EnergySage just released its 9thSolar Marketplace Intel Report. Relying upon millions of transaction-level data points from the EnergySage Solar Marketplace between July 2018 to June 2019, the report provides a great thumbnail sketch of the U.S. residential solar industry. Key take-aways: average installed costs have fallen below $3 per Watt for the first time, and the price gap has narrowed between the highest quality panels and the next tier down.
Just prior to the report’s release, I had a chance to chat with EnergySage’s CEO Vikram Aggarwal. As he describes it, EnergySage’s mission is to “make solar more accessible, affordable, and transparent to the customer.”
For the customer in the past, engaging in the residential solar space was bewildering. It was hard to get quotes from installers, and even more difficult to compare apples-to-apples. So Aggarwal and his team set out to create a resource that customers could access in order to better understand the options available to them, and built an online platform that allows customers to compare custom solar quotes online from pre-screened, local solar contractors.
This has resulted in significant customer value creation: their latest report indicates that U.S. residential buyers who do not use the EnergySage platform pay 26% more to install the same solar PV system (not surprisingly – Textbook Econ 101 – a more efficient marketplace results in a decline in costs). Depending on the size of the system, you’re talking $5,000 to $8,000 more in gross costs than the price quoted on EnergySage.
The team also went a step further and populated the platform with additional resources such as a Buyer’s Guide, which is a new Consumer Reports-like tool built with data and analysis from the National Renewable Energy Laboratory (NREL). The new resource allows buyers to compare products, and use dropdowns that explain technologies, financing options, and a host of other critical factors to consider when evaluating panels, inverters, or home batteries (It’s one of the first resources I go to when I want to further understand a particular nuance of the industry).
Aggarwal explains they put the time and effort into building this all out because the company really wants to “help the consumer learn about and understand solar and other relevant technologies, and help them procure those products as easily, simply, and transparently as possible.”
EnergySage is now active in 36 states plus Washington D.C. and employs 35 full-time employees. EnergySage estimates that they facilitated approximately 3% to 4% of all residential solar energy systems sold throughout the country in 2018.
Solar industry finally engaging consumers on their terms
EnergySage’s CEO is pleased that vendors are finally focusing on moving past historically common financial arrangements – such as leases and power purchase agreements – to meet actual customer desires. For example, he notes, the new panels in the marketplace are easier on the eye. We don’ t have to be subject to the tyranny of blue panels anymore. Some companies are designing all-black panels that are sleek and tie in aesthetically to the home. One company in the Boston area is even creating a skin that helps the panels blend into the roof. Or not. “You can put on the color of your favorite team,” Aggarwal comments. Regardless, he says “Finally we are thinking about the fact that people are putting these things on their homes…That is exciting. That tells you the industry is ready for the mass market. We need to meet the customer where they want us to meet them.”
That maturation extends beyond the technology into the area of financing, he observes, where you can now rent panels from some companies such as Tesla, while some utilities are jumping in with grid services and encouraging installation of batteries to complement solar offerings.
Adding batteries to the mix
Aggarwal sees solar plus storage in the residential space as another strong emerging trend, and it should be. Other countries like Germany and Australia already have many tens of thousands of solar-storage hybrid installations at residential sites. For a while, he indicates there was a shortage of available storage, and the Tesla Powerwall in particular was limited so installers had trouble getting inventory. But now many manufacturers are gearing up in Europe and Asia, so costs will continue to come down and storage will become increasingly viable and available.
EnergySage is seeing that already, he notes, “Very frequently we are adding solar companies that are now launching a storage product…either paired with solar or stand-alone.” Within the next few quarters, he expects that more customers will have access to both solar and storage, especially in the bigger markets. In fact, EnergySage is talking to utilities about how to best educate consumers and increase adoption of utility-run energy storage programs. Some of these will be designed as virtual power plants, allowing the utilities to tap into and aggregate the battery devices for grid-related purposes, adding to the programs already being offered in some market by companies such as sonnen and SunRun.
Community solar becoming more customer-friendly as well
Community solar is another area with growing potential, as the industry irons out its initial kinks and becomes increasingly consumer-friendly. Aggarwal observes, “When they first launched several years ago, I asked ‘would I sign up for it?’ I saw multi-page, highly legalese contracts I could not make sense of. I said this is not consumer ready. They had 20-yr contracts with hefty cancellation fees.”
In the past 12-18 months, though, he has seen a shift in the logic. Community solar developers are increasingly focusing their efforts on satisfying customer requirements, relaxing the rules and creating more simplicity, with shorter contracts, less onerous exit terms, and increasing discounts. As a consequence, EnergySage has increased its commitment to the community solar marketplace, which addresses the roughly 75-80% of customers in the market who cannot host solar panels or directly invest in on-site solar projects. The company will shortly launch what Aggarwal characterizes as the “industry’s first community solar marketplace so consumers can comparison shop.”
Highlights of the Intel Report
As noted above, the most recent tabulation of market data indicates that the average price of residential solar installations has now dropped below $3 per watt, 23% less than five years ago. Average prices vary considerably by state, from a low of $2.72/W in Florida to a high of $3.41 in New Mexico. The average sized residential system has declined slightly, from 9.6 kW to 9.4 kW, offsetting just over 94% of customer’s energy consumption.
Another interesting and encouraging trend has been the decrease in the pricing gap between the highest quality solar equipment (from manufacturers such as SunPower) and the next quality tier. This trend towards pricing competition has been underway for a while now, and it has resulted in more customers opting to pay slightly more for better quality. Over 70% of EnergySage customers opted to install panels rated as ‘Excellent,’ the highest rating on their platform.
Aggarwal is greatly pleased with this particular result. “This is very exciting,” he says, “We and the installers did not know consumers wanted that. But we started showing customers a quality score and ranking system we developed with the assistance of NREL. Customers are putting panels on their homes for decades, so they care.”
EnergySage’s CEO points to the findings of this latest report as evidence of the health of the solar industry, and a growing market acceptance, and he has big hopes for the years to come. “Now the goal is how do we get solar in the hands of practically every resident in the country,” he affirms “whatever it takes, let’s figure out what they need and let’s bring it to them.”