REVIEW

Many US citizens dont know

too much about the true costs
of solar and that residential
solar installations can be
nanced. Photo: dpa/Michael Reynolds

USA

The true costs

of solar
Public perception of solar technology varies widely across the US, with the
majority of people having strong misconceptions about the cost, reliability,
and other critical aspects of the solar industry.

he good news for the solar industry in the US is

that most people support solar technology. In
fact, 9 out of 10 Americans support it, the Solar
Energy Industries Association (SEIA) found in a survey. Most people, when asked, believe solar energy
will be a critical component of the global energy supply in the future. Many believe solar is supposed to
be the energy of the future, says Carter Lavin, Business Development Manager for the Solar Marketing
Group in California. But we need people to realize
that its happening today, he adds.
Solar is no longer just a niche technology of the
future. It can be installed on homes today with no upfront costs, and providing energy at prices that are
half what solar costs were just a couple of years ago.
Most people dont realize how fast prices are coming
down, says Bruce Douglas, attorney at Barnes and
Thornburg LLP. To some extent, the typical consum-

28

er who is not plugged into the solar industry is simply

not aware of how drastically prices have dropped, he
states. At an installed cost-per-watt basis, prices have
come down 50 % in 5 years, mostly due to the dropping price in panel costs. My point is simply that the
average person on the street, when you ask them if
they like solar, they will say they are in favour of it
compared to dirty resources, but then they have no
idea about the costs of solar, or how much it has
actually dropped, reports Douglas.
56 % of Americans think that solar costs more
than US$ 20,000 up-front, says a study by SunRun in
California. System prices actually range from
US$ 12,000 to 18,000, depending on where in the
US the home is located. The average person will
think this is a really high number, but they wont sit
down to do the math and gure out the payback period, says Douglas. Consumers are not getting the full

Sun & Wind Energy 9/2012

story about what solar can provide

because there is a lot of missing
analysis going into the discussion
about cost, explains John Lefebvre,
President of Suntech America in
California.
Over the next few years, as the
cost of solar becomes competitive
with conventional fuel sources in
more places across the US, politicians, solar companies, and solar
advocates must do a better job educating the public about the true
costs of solar.

The Business Promotion Agency of the State of Bavaria

Still just thinking about alternative energies?

Solar leasing has

changed the market
Financing is the main difference in
the residential solar market today
compared to a few years ago. Consumers could benet in a big way
from the new options, but most
dont understand the number of options available. The big misconception about solar is that people dont
realize that you can nance it, declares Lavin. Numerous third-party
companies, such as SolarCity,
Sungevity and SunRun, install, manage, and own the solar system on
the roofs of many different homes.
In these third-party contracts, the
homeowner pays a xed-rate of
electricity over a long-term contract,
usually 20 years or more. Homeowners basically pay the solar company for solar electricity instead of
paying the electric utility. The electricity price coming from the solar
system will remain steady while
general electricity prices will inevitably rise in the next 20 years, explains Gaurav Naik, co-owner of
GeoGenix, a residential and commercial solar integrator in New Jersey. In addition to third-party leasing options, some solar manufacturers, such as SunPower, offer leasing
options for their panels. This leasing system allows consumers to pay
for panels over long-term payback
periods.
While many have beneted from
leasing systems, most Americans
are still not embracing solar technology on a broad scale. Solar
power is held to a standard that
other purchases arent, says Lavin.
No one buys a house or car in cash,
so why build a solar array with upfront cash? People understand that

Sun & Wind Energy 9/2012

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29

REVIEW

Local installers are the best to

educate the local population,
but larger solar companies,
developers, banks that nance
solar and politicians have more
resources to put into marketing.
Photo: Sharp

USA

they dont buy a car outright and that its only a small
monthly investment, he adds. Solar systems are
now the same. People can lease them and pay nothing up-front for the system in many cases. But people are not used to paying for electricity up-front and
changing the way they buy electricity can be overwhelming. Some classes of consumers are scared
away by a long-term contract, says Naik. The solar
industry needs to work hard to get the word out to
consumers that solar is a valuable long-term asset,
he says.

Whose role is it to educate

consumers?
While solar companies may have the greatest interest
in educating the public about the benets of solar,
they often dont have the necessary resources to
properly market its value, states Lavin. Local solar
installers are the best to engage with the local population, but they often dont have the time and resources to educate the local population, he says. Many
smaller installers dont have marketing budgets at
all, so they cant x the marketing issue with solar.
In addition, it doesnt help smaller companies to
publicize the benets of solar to the general public
because their marketing efforts may not bring customers to their company specically. Local installers
are much more likely to advertise their company specically to a targeted local population, says Lavin.
Trade groups, like solar companies, are often underfunded and understaffed, he adds. This leaves larger
solar companies to carry responsibility for engaging
the larger general public about the benets of solar
energy.
Some larger solar companies, including solar
manufacturers and installers, have more resources to
put into marketing. Larger companies have a multiyear outlook and balance sheets that could back solar marketing efforts. For example, large solar manufacturers that offer nancing with its modules, could
also help installers by partnering with an agency to
create better websites and general marketing tools to
educate local consumers, says Lavin.

30

Local education and outreach is critical for the solar industry because pricing, rules, and permitting requirements for solar systems vary from state to state
and from utility to utility. There is a different public
perception in different states, reports Douglas. People in Arizona know they live in a good state for solar
and those governments tend to be fairly supportive,
he adds. Because of the geographic complexities of
solar, education has to be provided by many different
players. The education falls on the shoulders of
more than one entity, not just politicians, but also solar manufacturers, developers and banks that nance
solar, says Lavin. It is the responsibility of everyone
to get the word out within each jurisdiction, he says.
In addition to solar companies investing in local
marketing and education campaigns, local, state and
federal governments play an important role in setting
the tone about solar energy. The US has three times
the sun-production capacity as countries in Europe,
says Douglas, but it remains an untapped resource.
The political powers have not tried to sell this effectively to the American public, he adds.
While smaller companies lack the time or resources to educate the public, they could educate their local
congressional representatives about how solar works,
the pricing, and legislative changes could help solar.
Politicians are worried about who will pay for the solar
energy until the industry can bring prices down and
compete with conventional fuel prices, says Douglas.
Once politicians understand how close solar is to grid
parity, that it can compete without a bunch of government incentives and programmes, they will support it
more, he explains. The key is for politicians to understand how reliable and efcient the technology is and
how much better it will soon get.
Governments have always supported energy resources, especially in the early days. We dont have
to look far back to see all the subsidies, benets, and
tax breaks the coal industry has received, reports
Douglas. This is nothing new. The solar industry
needs a few more years of government support before the industry can stand on its own, but governments are hesitant to spend any money right now,
says Douglas. With a slow economy and job-rates
low, governments want to minimize spending and
many politicians see solar as a risk, he adds.
The solar industry needs to concentrate its marketing efforts to change the politicians, who will then
help change the minds of the general public. Im not
sure the things the solar industry would say would
actually get absorbed by the average American, says
Douglas. These people tend to listen to the President more. In the next four years, whether the
president is current President Barack Obama or
Republican Presidential Candidate Mitt Romney, the
rst order of business is getting the executive branch
to embrace solar energy further, declares Douglas.
The solar issue is actually a local one as much as it
is a national one, he says. The approach needs to be
dual with some local consumer education and some
political lobbying.
Reid Smith and Lisa Cohn

Sun & Wind Energy 9/2012