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Who Buys Solar Panels?

Avatar for Dave Llorens
Published on 03/29/2009 in
Updated 03/29/2009

I remember when I got into the solar industry about 3 years ago. It all started when Dan harped about the solar energy subsidies in Oregon where he lived, and how there should have been a lot more solar but no one knew about the financial benefits. We had grandiose ideas of how to help, and I got a sales job in San Francisco with an installation company to dig in and see if we could change things. We abandoned our original idea, but I learned so much as a sales person because I got to see firsthand who buys solar and who doesn’t, and why. Here’s some of the interesting stuff I learned:

Disillusionment #1:  Solar Purchases are usually made for financial motivations, not environmental.

When I started my job, I envisioned that about half of my customers would buy solar panels for environmental reasons, and 50% would buy for investment reasons (saving money on electricity).  Initially it actually appeared as though this was the case.  However, I soon learned when it came down to signing contracts, it flipped to more like 95% financial motivations and 5% environmental factors. Bottom line? It has to pencil out to a wise financial move for people to pull the trigger. But hey, that’s the way it is and fighting that is a big uphill battle.  But working inside of that paradigm makes all the difference.  The subsidies available today make it a pretty wicked investment in a huge slice of the pie; it’s just an issue of getting that knowledge to be commonplace.  The rest of the work will come from smart financing like solar leases, PPAs, or municipal solar financing, bringing the cost of solar down with better manufacturing processes or community solar purchasing, and education (can get a ‘holla?’).

Disillusionment #2:  Really wealthy people are actually LESS likely to purchase solar energy

I remember putting door hangers on these giant homes in San Francisco thinking, “this is going to be like shooting fish in a barrel,”  because in California, the larger your power bill, the more solar makes sense.  The reason for this is that the utilities charge people more for energy as they use more, in a tiered rate structure, to “punish” heavy users. Because their power costs more, the solar systems pay for themselves much quicker. Ironically though, all I heard from these neighborhoods was crickets and tumbleweeds… nothing.  What the hell?  $30,000 to the owners of these homes is nothing… what’s the problem?

At the same time, I was getting a MASSIVE inbound response from certain other areas. But these areas were not full of rich people. I didn’t get it.  Over time, I figured out that the sweet spot is this:  areas that are heavily saturated with owner occupied homes and socially conscious demographics, but also people who are still concerned about their monthly expenditures and saving for the future.  Turns out, if you can write a check for your $800 power bill each month and not bat an eye, you’re less likely to be interested in solar.

Here you can see a map of where people get solar in SF.  These people signed up to get low cost solar panels in a group at One Block Off the Grid, which is what I’m working on now.  These were not targeted, it is who came to us, so you can where the real interest is.

Disillusionment #3:  It’s not as easy as I’d thought to convey the value proposition of solar in a financial “slam dunk” situation.

I did a site evaluation and proposal for a laundromat in SF once.  There was a new San Francisco solar incentive program that offered $10,000 cash. The state rebate offered about another $15,000, and the Federal Tax Credit about $20,000.  Then there was their advanced depreciation schedule which was another $15,000-ish.  Point is, sure they had to shell out a ton of cash to BUY the system, but their net cost for a capital improvement to their building worth near a hundred grand ended up costing them only about $10,000 net.  So not only do they get a capital improvement basically paid for straight up, the rest of the system PAYS FOR ITSELF by saving them money on electricity, in about THREE YEARS!!!  And after that it’s all gravy, and every time their electricity rates go up, their property becomes more valuable.  Easy sell, right?

No.  This particular business owner could have written a check for this that day and not flinched, yet he never did it, and this story repeats itself a dozen times. I guess I was just a crappy salesperson because I never pressured anyone.  I just assumed they’d see this and obviously do it but here’s the rub, and it’s two-fold:

1) This is in-home sales for a product that no one understands.  People have questions, I have all the answers, but I’m also trying to sell them something at the same time.  The result is that, almost universally, people will think the solar industry is trying to ‘dupe’ them into thinking solar is a wise investment, when in a lot of cases, like this one, it is not only a good investment, but an insanely good one.  If we can get people to stop thinking we’re just pretending it’s a wise investment, and actually believe it might be, we’ll see the tipping point in solar.

2) This is a long term proposition.  I heard a great analogy from Cisco DeVries, who created the municipal solar financing program for Berkeley.  He said, and I paraphrase, “If I tell you I’ll sell you your cell phone minutes for half price, up front, for 20 years… you’d never do that, right? Even if it made sense… and that’s what we’re asking people to do with solar.”  It’s a complicated proposition, and any doubt is amplified 20 fold by point #1 above.

Last modified: March 29, 2009

5 thoughts on “Who Buys Solar Panels?

  1. Avatar for Solar Power Solar Power says:

    Solar water heating is really cost effective but not sure about PV cells

    How to make your electricity meter run backwards, legally

  2. Avatar for peggy peggy says:

    We are considering solar in Washington State where electricity rates are pretty low due to hydroelectric. The federal tax credit is a big incentive and we are researching if we make more electricity than we use (which is low because we are on natural gas for heat which is awfully expensive) maybe Puget Sound Energy will credit it against our entire energy bill. I also think the value will be great when it comes time to resell this house as anything Green is WAY COOL here. I think the sales process needs to be more consultative and the companies need to offer some level of minimum guarantee. There is a big fear of screwing appliances onto your roof what if they don’t work so well and worse what if they allow water into your roof etc. There is a lot to consider as a homeowner and it isn’t so slam dunk as it may seem.

  3. Avatar for Michael Michael says:

    Regarding the value proposition of solar, I think a lot of homeowners make decisions based on the short-term financial outlook regardless of the long-term benefits. Hopefully with better incentives and price reductions in the manufacturing and implementation costs of solar, these long-term benefits will start to payoff sooner and become short-term benefits.

  4. Avatar for CelticSolar CelticSolar says:

    There is an income goldilocks zone for PV. That is interesting insight. Thanks Dave.

    I guess the butlers were just throwing away recycling your material in the upper-income areas. Or if you have 6 houses, it is hard to pick just one for solar.

    Our system did not pencil-out for fast payback (over 20 years). But we did it anyway, so I guess we are in the 5%. But I certainly would have taken more incentives if they were available.

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