The #1 Reason Why The Solar Industry Has A Trustworthiness Gap? Costs! Part One

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When our CleanTechnica solar survey revealed that many consumers question the trustworthiness of the solar industry, we were mystified. So we reached out to our readers to learn more. And you all came through! The ensuing conversations unveiled many nuances of installing solar from a consumer point of view.

This article synthesizes the reasons our readers offered about why many consumers question solar industry trustworthiness. What stood out among all other explanations for the disenchantment with the solar industry was costs — costs across the lifetime of the solar equipment. That ranged from signing an agreement and financing all the way to savings over traditional power sources. This totality is known as ROI, or return on investment.

“ROI is meant to measure how much you earned on the money you spent on an investment,” says Greg McBride, chief financial analyst for Bankrate. Factors that determine homeowner renovation ROI for improvements like residential solar include location, project scope and quality, market trends, and timing.

Generally, it is assumed that residential solar installation offers an enticing return on investment. The return on investment for sustainability should be undeniable, as there is so much supporting data. But our survey indicates that many consumers were turned off by the overall cost framework of making the solar plunge.

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Readers felt strongly that expenditures like installation, permitting, sales, marketing, and financing charges were tainting the solar industry.  The Solar Energy Industries Association agreed, saying soft costs in the US today account for 65% of the cost of a new home solar system, well above the share in other countries.

Select responses have been edited for clarity and brevity.

Hard to determine ROI. Reader 1: “Determining how much you might be able to save is difficult. That, in large part, is why it can be a chore to get straight answers when shopping around for a solar system or installation. The solar industry, in that respect, lacks a lot of transparency.”

CleanTechnica editor Zachary Shahan suggests taking advantage of different ways to evaluate and vet rooftop solar companies “to make sure you’re not being scammed.” EnergySage, he recommends, is a good site that “will funnel you to rooftop solar companies you can trust. It has a solid team behind it that has been working hard for more than a decade to help people go solar.”

Labor costs are a big hit. Reader 2: “I have solar grid tied systems on three properties, and I have no complaints regarding work quality and function. However, in each case the costs seemed excessive. I priced all components, and my cost for panels, racking , inverters, etc. were about 45% of what I paid the installers. So, approximately each 6k system cost me 22k in three different states. Labor on site was about 8 man days.”

Breaking down what actually drives the price of solar is so much more than  just the panels—it’s the full system and everything needed to support it. We generally think about equipment –the type and number of panels, inverters, and batteries — but labor and permitting are significant. Expert installation, electrical work, and the local permits needed to meet state rules all factor in.

Comparison abroad. Reader 3: “US solar install prices are about 3x those in Australia. They are even double UK prices.”

South Australia recently achieved over 100% of electricity from privately owned residential rooftop solar. The only thing slowing things down, according to our CleanTechnica AU correspondent, David Waterworth, “is the ability to export excess power. 10 years of conservative pro-coal federal governments slowed the development of interconnectors between the states. That situation is being rectified.”

Need more honorable installers. Reader 4: “I looked for solar options for years. I was finally able to find a group that did my install for $2.12 a watt. If there were fewer groups gouging people, there would be a better acceptance of the solar industry.”

Research from senior CleanTechnica writer, Steve Hanley indicates that the loss of US federal subsidies may actually help to weed out unscrupulous solar installers. “Subsidies perpetuate these costs because they prop up bad actors and obscure inefficiencies in the system,” Hanley writes, “including slow permitting, expensive labor, regulatory barriers, and opaque pricing.” Fingers crossed.

Too much money spent on marketing. Reader 5: “Fixed tilt residential costs have a 200% premium over utility scale. And where does the extra $2.30 a watt go? Module costs the same. Labor construction design and engineering and permitting are surprisingly similar. The inverters eat an extra 30 cents (rats!) and some sales taxes. Most of it, though, (around $1.60) is the cost of marketing and SG&A (i.e. the text spammers). Think of it a different way, the entire ITC does nothing but pay for a portion of the marketing and overhead.”

For firms in the solar business, one of the greatest challenges remains: getting high-quality leads at an affordable price. Leads may be generated through various channels, such as online marketing, telemarketing, direct mail, and referrals. The cost of solar leads varies largely by geographical location. Such competition pushes up lead prices in areas where solar power is highly adopted. Cost Per Acquisition (CPA) is determined by dividing the total costs incurred in generating leads by the number of such leads who actually turn into paying customers.

So the lowdown is, if you’re in a competitive solar market, your bottom line will be affected by competition for your residential solar business.

Final Thoughts: Part One

Our readers have really stepped up to consider the various reasons why the solar industry has trustworthiness issues. By considering their wide variety of perspectives, we can see more deeply into consumer solar installation situations from other positions. Such sharing of experiences and viewpoints gives us a better understanding and greater empathy for people who are reluctant to endorse residential solar, even with all its likely benefits.

Because we received so many high quality responses, this is a two part series. In Part Two of this series, we’ll continue to delve into how costs figure into some consumer reluctance to upgrade to residential solar. Stay tuned!

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We received 3,426 responses to our original solar survey: 68% were from the US, 13% were from the UK/Europe, and the remainder were spread across the globe. A majority (57%) have rooftop solar, so these respondents spoke with credibility. Nearly all self-described as renewable energy advocates, with 80% saying they are 100% in favor of substantive change so renewables power our lives.