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Jul 25, 2012

Solar Issues of the Day: Customer Acquisition (Rescheduled Google Hangout July 25, 2012 at 11:00 a.m. MDT)


This event was broadcast July 25th 2012. You can watch the archived video below.

A holy trinity of plunging photovoltaic module costs, slowly escalating electricity rates, and new solar business models have created an environment where installing a rooftop solar system now makes pure economic sense for about 5 percent of buildings in the U.S. And yet, only about 0.2 percent actually have a PV system.

*Source: Multiple – see below

Much of the ability to further lower costs and increase overall demand relies on reducing so-called “customer acquisition” costs. On July 25th at 11:00 a.m. MDT, RMI experts will be joined by two solar customer-acquisition entrepreneurs, Dr. Beau Peelle, co-founder and president of Clean Energy Experts, and Tyler Tringas, founder of SolarList, on a Google Hangout to talk about overcoming the solar supply-vs.-demand challenge and how the industry is working to address high customer acquisition costs.

In order to better understand the customer acquisition issue, let’s compare the U.S. to the current global leader in low-cost solar PV: Germany. As highlighted recently by Greentech Media, average German PV system prices in 2012 were estimated at $2.24 per watt. Moreover, 72 percent of these installations were rooftop systems. In the U.S., average installed prices are twice as high: $4.44/watt.

If we hold module prices and all balance of system equipment (inverter, racking, and wiring) constant, that means that Germans spend about $3,500 per average residential rooftop installation on all “soft costs” including installation labor, permitting, interconnection, supply chain costs, taxes, system design, and acquiring new customers. In the U.S., that same figure is over three times as high: $11,200.

More specifically, in the U.S. rooftop residential solar market, about 44 percent of all such soft costs come from the process of acquiring customers and designing their systems. This includes costs incurred from customers who drop out halfway through the process and most sales and marketing costs.

Solar broadcast image 2

Source: Ardani et al. Quantifying Non-Hardware Balance of System Costs for Photovoltaic Installations in the United States Using a Combined Annual Expenditure-Labor Hour Productivity Approach. IEEE, 2012. See Figure 3, p. 6 for detail.

Customer acquisition costs must come down dramatically in order to meet the aggressive goals outlined in Reinventing Fire’s “Transform Case” by 2050 and by the Department of Energy’s “SunShot” program by 2030. This week’s Google Hangout will explore several specific customer acquisition challenges and introduce viewers to current business-led innovations in the space.

Join us on Thursday, and you’ll learn:

  • Why customer acquisition and system design costs are so much higher in the U.S. than in more mature European markets.
  • How much of the customer acquisition problem will be “solved” as the domestic market naturally matures, and how much of it will need to be directly addressed by industry.
  • What the main drivers of solar adoption in the U.S. are and how the market has changed in the past decade.
  • What novel approaches are companies in the solar industry developing and/or adopting to help reduce customer acquisition costs.

To watch the discussion live, you can:

1. Bookmark this page. We'll be streaming the conversation here starting at 11:00 MDT on July 25th.
2. Go to RMI's YouTube page and click on the Feed tab. The video will stream there as well.
3. Go to RMI's Google+ page and watch the event live. (You must be a Google+ member and follow RMI's page on Google+.)

We'll also be taking questions from our audience via Twitter. Send your questions to @RockyMtnInst and use the hashtag #solar.

*Source for pie chart: 120 million US bldgs. (RMI estimate); 200 thousand US buildings. with PV (multiple sources; note – possibly now closer to 250k based on market growth rates; NREL OpenPV Project presents 162k systems, though this is underestimate due to voluntary reporting though also includes ground-mount systems), and ~6.5 million US buildings with economic demand (~6.3M unmet) based on McKinsey Apr., 2012 Solar Power: Darkest Before Dawn report estimate of ~45 GW of residential and commercial economic demand mid-2012 with ITC assuming, RMI estimated 10kW average sized residential and commercial system, and RMI estimate of minimum additional 2 million buildings due to state and local incentives.


Showing 1-10 of 14 comments

July 10, 2012

It would be nice to hear the Devil's position on these matters. Could you invite David Koch?

P.S. Don't tell him I said that. I don't want to disappear.

All joking aside. (Please let it be a joke.) Relevant opposition needs to be addressed. Amory is cute, but 18 Veterans are committing suicide a day.

"You Americans are only afraid of one thing: Inconvenience."

July 10, 2012

Germany has roughly 10 times the installed PV systems as US. Why? Several key reasons:

1. German historical "Feed-In Tarriffs" which supports PV homeowners in actually receiving a very significant, highly-motivating return when selling their excess capacity.

2. Germany's PV "Permitting Processes" have been greatly streamlined.

3. Finally, in the US, "CORPORATE-MANDATED" massive public tax subsidies for corporate dirty fossil fuels & nuclear fuels shrink comparative solar tax subsidies into relative insignificance.

Is it any wonder why Germany has roughly 10 times the installed PV systems as the US?

One such good example can be priceless, and serves to illuminate the vital importance of resuscitating more than the facade of a pluralistic democracy in the US - including both government bodies' responsiveness to the masses, as well as widespread growth of independent mass media. We need totally public campaign financing in all our elections SOON (which has actually worked well in other western democracies) if we wish to avoid accelerating global heating destabilization and decimation to our planet and its precious species of life.

Richard Wenzel

July 10, 2012

Hi, I'm looking forward to the event! One question: how can we get away from using the term "solar system"? How about "solar power system" or "rooftop solar power" because we are talking about creating useful energy from the sun, are we not? "Solar system" still means what it has always meant (thank you, Mr. Copernicus).

July 12, 2012

I'll be interested to learn about all the non-module costs, including balance of system, financing charges, permitting costs, etc.

I'm hoping we can see a breakdown of these cost differences vs Germany, so that we know where to push for change. As soon as a region reaches solar grid parity without subsidies, in theory the PV market should take off all on its own - but all these other costs delay grid parity arrival.

July 12, 2012

Is this event still taking place. It's about 20 minutes past the start time!!

July 12, 2012

What happened? I really wanted to watch this thing.

July 12, 2012

I'm glad it will take place on another day so I can participate after all. If you schedule it for 3 to 4 pm MDT, you can get most of us from the Pacific to the Atlantic at our desks.

It would be nice to hear about the German and Japanese solar experience. How much do these systems produce in a year and what does the electricity cost, since it's not the California or Arizona deserts. Like real estate, location matters when it comes to solar. Please give us a good grounding in all the costs and the output in various locations so we can assess where we are today and where we are headed. Also, please tell us how we get the firm capacity we need for solar (and wind) as renewable energy becomes a larger part of the mix, and tell us what will that cost. I am neither pro or con solar. I just want the facts about it so I can know what to think. Thanks, Jim Lerner, Ph.D., Sacramento, CA, USA

July 25, 2012

Who is standardizing the panel size to cut balance-of-system costs in half? It's ludicrous that every solar company ends up designing their own support structures, rather than all designing to a common design. It costs buyers twice as much, and also drives up the development costs for solar suppliers, too. When Japanese fax suppliers quit trying to "get it all" at both ends of the phone line and standardized on the data transfer standard, the application exploded.

July 25, 2012

Could you speak to the new technologies of micro inverters and the Solar Edge alternative

July 25, 2012

This HTML 5 presentation is not working in the latest versions of Safari on OSX or iOS 5-- very frustrating. I sure hope the event will be available for viewing on YouTube, etc later today, via a different interface technology.

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