Americans are bargain hunters at heart. Black Friday shoppers will stand in line overnight to save a few bucks on a sale item. And for years, with the exception of a handful of early adopters who acted out of either environmental concerns or energy independence interests, most Arizona homeowners were waiting on the sidelines for the promise of a solar electron that was cheaper than conventional utility power.
It was a promise that always seemed to be one technological break-through away.
In 2002, I wrote a piece for the Arizona Solar Center website touting the great strides in rooftop solar electric systems in the Tucson Electric Power (TEP) service territory two years into its incentive program:
"The TEP Sunshare program pays a rebate to customers who install solar electric systems on their homes. To date, 24 Tucson area homeowners have taken advantage of the utility company's program and have received rebates ranging from $2,000 to $10,000."
Two dozen solar homes in two years – one a month. That was deemed an accomplishment a decade ago -- as high upfront costs limited solar’s appeal to mainly wealthy homeowners.
Not long after the U.S Department of Energy’s Renewable Energy Laboratory issued a report stating that a positive correlation existed between customers buying solar energy systems and customers living in affluent neighborhoods.
The analogy that solar electricity is for affluent homeowners dogged the industry for many years.
Then, in 2008, a new solar business model emerged in the form of the solar lease that offered an alternative way to finance a residential PV system. In markets like Arizona, with excellent incentives, the lease model was a game-changer.
For the first time a homeowner with good credit could have a solar system installed with little or no up-front costs. And what’s more, the monthly lease payment would be less than the cost of the electricity the system offset.
The solar lease model enticed a new demographic to adopt PV systems – one that is younger, less affluent, and less educated than the demographics of those that were buying solar systems outright.
The Center for American Progress issued a study in September of 2013 that found that 80 percent of installations in Arizona were in ZIP codes with a median household income ranging from $40,000 to $90,000. Further, most of these installations were in neighborhoods with median incomes of $40,000 to $50,000 a year.
Today, instead of one homeowner a month in the TEP service territory adopting solar – the number has grown to 100 – and the leasing model is one of the main reasons.
At the beginning of 2011 solar leases made up just 27 percent of all installations in Arizona. By 2013, 90 percent of all rooftop installations resulted from a lease arrangement.
It is an American business success story.
The major solar leasing companies did not even exist eight years ago. Now, their valuations are in the billions of dollars. According to GTM research, which tracks the solar industry, last year alone these companies did an estimated $13 billion in solar projects.
What’s more, other innovative entrepreneurs and new businesses are emerging to support the growing market sector.
Homeowners can now instantly find their home’s solar potential with the click of a mouse. Sun Number -- a company founded in 2012 with a federal grant from DOE -- has taken all of the guesswork out of solar analysis. By simply inputting your address, you can find out how much a PV system would save you in utility costs each year.
Another company that has emerged from a DOE incubator gives potential PV system purchasers a one-stop shop to compare online sales quotes – sort of like a “Priceline” for solar. EnergySage.com is providing unprecedented levels of transparency into PV prices.
These companies are on the leading edge of an energy transformation taking place across America. Next month the Arizona Corporation Commission will begin a series of workshops to explore the potential impacts to the current utility model resulting from innovation and technological developments in generation and delivery of energy. It comes at a time when Arizona homeowners are leaving the sidelines in droves to cash in on the promise of solar electricity that is cheaper than conventional utility power.
Jim Arwood
Communications Director
Arizona Solar Center
Question: In the 22 states where third-party financing is permissible, leases comprise a majority of the installs. Is the leasing model good for the industry? Is it good for utilities? Realizing that the ACC’s policies impact the adoption of new technologies and business models in Arizona, how can Commissioners encourage more innovation?
