The recent past is full of paradigms that are obsolete, including the idea that residential photovoltaic solar arrays are extremely expensive systems to purchase install, and maintain. Gone are the days when the photovoltaic array had a lower return on investment than a thermal hot water system. The concept of a “payback period”? That is so 2005. Welcome to the current paradigm: Solar Services. Putting solar PV panels on your roof has never been easier or more affordable.
So what are Solar Services and what does it mean for residential home owners? Instead of having to purchase the full PV infrastructure (e.g. panels, inverter, battery) homeowners can now obtain Solar Services. What this means is the solar provider owns the solar system and installs it on a residential roof. This way, homeowners don’t have to worry about the high upfront cost. Homeowners pay a low rate each month for the power the panels produce and the provider takes care of maintenance, monitoring and insurance. Typical agreements are 20 years and owners pay a monthly fee that is less than their electrical bill, locking in a low and predictable electric rate for 20 years. During the day, the array generates electricity that is supplied to the grid, giving homeowners credit. At night, homeowners draw an amount from the grid. If there is more grid draw than the system produces, the homeowner will pay for the overage, but often the additional grid usage + monthly lease fee is less than the total typical monthly electrical bill.
Don’t buy a system, buy a service. Other technologies went through similar ownership paradigm shifts. Susan Wise, consumer educator for Sunrun, likens the move to satellite TV. There was a period when cable channels could only be broadcast through satellite connections, which required the purchase and installation of the infrastructure (satellite + decoder) and required ongoing maintenance by the subscriber. With the advent of direct broadcast satellite, consumers could have the units supplied, installed and managed by the cable satellite services provider. Likewise, Solar Services, which Sunrun invented in 2007, relieved homeowners from the burden of purchasing the system and keeping up with maintenance, and made solar generated electricity more readily available. Susan offers the philosophy that sometimes, it is best NOT to own, that models like Zipcar offer easier and more affordable access to amenities without ownership.
Financially, it sounds too good to be true, how does it work? Prior to Sunrun, solar companies in the commercial sector had implemented a Solar Services model through Power Purchase Agreements for larger energy consumers. The founders of Sunrun saw an opportunity to apply the commercial model to the residential market, and other providers operate on similar approaches – SolarCity and Sungevity, to name a couple. In order to keep costs low for the consumer, Sunrun, for example, raises a reservoir of funds to cover the cost of the capital equipment. By increasing the scale of their operations, these companies can help reduce cost by taking advantage of tax credits not available to individual homeowners. Another benefit of scale is the efficiencies achieved on minimizing soft costs such as permitting, so that solar can become more affordable, even for a wider audience.
Sounds great, how do I sign up? It’s a quick call to the Solar Services provider, who will walk the homeowner through the process of analyzing the current energy usage, home size, orientation, and shade coverage. If it makes financial sense, and enough capacity can be generated, the team will then provide a design, handle the permitting process and install the solar PV array. The final step is to coordinate with the utility company to connect the array (and install NetEnergy meters as needed). Then solar panels will begin to power the home!