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Jul 25, 2012

Solar Issues of the Day: Customer Acquisition (Rescheduled Google Hangout July 25, 2012 at 11:00 a.m. MDT)


This event was broadcast July 25th 2012. You can watch the archived video below.

A holy trinity of plunging photovoltaic module costs, slowly escalating electricity rates, and new solar business models have created an environment where installing a rooftop solar system now makes pure economic sense for about 5 percent of buildings in the U.S. And yet, only about 0.2 percent actually have a PV system.

*Source: Multiple – see below

Much of the ability to further lower costs and increase overall demand relies on reducing so-called “customer acquisition” costs. On July 25th at 11:00 a.m. MDT, RMI experts will be joined by two solar customer-acquisition entrepreneurs, Dr. Beau Peelle, co-founder and president of Clean Energy Experts, and Tyler Tringas, founder of SolarList, on a Google Hangout to talk about overcoming the solar supply-vs.-demand challenge and how the industry is working to address high customer acquisition costs.

In order to better understand the customer acquisition issue, let’s compare the U.S. to the current global leader in low-cost solar PV: Germany. As highlighted recently by Greentech Media, average German PV system prices in 2012 were estimated at $2.24 per watt. Moreover, 72 percent of these installations were rooftop systems. In the U.S., average installed prices are twice as high: $4.44/watt.

If we hold module prices and all balance of system equipment (inverter, racking, and wiring) constant, that means that Germans spend about $3,500 per average residential rooftop installation on all “soft costs” including installation labor, permitting, interconnection, supply chain costs, taxes, system design, and acquiring new customers. In the U.S., that same figure is over three times as high: $11,200.

More specifically, in the U.S. rooftop residential solar market, about 44 percent of all such soft costs come from the process of acquiring customers and designing their systems. This includes costs incurred from customers who drop out halfway through the process and most sales and marketing costs.

Solar broadcast image 2

Source: Ardani et al. Quantifying Non-Hardware Balance of System Costs for Photovoltaic Installations in the United States Using a Combined Annual Expenditure-Labor Hour Productivity Approach. IEEE, 2012. See Figure 3, p. 6 for detail.

Customer acquisition costs must come down dramatically in order to meet the aggressive goals outlined in Reinventing Fire’s “Transform Case” by 2050 and by the Department of Energy’s “SunShot” program by 2030. This week’s Google Hangout will explore several specific customer acquisition challenges and introduce viewers to current business-led innovations in the space.

Join us on Thursday, and you’ll learn:

  • Why customer acquisition and system design costs are so much higher in the U.S. than in more mature European markets.
  • How much of the customer acquisition problem will be “solved” as the domestic market naturally matures, and how much of it will need to be directly addressed by industry.
  • What the main drivers of solar adoption in the U.S. are and how the market has changed in the past decade.
  • What novel approaches are companies in the solar industry developing and/or adopting to help reduce customer acquisition costs.

To watch the discussion live, you can:

1. Bookmark this page. We'll be streaming the conversation here starting at 11:00 MDT on July 25th.
2. Go to RMI's YouTube page and click on the Feed tab. The video will stream there as well.
3. Go to RMI's Google+ page and watch the event live. (You must be a Google+ member and follow RMI's page on Google+.)

We'll also be taking questions from our audience via Twitter. Send your questions to @RockyMtnInst and use the hashtag #solar.

*Source for pie chart: 120 million US bldgs. (RMI estimate); 200 thousand US buildings. with PV (multiple sources; note – possibly now closer to 250k based on market growth rates; NREL OpenPV Project presents 162k systems, though this is underestimate due to voluntary reporting though also includes ground-mount systems), and ~6.5 million US buildings with economic demand (~6.3M unmet) based on McKinsey Apr., 2012 Solar Power: Darkest Before Dawn report estimate of ~45 GW of residential and commercial economic demand mid-2012 with ITC assuming, RMI estimated 10kW average sized residential and commercial system, and RMI estimate of minimum additional 2 million buildings due to state and local incentives.


Showing 11-14 of 14 comments

July 25, 2012

For the questions we weren't able to address during the live chat, we will have a follow up blog post next week.

@Will Cook Sorry you had trouble with the broadcast - I'm not quite sure what issues you were having but the broadcast is now available above as a youtube recorded broadcast. In the future we will provide a direct youtube link for anyone who can't see the embed. Thanks for bringing it to our attention.

July 27, 2012

It sounds like you are only pushing the use of PV’s; there is so much more to Solar Technologies then just PV’s. I think that PV’s should not be used except for some small cases, because of the environmental cost of silicon-based photovoltaics and the expense.

There are many Solar Thermal ways to produce electricity along with the benefits of reducing the use of electricity by using the heat produced to heat water and space heating. One of my favorite ways to produce electricity is to use a sterling engine or steam engine combined with Concentrating Solar. In addition, Solar Thermal can be used to distill water with a solar still to clean water. However, you need a carbon post filter to eliminate the VOC that boil at about the same temperature as water.

Why do we push PV’s when Solar Thermal can be cheaper and cleaner? In addition, in 20 - 30 years you will have to completely replace a PV system, not so with many Solar Thermal solutions.

September 2, 2012

It seem people need to do some checking on today's solar installations before they decide it's not doable or any of the reasons mentioned.

My solar installation begins in 2 weeks by SolarCity. I put down $2000.00 (I could have put down much less) & will lease the equipment. SolarCity took care of paperwork, grant/rebates, pays insurance, permits, & does all maintenance. The payment will be $24.00 a month!! I pay $100.00/month for electricity now, live alone & have a 1400 sq. ft home. If I'd put down $500.00 my payment would be about $36.00/month. After 5 years I'll have the option of buying the equipment (after depreciation) but why bother? If I sell my home the new owner can take over the $24.00 payment or I can have it moved to my new home. I thought it would be much more expensive up front & complicated with state incentives, etc. but SolarCity took care of everything. I've wanted solar energy for quite a while & don't know why I waited but I'm glad I'm doing it while there's still a roof on my home to put the solar panels on!! Anyone who says climate change isn't happening must have some association with the oil industry!

September 2, 2012

After reading some comments I'd like to add an additional comment regarding my rooftop solar power system. The total cost of the system, including all permits, etc. is $14,000.00 with a 20 yr lease (or an additional $4,000.00 tax break to purchase) Yes, it will have to be replaced in 20 or 30 yrs just like my current heating system. If I doubled my monthly lease payment to $48.00 & banked it to purchase a new system I'll still pay half of what I now pay for electricity. I live in CT, not California, but the sun actually shines in CT - SolarCity is based in Ca & has regional offices in CT, their contract/lease price includes all permits, which will be signed, sealed & delivered in less than 2 wks., so this has in no way been inconvenient, although I wouldn't care if it were. The system will produce 90% of my current usage (my house doesn't face true south) but I've stopped using a clothes dryer & have reduced my usage & the killowat rate is less than CL&P & is locked in for the life of the contract! I contacted several companies but liked the flexibility of SolarCity's lease programs & they offer all types of solar power systems including battery backup & thermal- I hope this answers some of the questions in the comments. Thanks! Sandra Downie

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