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.
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.