
And you hand me some of that IKEA furniture, it's going in the trash unless someone else does it.
00:01:23
Speaker
So this stuff drives me nuts.
00:01:26
Speaker
I am helping out a little bit, but...
00:01:28
Speaker
Got the wife here who is giving me some VIP support, building out a little podcast studio.
00:01:33
Speaker
So I'm excited.
00:01:34
Speaker
If you can see on a video version, got a little new background here.
00:01:38
Speaker
You can see some of it's undone.
00:01:39
Speaker
So it's a work in progress, but we're getting it going
Building a New Podcast Studio
00:01:42
Speaker
here.
00:01:42
Speaker
So today's podcast is all about...
00:01:46
Speaker
different types of financing, and a lot of people are asking me, is financing done for in California?
00:01:52
Speaker
Are loans done for in California?
00:01:53
Speaker
We're here in NetMeeting 3.0, which means we got to do batteries with the majority of our systems, and it presents some different challenges.
00:02:01
Speaker
So we're going to be jamming on that, but before we get into it, wanted to give a special shout out to our latest review over on iTunes.
00:02:10
Speaker
We got Mr. John Hancock,
00:02:13
Speaker
Sorry, John Hancock is probably your uncle.
00:02:16
Speaker
but Jared Hancock rather.
00:02:18
Speaker
He gave us five stars.
00:02:20
Speaker
He said, thank you for this podcast.
00:02:22
Speaker
I'm brand new to solar with a smaller company out of Salt Lake City, Utah, and just started doing it after work, but I'm trying to become full-time solar.
00:02:31
Speaker
And this podcast has been so helpful and so many little gold nuggets.
00:02:35
Speaker
And I've listened to every episode and through this podcast and the help of the Lord.
00:02:40
Speaker
I'll be a solar dog.
00:02:41
Speaker
Thank you for your time and keep it up.
00:02:43
Speaker
Thank you.
00:02:43
Speaker
My name is Jared Hancock.
00:02:45
Speaker
Jared, thank you.
00:02:46
Speaker
You will soon be a solar dog.
00:02:48
Speaker
All the solar dogs listen to the podcast.
00:02:50
Speaker
And I agree with the help of the Lord.
00:02:52
Speaker
The Lord helps us all.
00:02:53
Speaker
Hallelujah.
00:02:54
Speaker
Keep sticking in there.
00:02:55
Speaker
And my advice to Jared and any other people is to go full time as soon as possible.
00:03:01
Speaker
Because let's be honest, if you work solar part time, you're going to get part time results.
00:03:06
Speaker
The riches, the fortunes go to those that go all in, burn the bridges, burn the boats, and are all in.
00:03:12
Speaker
So that would be my advice, Jared.
00:03:14
Speaker
Go all in as soon as possible.
00:03:16
Speaker
That's how you're going to make it rain in solar and truly become a solar dog.
00:03:20
Speaker
So let's get into the topic
Challenges with Solar Financing vs. PPAs
00:03:22
Speaker
today.
00:03:22
Speaker
And the topic is, again, is solar financing dead in California?
00:03:27
Speaker
So I want to start this out with a little experience, a little story that happened to me just recently, actually last week.
00:03:33
Speaker
So last week I closed this deal, get him rolling.
00:03:38
Speaker
I signed him up under a PPA, which is power purchase agreement.
00:03:42
Speaker
If you're not familiar, we'll talk a little bit about that.
00:03:45
Speaker
A little bit more about that if you're not familiar with what that is.
00:03:48
Speaker
But the husband's super excited about it.
00:03:51
Speaker
He convinces his wife.
00:03:53
Speaker
The wife is wanting to like, think about it, wanting to not sign all the documents quite yet.
00:03:57
Speaker
But the husband's like, honey, we got to do this.
00:03:59
Speaker
Like it makes absolutely no sense to stay with the utility.
00:04:03
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Let's get this rolling.
00:04:05
Speaker
And Scottum signed up.
00:04:07
Speaker
Everything was good.
00:04:08
Speaker
But then two days later, I get a call from the wife.
00:04:11
Speaker
And sure enough, she's like, Taylor, yeah, you know what?
00:04:14
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After talking about it more and more, I think we just jumped the gun too much.
00:04:19
Speaker
We actually just want to buy a system if we're going to do it.
00:04:22
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Just want to buy it.
00:04:22
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Like, okay.
00:04:23
Speaker
And turns out this lady, she's in real estate.
00:04:26
Speaker
So a lot of real estate people sometimes think that buying is the way to go, which I agree, buying is a great option and generally a little bit better for people.
00:04:36
Speaker
But what happens is she's...
00:04:38
Speaker
The good news is she doesn't say like, hey, we don't want to go solar.
00:04:42
Speaker
She just says, Taylor, we don't want to do the power purchase agreement.
00:04:45
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Can you come back?
00:04:47
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And we want to figure out the options for owning it, finance it or just buy it.
00:04:53
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So I'm like, okay, not a big deal.
00:04:55
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We reschedule, we go back, all is good.
00:04:57
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And then I get back in the house.
00:04:59
Speaker
We go over some of the options with financing, which those of you that are listening right now, we're recording.
00:05:06
Speaker
Summer of 2023.
00:05:07
Speaker
Can I say summer now?
00:05:08
Speaker
What are we, May?
00:05:09
Speaker
Yeah, summer of 2023.
00:05:10
Speaker
Been doing this seven years now.
00:05:12
Speaker
Jeez.
00:05:13
Speaker
But anyways, we go over all the options.
00:05:17
Speaker
And as you know, dealer fees are high right now.
00:05:20
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Interest rates are pretty high.
00:05:22
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So we're going through this and she's like, I want a different option.
00:05:26
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She didn't want to just pay cash for it.
00:05:28
Speaker
She wanted to finance it.
00:05:29
Speaker
But then she goes, the rates are too high.
00:05:32
Speaker
You know what?
00:05:32
Speaker
Let me see if I can get like my own financing.
00:05:35
Speaker
Let me go to my credit union.
00:05:37
Speaker
And on and on it goes.
00:05:39
Speaker
And this deal just gets more and more complicated.
00:05:41
Speaker
And long story short, she gets paralysis by analysis.
00:05:45
Speaker
And what's funny is the husband, he's there.
00:05:48
Speaker
But all of a sudden, he's way less excited about it.
00:05:50
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He's like, this is just a lot of money.
00:05:52
Speaker
Yeah, now we got to wait for a payoff.
00:05:55
Speaker
Yeah, I don't know.
00:05:56
Speaker
Like, we know we want to own it, but this just gets too complicated now.
00:06:00
Speaker
It's too much money.
00:06:01
Speaker
I don't know.
00:06:01
Speaker
We're going to have to really think about this.
00:06:03
Speaker
In my head, I'm thinking, wow, that's crazy.
00:06:06
Speaker
They went from being super stoked about a power purchase agreement to now they're questioning everything.
00:06:12
Speaker
And now they're ready to just stick with the utility for the rest of their lives just because they have to fork out some money, just because there are some obstacles with the financing.
00:06:20
Speaker
So the lesson in this story and the lesson I learned and was reminded of is, yes, I
00:06:26
Speaker
I agree.
00:06:27
Speaker
I think owning presents more benefits than doing a power purchase agreement or a leasing seller.
00:06:33
Speaker
I agree with that 100%.
00:06:34
Speaker
But at the end of the day, these people, now that there's some extra complications with the financing and the ways to own it, they're like ready to throw in the towel.
00:06:44
Speaker
So this just reaffirmed my stance on power purchase agreements and leases.
00:06:48
Speaker
It is 100% better than
00:06:50
Speaker
to go with a PPA or a lease, lease than it is to stick with the utility every time, 10 out of 10.
00:06:57
Speaker
And if that's the option, if it's between them doing a PPA or not going solar at all, then I'm gonna give it to them every time.
00:07:05
Speaker
I'm gonna let them do a PPA.
00:07:07
Speaker
And it just goes to show that, yeah, I think at times I hear people in the industry bash on people that only do PPAs, that are all about these leases, and don't even bring up the option of ownership.
00:07:19
Speaker
But maybe there's a reason for that.
00:07:21
Speaker
Is it because they believe that that's the option?
00:07:24
Speaker
People are gonna overcomplicate the ownership.
00:07:26
Speaker
People are gonna overcomplicate these loans.
00:07:28
Speaker
So why not just give them a PPA?
00:07:30
Speaker
They're gonna be happy.
00:07:31
Speaker
They're not gonna get quite as many benefits, but hey, they're gonna go solar.
00:07:34
Speaker
And they have the option, every PPA that I know of has the option to buy it out at some point during the term.
00:07:41
Speaker
So I just thought that was a funny little story, funny thing that happened.
00:07:45
Speaker
They went from being 10 out of 10 excited, at least the husband, the wife, she was a little on the fence the whole time because she's in real estate.
00:07:51
Speaker
But the husband went just from being through the roof excited to now with the ownership options, even though he thought that was the best option, he just went to like a four out of 10 excited.
00:08:02
Speaker
Like not sure if this is the best way to go slower, even if they should still go slower.
00:08:07
Speaker
So learning lesson right there.
00:08:10
Speaker
But how does that tie in with is financing debt in California?
00:08:14
Speaker
As I mentioned, across the board, across the country, rates are insanely high right now.
Advantages of PPAs in Current Market
00:08:19
Speaker
Dealer fees are insanely high.
00:08:21
Speaker
So what do we have in a lot of options?
00:08:23
Speaker
lot of markets um texas included i just heard i assume that most companies in texas are getting lease options but um that means a lot of us can start transitioning to these lease options these power purchase agreements and i'm just going to go through a couple reasons why i think especially if you're in california but even if you're not i think these things also apply in most markets but especially if you're in california here's a couple reasons why you need to highly consider doing more
00:08:52
Speaker
PPAs or leases right now number one kind of like what happened in the story I just told you with when you do the loans the financing you're adding debt you're adding you know debt to income you're adding a loan on there people get scared away by these things and if you're an expert and explain it right you should be able to present these things as not scary but sometimes no matter what you do people are like oh man
00:09:17
Speaker
$70,000 to go slower and it's going to be on my credit report now?
00:09:23
Speaker
I don't know.
00:09:23
Speaker
Okay.
00:09:24
Speaker
Cause you can explain it over and over, but some people, maybe the analytical types, some people are, do get held up by these things.
00:09:31
Speaker
So with the PPA, don't have to worry about any of that.
00:09:33
Speaker
Right.
00:09:34
Speaker
That's the first reason.
00:09:35
Speaker
Number two, all the maintenance, all the service covered.
00:09:38
Speaker
And I get it.
00:09:38
Speaker
A lot of loan options these days, you know, you got service covered, you got a maintenance covered, but I hear from a lot of people that
00:09:47
Speaker
If something happens, you own the system.
00:09:50
Speaker
A lot of these companies, they take time to get out there and service them.
00:09:53
Speaker
And in the meantime, these people still got to pay their loans, still got to make their monthly payments.
00:09:59
Speaker
So if you lease it, if you do a PPA, you don't have to worry about that nearly as much.
00:10:04
Speaker
Like they're only paying for the power that produces in the case of a PPA.
00:10:09
Speaker
And at least in my experience, the PPAs I've done, people have gotten their system service way quicker.
00:10:15
Speaker
Okay, and by the way, I am not someone that has done a ton of PPAs out here in California.
00:10:22
Speaker
I know you look at bigger companies, Sunrun, a lot of the bigger solar dealers and everything.
00:10:29
Speaker
People are slamming PPAs like crazy.
00:10:31
Speaker
That's all they do.
00:10:32
Speaker
And all these people, that's all they know how to do.
00:10:34
Speaker
But I'm not coming at this...
00:10:36
Speaker
biased towards PPAs because I've done mostly loans for my entire career.
00:10:42
Speaker
I would say I'm probably like 80% loans of all the systems I've sold.
00:10:46
Speaker
That's probably 300 plus systems, probably close to 400, 350 to 400 systems, 80% loans is what I've done.
00:10:55
Speaker
But that being said, I am liking much more right now, especially with the higher rates, with the higher dealer fees, I am liking a lot more.
00:11:03
Speaker
the PPA options.
00:11:05
Speaker
And then a few other reasons on top of that.
00:11:08
Speaker
Number three, you got it's easier for beginners.
00:11:10
Speaker
There's a reason all these bigger companies get new sales reps in and they teach them PPAs first because they're easy to get easier to present.
00:11:19
Speaker
Hey, you're not attaching the loan.
00:11:21
Speaker
You're not attaching debts.
00:11:22
Speaker
You just attach a lower monthly payment, at least in California.
00:11:26
Speaker
I know some of you listen to this in other markets.
00:11:28
Speaker
Maybe you're jealous.
00:11:29
Speaker
Okay.
00:11:30
Speaker
but you don't have to explain any of the other stuff a lot easier to get people through the door teach them this little cookie cutter script on how to sell ppa and boom you're good to go another thing that i didn't write down but i just thought about this spur of the moment here is a lot easier to make higher commissions on these things hey people are making insane commissions selling ppas because again you're not jacking the price up
00:11:54
Speaker
and showing that you're even though maybe you're price gouging people okay um i think there's a point where you shouldn't jack the price up too much on a ppa either but on a loan on financing it can be really obvious if you're charging way more than what the market is because people can go do a google search they can look up average pricing and you're done for you're getting a call to cancel where ppas you're not going to get as many people like it's just a lower rate
00:12:21
Speaker
People don't generally think, oh, I need to go shop out this lower rate and make sure I'm getting the best deal, right?
00:12:26
Speaker
Can happen, but not as often.
00:12:28
Speaker
Hey, and then number four, and stay tuned at the end.
00:12:32
Speaker
I've got the most important point coming up right after this pertains to mostly California, but stay tuned here.
00:12:39
Speaker
But number four is it's great for people with a lower tax liability.
00:12:43
Speaker
Hey, I just had a deal last week where I did a prepaid PPA, where that's just people pay the full cost of the PPA in advance.
00:12:53
Speaker
But not only did she get it way cheaper than what she was going to pay cash, because she had no tax liability, she wasn't going to get a tax credit.
00:13:03
Speaker
So all she does, she writes the check for a lower, you know, prepaying the system, prepaying the PPA,
00:13:08
Speaker
And she gets all the benefits of it.
00:13:10
Speaker
Next 25 years, everything's covered.
00:13:13
Speaker
Great option for her and great option for people that maybe they're retired, maybe they're not paying much in taxes on social security, whatever.
00:13:20
Speaker
And especially in other markets, when I did a blitz in Texas, we were at times knocking in lower income areas.
00:13:27
Speaker
People weren't paying a ton in taxes.
00:13:29
Speaker
And if you know Texas, you know people are getting generally huge systems, which means they've got huge tax credits coming.
00:13:36
Speaker
So if they're not going to get these huge tax credits,
00:13:38
Speaker
It's not as
Long-term Benefits of PPAs
00:13:39
Speaker
beneficial.
00:13:39
Speaker
Hey, and here's the last point and most important of all, especially in California, which I think is awesome and for me is the number one reason why you should consider selling these PPAs is, drumroll, because the battery is covered for 25 years.
00:13:55
Speaker
Okay, people need a battery.
00:13:57
Speaker
I'm speaking the PPAs I've sold.
00:13:59
Speaker
Maybe there's some lenders that don't cover this.
00:14:02
Speaker
I'm talking Sunrun specifically.
00:14:04
Speaker
I know Sunnova does.
00:14:06
Speaker
I'm not sure Everbright is another one we use.
00:14:08
Speaker
I'm not sure about that.
00:14:09
Speaker
But in general, to my understanding, 25 years of battery coverage, where you think about a loan, people are getting these expensive batteries, paying an extra $10,000, $15,000.
00:14:19
Speaker
And then what do they got to do?
00:14:21
Speaker
10 years, they're buying a new one.
00:14:24
Speaker
So this is my top reason why
00:14:27
Speaker
You should be starting to sell PPAs, why you should be doing more at leases.
00:14:30
Speaker
On top of all the other things, they're not evil.
00:14:33
Speaker
I think they are one of the better ways to do it right now.
00:14:36
Speaker
And matter of fact, funny story, people that follow me on social media, you saw this.
00:14:41
Speaker
I was knocking a door.
00:14:44
Speaker
This guy comes out and crazy never happened to me before.
00:14:48
Speaker
But he goes, oh, wait, are you Taylor Armstrong, the solar printer guy?
00:14:52
Speaker
This is just a cold door I'm knocking.
00:14:54
Speaker
And the guy comes out like that.
00:14:56
Speaker
I'm like, yeah, how'd you know, man?
00:14:59
Speaker
And turns out this guy was in solar for I don't know how long, not very long, but he didn't have solar on his house.
00:15:05
Speaker
Crazy.
00:15:06
Speaker
I don't know why.
00:15:07
Speaker
But we have a conversation.
00:15:08
Speaker
He tells me he loves the podcast.
00:15:10
Speaker
He helped him out a lot when he was the short time he was in solar.
00:15:14
Speaker
And he's like, hey, you know what?
00:15:15
Speaker
I'm going to go solar with you.
00:15:17
Speaker
Let's do this.
00:15:18
Speaker
And we're locking down an appointment time.
00:15:20
Speaker
This guy's like a business owner, insanely busy.
00:15:23
Speaker
But he has been responding to me.
00:15:24
Speaker
And one of the first things he said is, hey, I don't want to buy the solar, though.
00:15:28
Speaker
I want to do a
PPAs as a Practical Choice
00:15:29
Speaker
PPA.
00:15:29
Speaker
This is coming from someone that's educated about solar.
00:15:32
Speaker
And one of my good friends out here, he just put a PPA on his home.
00:15:36
Speaker
Got a lot of friends that put PPAs on their homes instead of buying the system.
00:15:40
Speaker
So I don't feel bad about offering it to people.
00:15:43
Speaker
I think it is a great option.
00:15:44
Speaker
So hope that helps.
00:15:45
Speaker
Whatever market you're in, if you don't have access to power purchase agreements, to leases, I'm sure you will soon at some point.
00:15:52
Speaker
But consider those benefits.
00:15:54
Speaker
Consider the other options and...
00:15:57
Speaker
remember, always love the families you meet with.
00:16:00
Speaker
Always do what's best with present to them the best options.
00:16:03
Speaker
It shouldn't be all about what's making us the most money, but it should be a win-win, right?
00:16:08
Speaker
Win for the customer, win for us, and win against the utility or lose.
00:16:14
Speaker
Utility loses, right?
00:16:15
Speaker
But we all win.
00:16:16
Speaker
Win for the company.
00:16:17
Speaker
So that's the podcast today.
00:16:18
Speaker
Hope it helps.
00:16:19
Speaker
Go out, sell some PPAs or some leases today.
00:16:23
Speaker
Remember those benefits and unique offerings with them.
00:16:26
Speaker
And we'll see you guys on the next episode.
Free Sales Diagnostic Opportunity
00:16:30
Speaker
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00:16:36
Speaker
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00:16:42
Speaker
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00:16:48
Speaker
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00:16:55
Speaker
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00:16:58
Speaker
So book a call now.
00:16:59
Speaker
Don't miss out.
00:17:01
Speaker
What you're going to do is send an email to taylor at solarpreneurs.com.
00:17:06
Speaker
That's taylor at solarpreneurs with an S dot com.
00:17:10
Speaker
I'll send you out a calendar link and we will figure out the time that works best.
00:17:14
Speaker
So shoot that email and let's increase your sales.