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.