Everyone in the solar industry is focused on soft costs—that is all the extra expenses that are rolled into the cost of installing a solar power system. Since prices for solar modules have dropped to below a dollar/Watt, the percentage of an overall system price consumed by soft costs continues to increase. But soft costs are really hard to reduce and we just had a painful example to help drive that point home.
One of the most pernicious of the soft costs are those associated with getting approvals from the Authorities Having Jurisdiction (AHJs) over the project. That includes both the utility that must approve any rebate application and interconnection agreement, as well as the local building and safety department which must issue the permit and inspect the project. The requirements for approving a solar power system vary considerably from jurisdiction to jurisdiction and that lack of standardization—combined with just plain arbitrariness that runs rampant in some places—means long, pointless delays in moving projects forward.
We are working on a medium-sized residential project in Los Angeles. If we were doing this in Pasadena, it would be installed by now, but as everyone knows, LA isn’t Pasadena. We submitted the requested materials for reserving the rebate on this project on December 3 of last year and then sat back while we waited to hear from them. Weeks went by without a peep—while we reassured our client that we would update them as soon as we heard something.
Then, finally, we did. On February 19th, seventy-eight days after we submitted the application, we got an email telling us that the application was “incomplete” and that:
If you fail to submit the requested documentation by the above date your incentive application will be subject to cancellation without further notice.
(It really was in red type.) How long did they give us to respond? Two weeks. In other words, we get less than one fifth of the time that LADWP took to, in its sole discretion, identify “deficiencies", to cure those deficiencies.
If that wasn’t bad enough, LADWP adds insult to injury by sending a copy of the “deficiency” email to the client! Pity the poor client—they have picked a contractor, signed a bunch of paperwork, and made a down payment, all months ago with nothing to show for it, and then they get an email that suggests for all the world that their contractor has botched things and their project is about to go south! How helpful.
So now the contractor has to spend time reassuring the client that despite the dire tone of the email, everything will be ok. Then you spend more time addressing the “deficiencies” that have caused all the ruckus in the first place.
I won’t bore you with the entire litany of nonsense that we were asked to cure, but my favorite one was this: when you submit information about the system online, you are supposed to show the cost of modules, the cost of the inverter(s) and the balance of system (BoS) costs. You are also required to submit a copy of your contract for the sale. This we did. But they complained that the contract price and the system price entered online did not agree. Now here’s the thing, once you submit the rebate application to LADWP you can no longer see those details, so the contractor has no way to know where this “error” came from. So, with no other options, you tell them that the contract is the controlling document as to the system cost so they should use that.
Instead, they send out yet another email, this time with the scary heading: “FINAL NOTICE” (yes, all in caps) with the following declaration:
The Los Angeles Department of Water and Power (LADWP) has received your Solar Incentive Program application, and it is still incomplete.
And yes, they send a copy of this email to your client as well.
Now if they had actually read the contract they would have understood that the discrepancy is due to the rebate amount itself. Online, the total cost reflects the price before rebate. But because we front the rebate for our client, the contract price is net of the rebate amount. (The contract itself spells that all out, of course, but then LADWP would have to actually read the contract.) We thought about explaining this before coming to our senses and realizing that was a lost cause. Instead, we created a letter requesting that they modify the online data to reduce the BoS amount by the rebate, and uploaded that to their system. Voila, just like that, they reserved the rebate.
By my count, it took eight emails to get this resolved.
Just about everything about this interaction is wrong. The delay in the initial contact is wrong. The tone of the email sent out is wrong. The absurd disparity between the timing LADWP allows itself versus that to the contractor is wrong. And the lack of understanding of what they are reviewing is infuriatingly wrong. It builds in delays and costs to deal with those delays. It is what makes soft costs so damn hard.
It needs to change.
At Run on Sun we love March, in fact, its our favorite month. Part of that is that March means Spring and how can anyone not love Spring? But March is also the birthday month for Run on Sun Founder & CEO, Jim Jenal, and for this March we decided to give the presents to you!
For the entire month of March, we are putting Jim’s book, Commercial Solar: Step-by-Step on sale for the special price of just $6.50, more than 33% of the regular list price of $9.95. Plus, if you purchase the paperback version of Commercial Solar you can download the Kindle eBook for free! (Heck, you could buy the paperback, keep the Kindle eBook and gift someone else with the paperback—how’s that for gifting it forward?)
Plus - if you show us your copy of Jim’s book when we come to do your site evaluation, you will qualify for a special discount on your proposal price!
So don’t wait. Help us celebrate March and all that it holds by taking advantage of these special offers.
Because come April, the accountants take over again and the prices go back up!
UPDATE - The podcast is now online so should you care to listen to Steven Bushong’s interview with me, you will find it here.
The folks at Solar Power World have a regular feature called “Contractors Corner” where they profile a solar power company and this month they chose Run on Sun!
We have been on a bit of a roll with Solar Power World of late. We were honored to have our small but mighty band featured as one of their top 250 solar companies around the country, and we were quoted at length in their piece on “How to Make Sure Your Business Survives the Solar Frontier."
Today’s honor takes things to a whole new level. The piece started with a phone interview (which will be turned into a podcast at some point) and from that, editor Steven Bushong created the article that is featured on both the Solar Power World website as well as their print magazine.
A point we particularly like is that they picked up on the importance of social media. Here’s the quote:
To stay current on the solar industry and help with marketing efforts, Run on Sun is plugged into social media much more than most other contractors.
“People who aren’t initiated often think it’s little more than photos of cats and dinners, but we have a well-developed Twitter and LinkedIn presence,” Jenal says. “The NABCEP LinkedIn group has some really smart people who are good at raising issues and answering questions.”
As an outbound marketing source, Run on Sun has amassed more than 20,000 followers on Twitter (@RunOnSun). Jenal says when the company releases blog posts or announcements on social media, the impact is immediate on the company website or blog.
“It’s a way to get our information out there so people can see it,” he says. “That indirectly contributes to leads coming through the door or website.”
Indeed it does - and it contributes to becoming more broadly known in the industry, as Solar Power World has demonstrated. We greatly appreciate the honor.
Ever since a fire chief in New Jersey let a warehouse burn for days because of his concerns about dealing with the solar power system on the roof, we are seeing a spate of these stories now migrated to concerns about residential solar as well. We think the risk is greatly overstated, but it turns out that allaying a firefighter’s fear of solar is one more argument for using Enphase microinverters.
We wrote about the New Jersey issue back in September and the fire chief was quoted as saying, “with all that power and energy up there, I can’t jeopardize a guy’s life for that.” Now no one wants to see anyone injured because of a fire, and certainly not because solar was on the structure that was burning. (The cause of the fire has not yet been disclosed.) But was that really the only option—avoid the roof and let the fire burn for days?
Worse still, now we are starting to see a steady drumbeat of similar stories with a residential slant.
Take this story that aired on a local news outlet with the scary title: Firefighters Warn Solar Panels Could Prevent Homes from Being Saved in Blaze. While the homeowner is thrilled to be saving money, he is unaware of the danger he is facing until it is presented to him—by the reporter. But how great is that danger, and what can be done to minimize it?
For one thing, here in California there are already State Fire Marshall guidelines that require set-asides on the roof to allow firefighters access and space to vent the roof as needed, without having to cut into areas covered by solar.
As for the concern about turning the system off so that dangerous amounts of power aren’t present on the roof, well, that is where the benefit of microinverters, such as those that we use from Enphase Energy, comes into play. When you shut off the power at the ground-based AC disconnect switch, the entire array is powered down. The solar conduits coming down from the roof are rendered inert, harmless, with no power present at all. This is the safest possible environment for firefighters with solar and the fire inspectors that we have dealt with readily understand, and appreciate, the difference.
So, should a homeowner pick a solar power system based on avoiding fire danger? Perhaps not; but if you are the sort that worries about such things, you should know that microinverters give you one more benefit—firefighter safety—over older designs. To maximize that benefit, we just need a generally accepted sign to mount on our systems that will let firefighters know what sort of solar system they are facing.
While the buzz around REC Solar this week is that their residential and distribution segments have been bought by Sunrun, we were struck by a press release that they circulated a couple of weeks ago and which was picked up in a story by Greentech Media. In it, REC puts forward a shocking statistic which, if true, is something of a scandal for the residential solar industry—but is it true?
It was the GTM piece that originally sparked our curiosity. Titled, “The Secrets of Selling Solar: Drivers of REC Solar’s Strong Growth,” the piece appears to have taken REC’s press release pretty much at face value. Here’s the money quote:
While 40 percent of solar install orders are canceled industry-wide, only 5 percent of REC Solar’s customers cancel. “When we qualify customers, we are honest and educate them about solar,” [REC Solar VP/General Manager Ethan] Miller explained. “That way, we are more likely to meet their expectations.”
That casual indictment—40% of solar install orders are canceled industry-wide—jumped off the page at me. How could it be that so many people were signing up to go solar, only to cancel the order after the fact? And if that was true, why on earth was it happening? What had been done to those poor people to get them to sign on the dotted line in the first place, only to have sufficient regrets that they cancelled their contract?
Unfortunately, the article provided no source for that shocking stat. Checking with folks at GTM for a source pointed us back to the REC press release. Here’s how that same stat is presented there:
Just 5 percent of REC Solar customers cancel before completing their system, compared to a 40 percent cancellation rate across the solar industry. This statistic reflects that REC Solar’s superior customer service enables more projects to come to fruition than any other solar installer.
Once again, the 40% figure is tossed out without citation. The only contact info on the press release was to someone named Sara Mier so we sent her an email asking for the source of the number. She replied promptly, if not helpfully, saying:
A good place to look for statistics on cancellation rates is California Solar Statistics.
Hope that helps!
Now I have as much respect for the insights possible from the CSI data as anyone, but this struck me as just strange. First of all, REC’s quote referred to the cancellation rate for the entire solar industry, whereas CSI data doesn’t even cover all of California. (In particular, the CSI data only covers systems interconnected to the state’s three Investor Owned Utilities: PG&E, SCE and SDG&E. Notably missing are municipal utilities like LADWP and PWP.) Moreover, presumably this 40% number is driven, at least in part, by contracts that are cancelled during a state-law mandated “cooling-off period” which in California is three days. As a general proposition, CSI data would have no visibility into such cancellations, even for contracts signed in IOU territories, since those contracts most likely never have rebate applications submitted, thereby making them invisible to CSI.
But given those caveats, what does the CSI data tell us about projects going south?
CSI categorizes cancelled projects as “delisted” and we wrote about delisted projects last August. In that slice of CSI data (limited to the first six months of 2013 and just in SCE’s service territory) we found that only 3.26% of projects were delisted—less than a tenth of the figure cited by REC! We even published a chart that showed the top companies with delisted projects (where they had at least 10 projects delisted), and guess what? REC made that list, albeit at just 2%! Indeed, only one company—out of 149 different companies that had delisted projects—showed a cancellation rate at or above the 40% figure that REC has published.
My email back to Ms. Mier pointing out these limitations invoked no response but silence.
Having failed in that avenue I decided to reach out to Mr. Miller directly and after some sleuthing was able to determine his email address. Unfortunately, our email to him requesting comment on this question was similarly met with silence.
So what is the basis for this damning number? We have no idea. Which makes Mr. Miller’s quote somewhat ironic:
While 40 percent of solar install orders are canceled industry-wide, only 5 percent of REC Solar’s customers cancel. “When we qualify customers, we are honest and educate them about solar,” Miller explained.
One wonders just how honest you are with your potential customers when you toss out baseless statistics to make your own performance look better.
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