Is Solar Affordable?

New blog post: Is Solar Affordable? http://www.getsolar.com/blog/is-solar-affordable/

Ian,

I think you hit the nail on the head — one of the biggest challenges facing solar and other forms of renewables is that of a lack of clarity. As you note, this stems from a number of different sources: the variety of solar technologies, brand names, and PV installers that are out there; variability in the pricing of conventional electricity across different states; differences among the various state-sponsored solar incentive programs; variability in solar radiation; the list goes on. Part of what makes the solar market so challenging is that it’s incredibly fragmented. And, as you note, there are still a lot of questions lingering in consumers’ minds.

Part of what we try to do at GetSolar is try to answer some of those questions. We aim to provide as much relevant information as possible to help people arrive at a sound decision. (And, yes, we’ve told a lot of individuals that solar PV is probably not their best bet.) Incidentally, I don’t share your cynicism about solar companies willfully misleading consumers like the proverbial used car salesman. Ultimately, most installers and manufacturers are trying to build a strong track record — otherwise they’d be shooting themselves in the foot. Yes, there are always caveats and assumptions. But a good solar quote should draw in fairly robust analysis, including the NPV of future savings, expected output and an estimated payback period. What does this mean to the buyer?

As you note, we know what we’re getting when we buy a car — transportation. But, as we both well know, both a $13,000 Hyundai and a $80,000 BMW will get you from Point A to Point B. Which has the higher ROI? All else equal, clearly the answer is the Hyundai. But the answer may well change once we start considering the owner’s values, likes and dislikes, expectations, etc. I’m not saying that people should line up to buy a solar PV system that’s prohibitively expensive and offers an awful return on investment. I am saying that (1) there are legitimate, non-financial considerations that can factor into the solar purchasing decision, and (2) there ARE instances in which solar is a good investment — strictly from a financial point of view.

Finally, your comments made me think of the early days of the oil industry (I’m currently reading “The Prize,” by Daniel Yergin — can you tell?). Anyway, in the mid- to late-1800s, kerosene was becoming all the rage. Simply put, it was a superior illuminant (esp vis-a-vis whale oil). But not all kerosene was made equal. There were many blends, of varying quality — a function of the sheer number of producers/refiners who had jumped into the business in Pennsylvania. This lack of consistency poses serious issues: in the 1870s, literally thousands of people were dying each year from accidents involving kerosene explosions. Imposing a standard on this new market was obviously of great import. In fact, allegedly this is where Standard Oil got its name. It’s clear that standards and consumer education are important features of market development — as is a degree of consolidation among producers. (Oh yeah, and innovation and falling cost curves…) This is as true for solar as it was for oil.

Long story short, I agree with you: until there is more clarity and more understanding among consumers — and as long as there are low-cost power alternatives — the solar industry will face challenges. Despite these obstacles, however, I’m optimistic. As you say, it’ll be slow, but hopefully solar will make steady progress.

Thanks for your comments — I’ll look forward to hearing your thoughts in the future.

Hi Ian, I just wanted to chime in here: your points are really well taken, and I think in a fledgling market like solar, installers themselves still have some thinking to do on the best way to present financial analyses to their customers. As you say, it’s possible to bias the figures “inadvertently” just because we all do want solar to be more affordable than it is, in most cases; and one wants to avoid scaring off the customers. On the other hand, as Adam points out, it’s in the installer’s own self interest to be as honest as possible. It’s a small industry–word gets around.

One of the most important things we do at GetSolar is educate the consumer about what to expect from a solar quote, and what comprises realistic costs and payback. A large portion of the value we represent to consumers is peace of mind: we only connect them with installers who have a good business record, excellent solar experience, and a history of satisfied clients. In an industry without standardization of hardly any kind at this stage, it allows residential consumers to be sure they’re getting the most thorough quotes possible, even if (especially if) the consumer isn’t interested in understanding how all the nitty-gritty elements of the finances break down. Most of the variables you mention are basic components of any decent solar quote. We make it clear to consumers, as well, that they should always feel free to contact us if they have questions during the quote comparison process, and in the past we have certainly helped folks to see the strengths and weaknesses of the options before them. For commercial consumers, we put exhaustive effort into making sure they are aware of each separate component and the impact it has on their investment.

We believe at GetSolar in presenting the facts of solar without gilding. As Adam mentions, solar CAN be a good, even a great, financial investment; when this is the case, no gilding is necessary.