Solar panel installers are the heart of the solar industry. Or maybe they’re the brains. Or maybe the veins. Well, I don’t know the best metaphor for these guys and girls, but they are one of the most critical and influential components of the humongous solar power industry. This article provides information on broad differences between solar panel installers and how to compare installers as well as specific tips for solar panel installers who land on this page.
Solar panel manufacturers are, of course, are another critical component of this system, but they have brought down their costs on a massive scale and some argue that the solar panel industry has even become a commodity industry. The “soft costs” of solar are now more than 50% of the cost of a solar panel installation in some markets — particularly, in the US. Various factors come into play here, and some are definitely outside of the hands of solar panel installers, but some big ones are distinctly tied to solar panel installers, with some installers doing much better than others.
Of course, evaluating solar panel installers is about much more than how much they cost — quality is also an important aspect, as are warranties, ongoing support, and the products they use.
To kick things off, here’s a quick look at the top solar panel installers in the US (that is, the ones with the biggest share of the market):
To be clear, though, there are hundreds of solar installers across the United States, including many only operating in one city or region, and a look at the top solar panel installers by market share in such a distributed and young market doesn’t necessarily tell you the story you need in order to pick the best company for yourself. Just because a solar installation company is large doesn’t mean it will offer you a good deal. In fact, some research may indicate that the opposite is true for the average consumer.
Customer Acquisition Costs
One of the big things that make US solar panel installations so much more expensive than other countries (about twice as expensive as German or Australian solar panel installations, for example) are customer acquisition costs. Part of this comes down to market maturity. When 20% homes have solar panels on them, word of mouth has gotten around the block several times, and solar panel installers don’t have to do as much work to inform the public of the benefits of going solar. However, some companies definitely spend more money on customer acquisition than other companies, and this brings up their prices for all customers.
SolarCity (full disclosure: I’m a SolarCity shareholder), Sunrun, Vivint Solar, and probably some other large solar companies utilize door-to-door salespeople to pull in customers. Especially in low-density residential areas of the US, this comes at a fairly high cost. While effective for getting people to go solar, it’s not particularly cheap. When evaluating solar installers in your area, I’d check and see if they use door-to-door salespeople. If they don’t, how do they acquire customers, and are the other methods less money-intensive?
SolarCity also plants salespeople in Home Depots around the country. Again, this surely must bring in more customers, but at what cost? Those person-hours from standing on the sales floor of Home Depot day after day don’t come free. Is it more cost effective than door-to-door sales, conventional advertising, internet leads? I haven’t seen any studies on these matters, but….
Solar installation leads from online sources seem much more efficient in numerous respects, so I would think they are more cost-effective avenues for acquiring new customers. Since random online ads through Google may be “hit or miss,” I have no idea how cost-effective they would be. (I’m curious to see some data on that.) But online leads through websites like ours send relatively captive potential customers to solar installers. These customers have likely searched for solar panel facts or installers in Google, landed on a useful solar-focused webpage or even website, input their unique info into a solar form or calculator, and permitted the solar lead company to send their info along to a solar installer or several solar installers (systems vary). These are people who very likely want to go solar and have determined it’s a possibility for them. They are not just random people clicking on attractive ads, walking into a Home Depot for some home supplies, or being spammed by a door-to-door salesperson.
With a more focused potential customer pool, there’s already a huge advantage to this customer acquisition method, but the likely cost effectiveness doesn’t end there. Often, solar installers only have to pay for leads where the customer actually go solar, or for leads where the customer’s data show a high potential and likelihood of going solar. In other words, they are mostly paying for customers who actually make them money, and not for ones who don’t. In cases where solar installers buy all the leads sent their way, they of course pay a much lower amount.
Not having found any data on the cost effectiveness or cost efficiency of various customer acquisition costs, I can’t say definitely which methods are best for keeping down costs. Though, logic compels me to think online solar leads and perhaps online advertising focused on solar-oriented websites are up at or near the top. From what I’ve gathered, door-to-door sales are common in the companies with the highest solar panel installation prices and are not common in markets with less of this approach.
[Note to solar installers: Crunch the numbers for efforts you take (to the degree possible), track where your customers come from and how much you spend on those avenues, and see if you can nail down cost-efficient customer acquisition methods that help you to rise above the crowd and offer the cheapest solar power around. If you are looking to start using internet solar leads, note that some companies provide much better services and higher-quality leads than others. As you can see, I recommend a few particular companies for those — the one linked above and the ones at the end of the “Solar Financing” section below.]
Speed of Installation and Connection
Another factor to consider when evaluating solar panel installers is how long they take to install and connect your solar panels. Again, broad information on this topic from respectable third-party researchers is lacking, but you can try to evaluate solar installers yourself by checking out reviews on sites like Yelp (I know, that’s a sketchy method), Consumer Affairs, and SolarReviews. You can also try to find local solar consumer groups and find out what solar panel owners have to say.
One independent review I know of, from Pick My Solar, “found that most solar installation companies in California get the system turned on within 2 to 4 months once the contract is signed,” but that market-leader SolarCity is “known to take six months or more to install a system due to backlog and inefficiencies.” The contract via SolarCity’s MySolar loan indicates that it will take up to 12 months.
Naturally, overextended solar panel installers are likely to have more delay getting to your project than those that aren’t as busy — then again, why is one solar panel installer slammed with work and another one much less busy?
[Note to solar installers: get your paperwork done asap and give potential clear (and accurate) timelines as far as when their solar panels will be installed as well as when they will likely be connected to the grid; and if there are known barriers and delays to connection in your jurisdiction, let customers know about this — more information relaxes customers concerns and dissipates anger over delays and unsatisfied expectations.]
Financing options can play a large role in the cost of a solar panel system. In fact, they can be the biggest cost. While 70–80% of US home solar installations have come from third-party solar installations whereby homeowners lease the solar panels (or pay for them through a similar power purchase agreement, or PPA), there’s been much criticism in recent years of this approach, as many people see it as being much more expensive.
A rather simple analysis I did in early 2014 comparing leasing options, loans, and non-loan cash purchases came to some interesting findings. Naturally, paying in cash without taking out a loan offered the most savings by far (often >$10,000 more in savings). However, not everyone can pay for a solar system in cash, and some believe they will get a better return on their investment (ROI) by putting cash elsewhere and financing their solar panel installations. Comparing solar loans and solar leases at 10 different properties in 10 different cities and states, I actually found a 50-50 split between them in terms of which offered the biggest 20-year savings. I was surprised, as I expected leasing to lose in almost all or all cases.
Whether or not that’s the story in general today, I have no idea, but many people argue against solar leasing, and the logic seems pretty solid. Solar panel costs have come down dramatically in the past few years, which requires a smaller loan, which means less interest paid to the financier. Additionally, several banks have become much more familiar and comfortable with solar panel systems, so they have started offering more competitive home solar loan rates.
However, note that some loans rack up the interest fees to a much greater degree, resulting in much higher prices. That analysis from Pick My Solar that I mentioned above found that SolarCity’s home solar loan offering, MyPower, makes prices 34% higher than the California average (according to Pick My Solar data and analysis). The difference in cash terms was nearly $10,000 for an average system. Part of the reason was the 30-year (quite long) time frame for the loan, and another part of it was the price escalator that results in higher payments further along in the loan period, meaning higher overall interest payments.
In any case, what I always recommend is comparing as many offers and options as possible. Solar installers typically compete with 15-20 other installers in a region. The savvy and well-researched consumer can surely come out ahead if they make sure to find the best installer for their needs and desires. Sites I recommend using to compare options include CostofSolar.com, Pick My Solar, EnergySage, Dividend Solar, and Google’s Project Sunroof.
[Note to solar installers: offer the most competitive financing packages you can come up with if you want to win customers in an increasingly competitive solar installation market.]
Overall Solar Installer Price Differences
As I’ve already touched on, various factors together combine to result in the total installed price of a solar panel system. Isolating each of these factors may not be important for a customer, but looking at the overall, final picture is. So, like I said above, be sure to evaluate as many solar bids as possible (solar installers almost always offer a solar quote for free — I’ve never seen one charge for that) and do the long-term math on the upfront costs + monthly payments to determine which offers are most appealing to you. However…
Solar Panels & Inverters Used
It’s also important to realize that cost is only part of the equation. More efficient solar panels and solar inverters are going to produce more electricity. If they cost 10 cents more per watt or rated capacity but generate a lot more electricity, they may well be the best option (despite a higher price). Solar inverters also play into output and efficiency.
Doing the math on everything is quite challenging, but you can ask solar panel installers which models of solar panels and solar inverters they use, and then see what is written about those products. For example, SunPower solar panels are known for high efficiency, high reliability, and high durability. They cost more than solar panels produced in China, but they are also worth more (full disclosure: I’m a SunPower shareholder). How much more they are worth compared to how much more they cost is the important thing, and that’s going to depend on various matters particular to your home and climate. Again, it’s hard to quantify, but at least doing some research on the products offered to you should help you to weigh your options and perhaps avoid a costly equipment mistake.
[Note to solar installers: choose your solar panels and solar inverters carefully, inform potential customers of the products you use and why, and be flexible enough to stay up to date with the industry and change your products as you find better options.]
Solar panel buyers: I hope this helps you to evaluate solar panel installers in your area and find the best deal possible. If there’s any information lacking in this article that you think I can provide, let me know.
Solar installers: I hope the various tips I’ve included in this article will help you to improve your business and offer customers the best product in your region, thus growing sales through the best advertising of all — word of mouth. If you’d like some help evaluating your offerings, feel free to contact us for a basic or thorough consultation.