All solar companies market themselves, Run on Sun included. But lately we’ve come across some particularly puzzling ploys being touted by some companies as if they were a benefit to the consumer, when all they really are is a way for the solar company to cut their costs at the consumer’s expense! Let’s peel back the onion layers on these three ploys to see what is really going on…
One of the major solar companies built its entire business model around this ploy, and a bunch of aggregator sites have popped up offering much the same thing: a quote on a solar power system without ever visiting the consumer’s home. Certainly for some folks - the very busy or the very shy - this might sound appealing. You can get a quote for your system without ever having to deal with those pushy salespeople.
The advantage to the solar company should be pretty obvious - they avoid the time and expense of sending a vehicle and a salesperson to your home, thereby saving the salesperson for only those potential clients where a face-to-face meeting is required.
So how does this ploy cost consumers? The simple truth is that no one can properly install a solar system without actually coming to your home and seeing the actual conditions on the ground. While satellite images are great for making preliminary assessments, there is just too much that could affect the ultimate cost of the system that cannot be determined remotely. For example, the other day we noticed a sag in a roof while taking our measurements. Upon closer inspection it was discovered that one of the roof rafters was split and caused the roof to sag. That damaged rafter needs to be repaired or replaced before solar can be safely installed. The homeowner was completely unaware of the situation until we pointed it out to him.
When a solar company gives you a quote without having performed a comprehensive site evaluation, their quote will be hedged as “preliminary, subject to revision following engineering review." Which means that after you sign the contract, they will “discover” the issues that they should have told you about initially. But now you will have signed a contract and to move the project forward you will have to accept a change order increasing your cost. Great deal for the solar company, not so much for the consumer.
This one to me is a real head scratcher - the solar company that brags that they will install solar on your home in one day! Seriously?
Solar power systems, when installed correctly, should provide you with trouble-free operation for twenty years. Given that time frame, do you as a consumer really care whether the install takes one day or four? Frankly, in ten years of doing this, we have never had a client ask if we could complete the installation in one day.
Of course, that doesn’t mean that clients aren’t concerned about how the installation will be done, they are. But they are interested in knowing that it will be done right, and right the first time.
The solar company promoting this ploy wants to suggest that they have this so dialed in that it will take them no time at all. But what is really happening is that they are telling their crews to throw it up on the roof and move on to the next job. That translates into lower labor costs for the solar company (i.e., more money in their pocket), but no real benefit for the consumer.
The simple truth is that craftsmanship takes time. You, the solar consumer, are going to be living with this for the next twenty years - maybe that extra day or two will actually inure to your favor!
This may be the scammiest ploy of all. The solar company prominently displays that they will install solar on your home for free! And who doesn’t love free, right?
Of course what this really means is that the solar company wants you to sign on to a 20+ year agreement (either a lease or a Power Purchase Agreement) to pay them every month for the privilege of having that “free” solar on your roof. The end result is that you end up paying as much as twice as much to that solar company as you would have if you had purchased the system outright - and you still won’t own it even after twenty years!
And yes, I know that not everyone has the cash on hand to purchase a system outright, but there are better options than leasing. For consumers with good credit, a home equity line of credit will be way cheaper than going with a solar lease. If your credit is not so great, you could look into PACE financing which is not tied to personal credit. PACE is more expensive that a HELOC, but still a better deal than a solar lease.
At the end of the day, all of these ploys work in the solar company’s financial interests, and not the consumer’s. The folks that dream up these schemes are shrewd - consumers need to be just as shrewd if they are to avoid getting fleeced!
Happy New Year!
When deciding to invest in a photovoltaic solar system one of the first questions everyone has is how to finance the cost. While solar continues to be a great long-term investment, with payback periods often in the 4-7 year range, the hefty outlay is more than many homeowners feel comfortable fronting. Hence, the concept of the zero-down solar lease financing model and third-party system ownership (TPO) was born. While SunRun invented the model in 2007, the three behemoth national solar companies - SolarCity, Vivint Solar, and SunRun - rose to the top over the last five years due to the popularity and ease of the model for customers. Until this year, nearly 100% of Vivint Solar’s business was with solar leases and power purchase agreements (PPA’s).
However, as we at Run on Sun point out to all of our potential clients and in various blog posts, solar leases are simply a bad deal. And, what do you know, finally the wider public seems to be coming around to this fact! GTM’s recent report, “US Residential Solar Financing 2016-2021“, showed that for the first time since 2011, direct ownership of residential solar systems will surpass third-party ownership in 2017. The solar lease has been rapidly decreasing in popularity since it peaked in 2014 with 72% of the market. GTM predicts that in 2017 55% of residential solar systems will be bought outright through cash or loans, and the trend will continue with 72% of all systems sold owned directly by 2021.
GTM Research: Residential TPO Penetration and Installations by Ownership Type, 2011-2021
There are several factors at play in this shift. The total cost to go solar has declined rapidly in recent years meaning the upfront cost continues to be less frightening. Today there are more attractive solar loan options available to homeowners as well. One popular option in California is the PACE (Property Assessed Clean Energy) government loan program which is repaid as an assessment on the homeowners property tax bill. Mosaic is another solar loan program available nationally. While loans do have interest rates and dealer fees to be aware of, the benefits of owning a system outright far outweigh the costs of third party ownership - such as financially damning escalator clauses, the inability to take the tax credit or local rebates, and the risk of selling your home to buyers who don’t qualify for (or want) the solar lease.
Overall growth of the solar industry is also beginning to slow this year. After growing at more than 50% annually for the last four years, the residential market is expected to see a slower growth rate of 16% this year. The report shows that growth has slowed among all solar installation companies, but much more so for the top three national companies who previously relied upon the popularity of the solar lease. For the first time since 2013, these three will together install less than half the market’s solar systems as their growth slows to just 12%. By contrast, growth among the remaining solar power installation market will slow to 36% according to GTM. It will be interesting to see how the “big three” handle this shift in the coming years.
One thing to note is that while growth is slowing among the largest companies, solar continues to grow overall. Smaller local companies have always offered, and preferred, to sell systems outright rather than through leases and these companies are becoming more popular as more research shows the true value of ownership vs leasing. As one of those companies, we have always stood by the data and educate all our clients on the realities of financing options as the last thing we want is to be in the business of locking people into a twenty-year-long bad deal! Curious as to the specifics of leasing vs owning? Check out our blog from almost two years ago: Top Five Reasons to Stay Away from that Solar Lease!
At Run on Sun we don’t take partisan stances on politics. We believe everyone, regardless of politics, benefits from harnessing the unlimited resource of sun-powered PV systems. However, the recent election has raised questions about the future of federally-backed support for solar - specifically the federal solar investment tax credit (ITC). The short answer is, we are optimistic the current plan for the ITC to continue for three years at 30% then gradually sunset after five will be unaffected. Here’s why:
The fact is, the ITC is federal law and laws are not easily changed. Even if it did somehow manage to be changed before the 5-year planned sunset, we are confident our state will step up to make sure adequate support continues to make solar an economically viable option for the public. Never fear! Solar is here to stay.
(Thank you to CALSEIA and Executive Director Bernadette del Chiaro for the inspiration for this blog and for their invaluable efforts to advocate on behalf of the solar industry.)
Bad news for Pasadena Water and Power customers - we have just learned that PWP’s solar rebates will be dropping by 1/3 effective August 1st! Here are the details…
As we have noted many times in the past, Pasadena has one of the best solar rebate programs around - decent rebates, a well managed program, and good communications. Consistent with that approach we have just learned that the solar rebates are going to be reduced effective August 1st. That means that rebate applications submitted prior to then, and which are deemed complete when submitted, will qualify for the current rebate. Once the rebate is reserved, you would then have a year to complete the project.
Here are the current and upcoming rebate rates:
Potential residential or commercial clients, your rebate will drop from 45¢/Watt to 30¢/Watt. That means that for a typical residential project of 5 kW, the rebate will drop from $2,250 to $1,500.
Non-profits will leave even more money on the table if they miss the August 1 deadline. For a typical 40 kW school project, the rebate will drop from $36,000 to $24,000! Ouch!
If past is prologue, this drop in the rebate amount will create a stampede as folks try to lock in the current rebate rate before it steps down. If you are in PWP’s service area, please don’t wait, give us a call today!
(Editor’s Note: This is our second of two articles looking at data provided to us by NREL researcher Benjamin Sigrin as part of his SEEDS investigation. To read more about that project and our first post analyzing this data, please see: Who Chooses Run on Sun?)
While some 400,000 California homes and businesses have gone solar, there are still many folks out there who think about solar but ultimately don’t pull the trigger. The SEEDS data provides some interesting insights into the reasons why that might happen - and in the process, provides some pointers for what we as an industry can do better.
To get a handle on why consumers don’t become solar clients, it is first important to know why they were looking into solar in the first place…
It should come as no surprise to anyone that the number one reason that non-adopters cited for looking into solar was to save money on their energy bills. After all, that is what most advertising in the industry is focused on, “Save money by going solar!" Which is fine, as far as it goes, but there is the risk that some of those ad claims create unrealistic expectations among consumers.
Some of the other initial motivators are quite interesting, including seeing solar being installed on another person’s home. This is classic secondary-adoption behavior, and it suggests that we are moving away from the pioneering, early-adopters and into the general public. But unlike those pioneers, the general public is likely to be far more skeptical regarding claims by solar sales people!
So how are folks first connecting with a solar installer? For folks in SoCal, this chart will come as no surprise…
Nearly 60% first made contact by having someone show up at their door! This gives rise to the following likely scenario: consumer has been suffering from high energy bills when an aggressive salesperson shows up on their door, promising amazing savings (and frequently at “No Cost to You!”), and then doesn’t leave until the hapless homeowner signs on the dotted line. The likelihood of this scenario is bolstered by this graph that we used in our initial post…
More than 40% of all solar consumers spoke to only one solar company! Clearly for a sizeable percentage of consumers those high-pressure tactics are effective in closing the sale, but we are very concerned that they are breeding a backlash that will damage the industry in the long term (more on that in a future post).
The second most common way to first come in contact with an installer is via a recommendation, although that only occurs one-third as often as finding a stranger on your doorstep! As solar becomes more mainstream, we expect the number of first contacts by way of recommendation to go up, and hopefully the number of uninvited house guests to decline.
The bottom ranked means are particularly depressing as they include conventional advertising, review/research websites (like Yelp or Angie’s list) and the ever popular, but obviously ineffective, website forms.
These are all the means by which prospective clients are getting into the solar sales funnel, but where are they dropping out? The survey data provides some insights there, too…
Money, it seems, is still the number one impediment to going solar - and this despite the availability of zero-money down leasing programs. (Perhaps people are looking more closely into the fine print of those programs and realizing that they aren’t the great deal that they are cracked up to be?) However, the dataset of folks who did not go forward reaches back several years, and prices (and consumer access to financing) were more daunting years ago than they are today.
Which makes the second reason cited a greater cause for concern: nearly 40% cited the inability to find a “trustworthy and competent installer!" To be sure, there is no shortage of installation companies out there, so it is in the trust and competence areas that we are failing as an industry to meet more than a third of consumers’ expectations!
While we like to think that we score well on both counts (and our clients would agree!), we think there are some simple ways for consumers to overcome this hurdle. First, do some homework - if you want to find a competent installer, go look where they hang out: the NABCEP website. Second, talk to your family, friends, and co-workers. With 400,000 installs in California alone, you already know people who have gone solar, so seek them out and hear what they have to say. And finally, get more than one bid! A solar installation is a major purchase (no matter how it is financed) so it is in your best interest to shop around.
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