In the first four months of 2010, California solar applications totaled nearly much as in all four quarters last year, according to Mark Bachman of Auriga USA. Through all of 2009, Californians installed 265 MW on their rooftops, about the size of one typical electric power station. This year we have collectively already installed another 252 MW – just through April.
In a piece at Forbes, Bachman attributes the “staggering increase” to the solar panel price drop. But actually, my experience tells me it was something different. Two Californian clean tech innovations, one taking cost out of the equation altogether – drove installation increases at least as much as the cheaper panels.
Initially state utility rebates made solar more affordable. The rebates were $2,500 per kilowatt in 2006, and have steadily been stepped down over the last few years as more solar was added to the grid. Last month it was down to just over $600 per kilowatt. However, that reduced rebate has been balanced by the Federal 30% tax credit which kicked in during the same period, keeping after-incentive costs at about the same level.
Panel prices have also dropped about half in the last year as Spain dropped its generous Feed in Tariff suddenly and nations that produced panels to meet their extraordinary demand, were suddenly faced with a glutted solar panel market. Prices dropped precipitously over the last year as a result. Bachman attributes the increase to the cheaper panel prices offered by Asian manufacturers like Suntech Power, Sharp, Yingli, Trina Solar, and Kyocera.
But panel prices are only half the cost of getting solar on your roof. Installation is the other half of the cost. And finding the money has till now been a key impediment.
Neighborhood group discounts and power purchase agreements (PPAs) solve those issues. Both take the guesswork out of the equation. Homeowners no longer have to become experts in evaluating installers and panels. One greatly reduces, and the other virtually eliminates the cost.
Our own 1BOG makes it possible to cut the costs of custom local permitting, sales and installation by grouping together neighborhood installations at one time, and getting solar companies to bid on what amounts to a much larger “neighborhood install” – bringing down the rooftop cost side. By handling the bidding process and vetting installation companies (CEO Dave Llorens is a former installer) they reduce the homeowner’s home-work load.
Power Purchase Agreements
Once residential solar power purchase agreements (PPAs) sprang into being in California, that made getting solar as straightforward and routine as signing up with an electric utility.
The thought of going to a bank gives many pause. But just buying the power itself through a flat rate residential power purchase agreement (with Solar City‘s Pure Power or SunRun‘s Power Plan) means it is possible to just substitute solar power in place of the utility power that is (for many in California) already more expensive than solar, and gets increasingly expensive over time. Sungevity offers a lease, with about the same same savings.
Residential PPAs mean that for most people, with an electric bill over about $120 currently, transitioning to solar power off their own roof is cheaper – starting in the very first month – than doing nothing and staying with their utility. And the savings mount up from there.
The difference can be eye popping. Someone now paying $500 a month can save over $100,000 over 25 years, yet with no investment costs at all, with the SunRun PPA. All three companies offer $0 down options in many cases. Most people know about the tremendous savings of a solar system (over paying utility costs) – but coming up with the upfront costs has always been a huge deterrent. Till now.
Bachman attributes the “staggering” increase in applications to the cheaper Asian panels. But as someone who worked in the solar business both before and after neighborhood discounts and residential PPA’s – my experience has been that these two innovations by California clean tech start ups have actually created a much greater game-changer.
(Disclaimer: I write for 1BOG (Virgance owns both 1BOG and Cleantechnica), and have canvassed for both 1BOG and and SunRun because I believe in both business models as effective ways to get more solar power on the grid at little cost.)
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