New Changes to Solar Fields

In 2023 the LVR President formed a President’s Advisory Group (PAG) to make recommendations with regards to Photovoltaic Solar, since this aspect of residential real estate is constantly evolving, we are just keeping up with those changes. After review by the MLS Board of Directors you will see some change to the Solar fields within Matrix™. On Tuesday, April 9, 2024 the following changes will take effect within the MLS system.

Solar-PV, specifically refers to the type that generates electricity, will now be distinguished in MLS as Solar-PV. These photovoltaic panels operate without chemicals and with no moving parts to create energy directly from sunlight.

Besides the current Solar multi select options already in place there will be additional values of Financed and Power Purchase Agreement (PPA). You will need to accurately determine which of these is on your listing. Obtaining a copy of the paperwork that your seller received when they got the system will be extremely valuable to you in smoothly completing the transaction.

1)

Owned - When the system was purchased outright or financed, it falls under this category. The paperwork will reference a single purchase price, such as when buying a car. The price will be similar to that, as well.  

If your seller had it installed, they will likely recall having gotten a Federal Tax Credit. That is another confirmation that the system is owned.

Financed - If it is owned, and the owner is making payments, the system is financed. The title company can confirm this by checking to see if a UCC-1 lien has been filed against the property. If this is the case, you will need to check the box indicating that the system is financed.

UCC-1 When a system is used as collateral, the lienholder will place this UCC-1 lien on the property. It ensures that the loan for the PV-Solar is paid off before the property can be sold or refinanced.

When this lien exists, FNMA will NOT allow an appraiser to consider the value of the system in the appraisal. Does that mean that the system has no value? No! Just like your car, if you owe money on your car loan, does the car have no value? Sure it does, but the loan needs to be paid off before that value can be realized.

If your seller is paying off the loan on the solar with the proceeds of the sale, be sure to uncheck the box indicating it was financed. This way, the appraiser knows that the system can be considered in the value. Be sure this is noted in the RPA too.

2)

Leased – If a system is leased, the lessor will typically structure the lease agreement as a singular, set monthly amount for a term of 20-25 years, and will often include an escalation percentage.  

For example, the system may be leased for $225 per month, and it will often include a provision of 2-3% per year that is can increase. For example, a lease of $225 per month in year 1, with a 2.99% escalation will be $231.72 per month in year 2, and so on.

A Lease will be the same charge every month of each year.

A lease will (or should) guarantee a minimum output of the system per month/year. If it produces less than that, the lessor will compensate for the difference. If it produces more electricity than that, there is no charge for it.

3)

Power Purchase Agreement (PPA) - With a PPA, a third party will put a system on your roof and you will pay them an agreed upon amount per Kilowatt Hour (KwH). Basically, you agreed to buy power from them, just like you buy it from NV Energy.  

It will be charged monthly, based on the production of the system. In this example, a system could produce, 900 KwH per month in the Spring, at an agreed upon rate might be $0.11 per KwH, so April of year 1 would be $99.00 for the energy produced on your roof. In July, is could be 1,200 KwH, so the bill would be $132.

There can also an escalation percentage for a PPA, so that same 2.99% annual increase would bring the KwH rate to $0.113 in year 2, and $0.117 in year 3, and so on.

A PPA will have a different amount due every month.