By Kacie Peters, director of business development, Pivot Energy
Community solar is an excellent option for people to participate in a renewable energy program with very little commitment. The service brings monetary and environmental savings to its customers, who are oftentimes referred to as subscribers. Additionally, the process is much simpler than installing and maintain a rooftop system.
Until recently, the majority of sales involved a salesperson walking prospective customers through a full sales pitch, thus creating an entire subindustry and slowing the development of community solar. If community solar is really going to scale, we need to educate and empower consumers to break through the noise themselves and retire the door-to-door sales approach for good.
Think about the last time you bought a vacuum cleaner. Did a well-dressed man show up to your door mid-day and drag a heavy bag of equipment to display in your living room? Unless you have not upgraded your cleaning supplies since 1970, that sounds absurd. Today, when your Dyson needs to be replaced, you go to the store and buy a new one. You may go online and do some research, but odds are you will not even talk to an associate while spending a few hundred dollars at Target.
The cost of the status quo
Most community solar companies pay between $500 to $1,200 for each customer acquisition. On the front end, that is $0.08 to $0.15 cents per watt, which can be 5 to 10% of the average build cost for a community solar project. Odds are companies will need to replace that customer two to three times over the life of the system as people move and product offerings evolve.
Practically speaking, like most products sold door-to-door before community solar, we cannot sustain this model. Most community solar programs have geographic requirements, meaning subscribers need to reside relatively close to the system. Systems are built in sparsely populated areas, and as a result, acquisition companies need to cover vast geographies on foot. Until we change program rules (or more fundamentally how we move power across load zones), it is going to get harder and more labor-intensive to do direct community solar sales.
This intensive sales strategy is holding back the scale and evolution of community solar. Many of us in the industry advocate for flexible contract structures without strict credit requirements, but more risk-averse financing entities believe that such contracts are predisposed to churn. If the cost of recruiting a new customer to replace an old one continues to cost upwards of $1,000, it seems like an incredibly risky and expensive model to pursue, whether or not that churn actually happens.
So why are we doing it this way?
To date, the industry’s pursuit of the door-to-door sales strategy aims to directly confront the three biggest hurdles to community solar subscription sales: a lack of awareness, misconceptions about product viability and consumers resisting change. Each of these factors makes the community solar sale an uphill battle that requires costly interventions.
A lack of awareness that community solar is a viable, legitimate option for electricity makes the public incredibly wary of online sales. Thanks to the success of rooftop solar, much of the public has been exposed to solar, but many believe it is an expensive undertaking, or that it requires homeownership and long-term contracts. Parts of community solar that make it so accessible, frankly, also make it sound like a scam. A structure that requires no commitments or money down to see 10% savings on an energy bill sound too good to be true.
Compounding the lack of education is the fact that community solar is growing at a time in which much of the country is either (a) not accustomed to energy choice or (b) have fatigue and mistrust from competitive retail energy suppliers. In the former group, customers are not actively seeking alternative ways to reduce costs and may not be savvy energy users who are analyzing and understanding their energy bill. In the latter, alternative suppliers tarnished customer relationships by offering teaser rates and locking them into contracts with onerous exit fees. Both scenarios necessitate additional handholding to sell against misconceptions in the market.
Finally, even if a consumer has a general awareness about the benefits of community solar, completing paperwork to qualify for a solar system can feel tedious. It is the same reason why auto insurance companies spend millions in marketing to get drivers to switch and save. Change feels difficult, and when it is not necessary, savings need to be easily recognized and communicated transparently to feel worth that effort.
What will it take to change things?
Community solar has the opportunity to be the Netflix of solar energy: offering flexible options to pursue renewable energy for anyone at an affordable rate. However, in order for this to be a reality, a few things need to happen:
- Utilities and program managers need to endorse community solar, not regulate it out of existence. Consumer protection organizations that insist on lengthy and confusing disclosure documents present the opportunity as a potential scam before educating the public on benefits. If these entities supported community solar by pushing ad campaigns legitimizing the product or publishing links to available projects, it would not be so difficult to overcome misconceptions — and it may even cut down on misleading advertising from the private sector.
- Asset owners should stop requiring payment information during the sign-up process. Customers who are not accustomed to community solar are wary of giving payment information online. Rather than making it a prerequisite, encourage sign up and then follow up with campaigns aimed at finishing the onboarding process.
- Offers should be simple to understand and signing up must be easy. Minimal savings products are difficult to sell, especially when consumers do not want to change. Community solar developers can use platforms like Greenbutton to simplify the process without requiring potential subscribers to understand their bills. The most successful online platforms simplify choices and guarantee savings without getting into the weeds about electricity tariffs.
These changes are not easy. It can seem risky for a program administrator to promote products that may harbor bad actors. Asset owners want to ensure subscribers can pay bills, and demanding payment information seems the best way to do that. It is tempting to give potential subscribers complex options that make them feel like they have control. However, the status quo is holding back our industry from a broader scale, so it is time to try something new if we really want to scale community solar.
Kacie Peters is the director of business development for Pivot Energy.
Mark Lewis says
The problem with this theory is illuminated by Kacie Peters herself when she asks the question, “What will it take to change things?” She answers her own question; “Utilities and program managers need to endorse community solar, not regulate it out of existence. Consumer protection organizations that insist on lengthy and confusing disclosure documents present the opportunity as a potential scam before educating the public on benefits.” OK…that’s correct…but this is not going to happen. Utilities are not going to endorse their own competitors, which ought to be obvious. I spent 2 years in Colorado researching solar before returning to Texas to take a lowly door-knocking gig for a rooftop solar company. I wanted to learn the ins & outs of this business from the ground up while doing my own research in preparation to eventually start a solar firm. I understand the economies of scale problem with the sales model, but I don’t think community solar is going to overcome them in the manner she describes. In point of fact her argument about the obstacles community solar has to overcome convinces me that nothing but direct face-to-face contact with potential customer can overcome those kind of powerful objections. Kacie says the direct sales model produces overhead of 5-10% of the cost of a solar project. OK…that’s hardly out of line with what most businesses spend on marketing as a percentage of their gross revenues. Beware of the idea that you can just switch gears to seamlessly eliminate the cost of reaching the customer.
I disagree with ending d2d sales for anything regards to a lot of different products. Truth be told most people don’t pull the trigger on solar or community solar(among other products) because they don’t know about it,don’t understand it completely, too busy to care and do their own research. Door to door sales people can be a great way of marketing said products and get more people enrolled in community solar and or going solar on their house. There are instances of bad sales people going to peoples doors and that should be obviously addressed and people need to be weeded out but this is what I do for a living have been for 13 years. I just started community sewer back in January but I love it and a lot of people appreciate me explaining things to them and rolling them into the community store here in the New York area and I don’t think a few bad apples means completely illuminating a wonderful industry that people support their family are which would be me and a lot of other people. It’s a good way to meet people face-to-face especially with solar you can come back after I’m sending an appointment and really explain things to them and show them the benefit of going solar on the house. But with community Solar it’s a simple process that saves the money right off the bat and most the time these places don’t even have contract cell well I see your point I completely disagree with what you say.
Well written, curious what the difference between a community solar program and a solar co-op are? Seems to be a good alternative that forces providers to bid on a group of homes, as opposed to selling individually.
Mike Mollin says
Great Article, Community Power Partners has been implementing your later two suggestions with great success and has been begging New York State for help in your first suggestion, lets hope it happens.
Great piece Kacie! You make a compelling case.
The community solar PV projects were applied in Washington State in the 1990’s. Some of the problems found, were as stated here, when folks moved out of the community solar PV boundary, even if it was just across the street, one had to find someone to sell their Stock in the development to. IF a storm does damage to solar panels in the array, how does one administer, the cost of replacement. IF vandalism breaks or steals many solar PV panels, how does one administer the cost of replacement, or does the community solar PV project have insurance against such actions? Some of the lessons learned here are, more investors can build larger energy projects and bring the price down. Putting these systems on parking structures or somewhere high, helps keep vandalism to a minimum. Over the long term, a “better” program for those who move out of the area to recapture their initial outlay.
Kacie peters says
The model you are referring to Where people invest in specific solar modules isn’t used much anymore. Instead, people subscribe to a quantity of kW of capacity. If the system is damaged or under performs, the asset owner is in charge of repairs, and if it’s a big enough disruption, then subscribers don’t receive credits and are not charged for them. Further, the subscription model means that the management provider is responsible for replacing subscribers. Some programs will change an “exit fee” to cover the cost of finding a new subscriber, but management firms are trending away from that too.
As far as location to participate, newer programs are imagining larger geographic footprints to accommodate those who move, but you’ll probably have to stay in the same service territory.
Jim Kurtz says
Not surprised to see this well written and thoughtful piece Kacie. You have provided us with very helpful solutions. Thank you and good to see this article!