Solar power is gaining momentum every day, but is it growing as fast as it should be? Let’s start with solar energy’s market development and growth:
- From 2000-2009, the number of photovoltaic (PV) cells and modules—the devices needed to capture the sunlight and turn it into energy—jumped from 88,000 to over 1.2 million.1
- Despite being in a recession, the solar market share increased by 67% from 2009 to 2010, yielding an increase of $2.4 billion in annual sales.2
- Over a hundred companies, 80% of which are less than 10 years old, have flooded the solar market and offer everything from direct panel sales to customized home installations.2
- From 2009 to 2010, the annual cost of installed photovoltaic systems dropped 8% in the residential sector and 11% in the commercial sector.3
- Solar has been gaining momentum worldwide, with Germany being the largest market share user of PVs in the world.4
Furthermore, government backed programs in the United States have created considerable markets in New Jersey, California, and just about any state with a good amount of sun. The 30% federal tax incentive, generous loan guarantees, tax credits, and renewable portfolio standards have all boosted considerable growth in the United States’ solar energy market.6 With little or no upfront cost solar has become an economically advantageous option for homeowners, commercial businesses, and industrial electricity generators.
In the midst of all these growth numbers and success stories comes one glaring question: Do you have solar installed on your home or at your business? Almost certainly all of us have seen a local advertisement or flashing pop-up ad while web surfing, but how many of us actually consider solar an option? Let’s take a look at some of the challenges solar energy faces in becoming mainstream.
Lack of Consumer Knowledge
solar-panels.co.ukAs a responsible homeowner I perused a few different websites and really was overwhelmed by the wealth of solar power options, information, and services being offered. While this may be a personal learning curve that I have to overcome, it represents the great disconnect of information from the consumer to the product. The biggest challenge to this day has been educating consumers on what solar can mean for them.7 Many individuals have no idea what options they have in terms of technologies, products or solutions to their energy problems. Similar, with a myriad of installers and reseller’s clogging up any solar related internet search on Google makes it that much less attractive to consumers to pursue. How can individuals know they are getting the best technology or the best service out there? Is this technology even proven to work as effectively or efficiently as promised? Is this technology mature enough to prove itself on my home or business? All of these questions should be answered and debunked before a homeowner can feel at ease with the technology.
To tackle the consumer knowledge issues, we have seen the entry of many solar consulting companies aiming to debunk the mystery of this technology, but more importantly guarantee that the 15 or 20 year contract you are entering is not going to come back and haunt you. Furthermore, state and local NGOs are beginning to make educational guides on how to go about purchasing solar responsibly. Similarly, reports show that 82.9% of companies will be stepping up sales and marketing outreach to counter the lack of customer knowledge regarding the solar industry.8 Companies have assuredly ramped up their efforts to streamline the process and make this industry a service oriented business that does just about every everything from remanufacturing solar panel models to maintaining your installed systems.9
Financing Hurdles
The first question a homeowner or business owner asks themselves is: Can I afford solar? Unfortunately, many solar industry websites encourage interested customers to fill out a laundry list of different information just to get a quote. From that quote comes another round of sizing up that then follows in an audit, and last but not least, the financing options are finally offered. If you are like me and prefer to know your options from the beginning, here are three of the more popular terms I have encountered in the solar market.
Lease option: Similar to leasing a car, annual or monthly payments are made towards the purchase price of the installed solar system. However, in the process the installer takes part of the financial incentives offered and charges interest as well.
Power-Purchase Agreement: For agreeing to lend your top solar-real estate roof or back yard to the solar company, you can get a considerable discount on your monthly energy bills (normally around 15-20%). Additionally, homeowner or business owner installers are in many cases not required to front any money or pay a dime during the 10, 15 or 20 year period. The catch is that normally this rate is set in stone and you are stuck with a solar panel if you decide that you don’t like your rooftop addition.
Ownership option: You outright buy the installed system with either money sitting in the bank or through some type of loan. Many companies offer loans and payback options for those interested in fronting anywhere from $25,000 to upwards of a $100,000. The benefit, however, is that you retain the federal tax credits, reap all the benefits of generating solar power, and have made a capital investment to your property that is tax exempt. The bad news is that maintenance usually becomes your responsibility instead of the solar-installation company’s responsibility.
While flexible financing options exist and customization is a reality, installers are not making this information available to consumers. Additionally, while all three of the discussed financing options exist, the price of a kWh is still the determining factor on whether installing solar will actually save money. If electricity prices drop then it will no longer make solar installations a money saving option, which makes many homeowners hesitant to invest in such a technology.
This year already we have seen Solyndra go bankrupt after huge Federal loans, SolarCity and other companies get huge investment backing, and dropping manufacturing costs. While the solar market as a whole has yet to settle down and find its mainstream equation, the industry is here to stay. With incentives, costs, installers, and options for literally any sized project, the time to act is now!
