And how a business model threatens to derail the U.S. solar revolution.
Residential solar is booming in the U.S., driven primarily by the lease/power buying business model. This model appeals to the energy consumer’s desire for a degree of independence from utility rate hikes and allows the consumer to continue renting electricity instead of making the shift to owning the means of electricity production.
Understanding what it means, i.e, the relative independence of owning the means of electricity production, has always been a lot to ask of electricity consumers in the U.S. The educational effort required to help consumers make this change is expensive, complex and tough going as it requires a paradigm shift in outlook. When you throw in the generally held impression that a residential PV system is expensive, the task can seem insurmountable. When you add a lack of available low interest (or zero interest) financing, well … the task takes on a pushing-a-boulder-uphill aspect.
Germany’s first PV innovation was offering zero interest financing to encourage homeowners to install PV systems on their roofs – this mid-1990s program was rapidly oversubscribed. The lesson, evident also by the lease/power buying model, is that giving consumers a way to afford a PV system on their roof breaks down the too-expensive barrier and does so rapidly.
Asking consumers, or anyone for that matter, to change behavior as well as altering their expectations is a difficult proposition, and the word “difficult” understates the task. In the U.S. electricity consumers generally rent their electricity and heat from a utility paying by the kilowatt-hour for electricity consumption. In exchange for this rent, the utility maintains the system by which electricity is generated and delivered. Consumers have been used to flipping the light switch and turning on the TV without worrying too much about the machinery and method of delivery http://www.renewableenergyworld.com/rea/blog/post/2014/01/which-is-more-effective-marketing-solar-with-anxiety-or-inspiration unless, of course, their utility increases its rates.
Current research indicates that residential PV lease/power buyers want the least expensive way to choose solar (no money down), the least complicated way to go solar, to save money and for someone else to handle repairs — in other words, again, to continue habitual electricity renting habits. Many do not want to learn how the system operates.
As owning/leasing/buying power from a PV system that is installed on a residential roof means going through the installation process, which does make changes to a home, as well as having an electricity generating PV system on their roof, whether the consumer wants an education or not, one should be provided.
Consumers should understand what the technology on their roof will or will not provide, how to know if it is functioning or not, what will happen in a utility blackout and what will happen if their system underperforms (will they have a surprise bill from the utility at the end of the year?) or, in the case of power buyers specifically, should the system "overperform" will they pay for only the electricity they use or all of the electricity the system generates?
During the sales qualification process potential customers should be asked to present six months (at least) of electricity bills so that an assessment can be made as to a) whether they are a candidate and b) what size system will cover most or all of their electricity. They should know what they are currently paying on average for electricity by the kilowatt-hour and if they do not know what a kilowatt-hour is, it should be explained.
If the consumer is sold a system, or is leasing/buying power based on the number of panels, s/he should understand what this means in kilowatts and kilowatt-hours. As the consumer will have electricity generating machinery on his roof, he needs to understand how the inverter and panels work together to generate this electricity. Potential customers need to be told of all incentives available to them in order to make an informed decision about whether to buy a system or lease/buy power from a system on their roof and they need to informed about whether or not there is an escalation charge on their lease and what this means.
Lessees and power buyers, who are typically promised that all repairs will be covered, should clearly understand who to call and how long repairs will take if necessary. After all, when utility power goes out there is a response, it may be slow, but it is a response. It should be clearly explained to consumers that though an owned PV system may well be an asset, a leased system, or, a system from which electricity is purchased by the kilowatt-hour may not be an asset in a sale. In fact, a recent report shows that it may be the opposite of an asset in a sale.
Prospective customers should be encouraged to ask questions because a happy, educated customer is an asset, while an unhappy, uneducated customer who assumed that leasing or buying power from a PV system installed on their roof would be roughly the same as continuing to rent electricity from the utility may be an extremely unhappy customer if expectations and assumptions are not met. The responsibility in this regard is with the leasing/power selling company not with the customer. Things your potential customer should do before committing to having a PV system on the roof include:
1. Before you buy, lease or sign a contract to buy power: Do an audit of your annual electricity usage (your utility will have the records).
2. Before you buy, lease or sign a contract to buy power: Know what you are paying on average per kilowatt-hour (your tier if applicable).
3. Have your own energy audit and make changes.
4. After your audit wait six months and see the difference in your electricity usage.
5. Have your roof inspected.
6. Have your electrical inspected.
7. Understand the basics of what to expect from solar as well as the terminology.
8. Call a few real estate agents and ask if owning a solar system is an asset or a liability and if the same holds true for leasing or buying electricity from a system that is on your roof and that you do not own.
Disappointed Customers Could Have a Very Bad impact on a Fragile Industry
Despite an almost annual prediction of their demise, in the U.S. the small to medium PV installer is still the backbone of the industry. These small businesspeople have for decades been the face of solar in the U.S. They have built their businesses from the backs of trucks and their garages usually on the basis of customer service and referrals. They take customer service, including after service, seriously. They are often the subcontractors used by larger firms to install the systems that are leased or from which the customer buys power. These small business people have been the forefront of the U.S. solar revolution for decades and they built the platform on which today’s residential solar industry currently stands on their belief in solar and on shoestring budgets.
The solar lease/power buying model is not inherently bad, but it does need a tune up before there is a customer backlash. Aspects of these models that could use attention include customer qualification, customer education (if the customer does not want to be educated, maybe it’s the wrong customer) and a clearly written list of what the lease/power buying customer should expect in the way of repairs and customer service along with timelines and who to call, an estimation of what the system will provide and what happens in the case of excess production or underproduction.
Recently in the news are extreme examples of what happens when corporations do not keep their word, or put profit above customer care. There are also many examples of companies that are committed to putting the customer first — you can find many of these examples among the small to medium PV installers, who remain, again, the backbone of U.S. Solar.