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No. of Recommendations: 4
A few things to clarify and I'll use your bullet points.

2. The PPA isn't fixed, it escalates at 2% to 3% per year typically.
3. One watt will generate about 2,000 watt-hours, which is 2 kW-hrs. So, a 5 kW system will generate about 10,000 kW-hrs per year.
4. SCTY and SPWR use a 6% discount rate for their retained value calculations.

Your objections are understandable but they are included in SCTY and SPWR's retained value models.

1. SCTY breaks out their assumed retained value after contract in earnings presentations (typically 40% of total retained value). In my articles I usually assume that is $0 because we have no idea what solar will look like in 20 years and why would I renew a lease with panels performing at 50% or less of current options?
2. These costs are small so you can probably ignore them in a simple model.
3. Probably true and addressed in my point above.
4. This depends on the panel. Chinese panels will degrade between 1% and 2% per year and SPWR will degrade <0.25% per year (according to their data). A 1% assumption is probably safe.

I hope that helps.

Travis Hoium
Solar Specialist
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