The cost of installing residential solar power has declined in the past few years, but the state and federal incentives that help make solar affordable will also decline over time, so it makes sense to continue looking for ways to save money on installations.
A Connecticut program called Solarize has been experimenting with a way to push down the cost of installing solar power and speed up the decision-making process for customers thinking of getting it. The Solarize model, first developed in Portland, Ore., is administered locally by the Connecticut Green Bank.
The growth of home solar was pretty sleepy until 2011-2012, when equipment prices fell and new financing options began coming online. Then the Green Bank and its partners, SmartPower and Yale University, participated in the federal Department of Energy’s Solar Energy Evolution and Diffusion Studies to design and examine Solarize campaigns in Connecticut
How Solarize Works
Solarize programs are designed to use a combination of group purchasing, time-limited offers, and grassroots outreach, while local clean energy advocates volunteer and coordinate with their towns to help speed the process.
In a traditional Solarize Connecticut campaign (called Solarize Classic), a solar installer is competitively selected by a town based on the installer’s bid price, the equipment it’s using, experience in the industry and outreach strategy. Pricing is tiered based on the number of customers who participate.
Part of the cost savings comes from the installer’s reduced customer acquisition cost — money spent on marketing to find and acquire potential customers.
Every customer pays the same price per watt, and the price is pushed down as more customers sign up with the installer. Homeowners also have the option to add to the base pricing for premium panels, equipment, or special setups involving roof pitch or electric upgrades.
Prediction
The idea is that an intervention such as a Solarize campaign helps homeowners make quicker decisions and helps the work get done at less cost.
If these approaches are effective, then the pace of installations should quicken and the average cost of an installation cost should be reduced in towns hold Solarize campaigns.
| Solarize Towns | 2004-2011 | During Solarize campaign | Post-campaign rate | Non-Solarize towns rate 2011-2015 |
|---|---|---|---|---|
| Average | 16.52% | 110.16% | 59.31% | 20.91% |
After a Solarize campaign ends, some of its momentum continues. Think of it like compound interest: as more homeowners see solar on neighborhood roofs and get word-of-mouth feedback, there’s a higher likelihood that they too will go solar.
Research using local data shows that even a single additional solar roof can be surprisingly influential in prompting other residents to think about getting it themselves.
| Metric | Solarize Classic | Solarize Express | Solarize Choice | Solarize Select | Solarize Prime | Solarize Online | Total |
|---|---|---|---|---|---|---|---|
| # of Participating Communities | 34 | 5 | 6 | 5 | 4 | 4 | 58 |
| # of Participating Contractors | 11 | 5 | 8 | 5 | 4 | 12 | 18 (unique) |
| kW Installed | 10669 | 910 | 1407 | 1312 | 1336 | 455 | 16,089 |
| Customer Acquisition Cost ($/kW installed) | $75 | $75-$150 | $150-$275 | $125-150 | $75-$100 | $175-$300 | $100 |
Variations
Green Bank, SmartPower and Yale experimented with several versions of the campaign to determine what works best:
- Modified campaign lengths (called Solarize Express): These campaigns require customers to sign contracts within 10-12 weeks rather than 18-20.
- Simplified pricing structures (called Solarize Prime): These campaigns eliminate the tiered pricing model. The competitively selected installer offers a simple base price.
- Multiple installers (called Solarize Choice): This modification opens the program to three installers at a time instead of a single installer during the 20-week campaign. There is no tiered pricing and installers submit a single base price. The Solarize town’s selection committee picks which three installers participate, and, as the campaign commences, they are free to reduce prices and compete against one another for customers.
- Randomization (called Solarize Select): Towns were selected by lottery for the opportunity to participate. Normally towns would apply to the program, competing on criteria such as: previous clean energy leadership; number of existing solar projects; and volunteer capacity to do outreach in the communities. Randomizing the town selection process tests the significance of that process.
- Online platforms (called Solarize Online): Here, a customer identifies their home on an aerial map and provides information about their energy usage. The online platform then notifies each participating installer that there is an interested customer. Like a reverse auction, each installer can bid the project cost in an attempt to acquire the customer. There is no mandated pricing – just sheer competition. Installers are free to participate and a dozen have done so.
Yale will continue to explore these different approaches.
This map uses statewide averages as a benchmark, and compares them against how much was deployed during (and slightly after) the term of Solarize campaigns in the towns that hosted them. In some cases the difference is substantial.
One additional statistic of note: 10% of systems installed in towns with Solarize campaigns have used USA-made panels. In towns that never hosted a campaign, it was 7%.
Looking ahead
In spring 2015 just over 10,000 homes in Connecticut either had solar power or were about to get it. By fall of 2015 that number reached 15,000, with more than 2,000 installed as part of a Solarize campaign.
Our field trials from 2012-2015 have given us valuable data and insight for changes going forward.
- The future Solarize model will have an open-market approach. Multiple installers sharing a single discounted price performs just as well as having a single installer that uses tiered pricing, so it makes sense to let in more competition. Also, single installers serving entire communities can be overloaded with projects, extending the time-to-install figures (see below). A do-it-yourself model is in the works, which will hand the reins over to the private market, and its participants can scale their business as the market needs.
- The Solarize U program worked with six institutions to implement the Solarize model in a university setting, with faculty and staff eligibility for group purchasing discounts.
- Electric utility companies may help target future Solarize campaigns. That’s because they know where the power grid is suffering from congestion because of constrained transmission lines. Blasting those areas with new solar installations reduces the need to import power from far-flung central station generators. That could even reduce the costs borne by electric ratepayers by deferring the need for costly transmission system upgrades.
- Solar is no longer just for the affluent. The Green Bank is working with the Connecticut Housing Finance Authority to apply the group purchasing model to more than a dozen housing authorities statewide – which should lead to about 750 kilowatts of new distributed solar capacity, installed at no cost to the housing authorities and to be paid back at a discount to current electricity prices over 20 years. To a similar point, installers focusing on low- to moderate-income populations are now operating in Connecticut.
- Lessons from Solarize hold real promise for speeding up sales of alternative fuel vehicles, since the “peer effects” of neighborhood interactions have also been shown to play a role in vehicle purchase decisions. For example, one could envision a Solarize EV initiative that applies the Groupon model to car dealerships for electric vehicle purchases.
Robert Schmitt and Bob Wall contributed to this story. Data is current up to October 2015.
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