Is Solar PV a Commodity? Our Survey Says: Yes!…and No

The survey results are finally in. Thank you to the 102 people who took the time to contribute their perspectives.

So what’s the answer? Is solar PV in fact a commodity in 2010? If you just want the raw numbers from this unscientific survey, then the answer is... yes.  When the 102 responders were asked:

Is solar PV a commodity? In other words, when all's said and done, is a solar panel just a cog at a certain price per watt?

• 52% (53 responses) said “Yes, price trumps everything in the long run.”
• 48% (49 responses) said “No, a solar PV panel is more than a price per watt cog.”

So, not a definitive win, but it certainly indicates that a good part of the solar professional community believes that price is more important than anything else right now. However, that's not the full story....

When I only include results from the 56 responders who identified themselves as solar installers, the numbers switch around. Instead the response is:

• 44.6% (25 responses) said “Yes, price trumps everything in the long run.”
• 55.4% (31 responses) said No, a solar PV panel is more than a price per watt cog.”

A little ambivalence there... But wait, there’s even more conflicting news:

• Of the 56 who identified themselves as installers, 20 (35.7%) said that they based their last purchasing decision on comparing product specifications, not just price.

Of all 102 respondents, 28% said they made (would have made?) their last purchasing decision based on comparing product specifications.

As for price considerations:

• Of the 56 installers, 9 (16.1%) said they based their last purchasing decisions on price alone.
• Of all the 102 respondents, 16 (15.7%) said they based their last purchasing decisions on price alone. 

There seems to be good news for the solar PV efficiency leaders. When asked what would make them pay more for a PV panel, the number one answer for both installers and non-installers was “significantly higher panel efficiency.”

• Of the 56 installers, 25 (44.6%) said higher panel efficiency was most important factor for them to pay more for panel. In second place, 9 responders (16.1%) said they’d pay more for reliable, on-time drop shipping at the installation site.

Of the entire 102 respondents, 39 (39.4%) said that higher panel efficiency was the number one factor that would make them pay more. In second place, it was a tie. 12 (12.1%) said that the most important factor for paying more would be either:

• Credit terms for customers.
• Reliable on-time drop shipping
• Longer warranties

As for the type of panel they prefer (poly, mono, thin film, etc) when space consideration is not important:

• For the 56 installers, there’s a fairly even split. 29 (51.8%) said the type of panel did matter to them, even when space was not a consideration, while 27 (48.2%) said the type of panel didn’t matter.
• Similarly, of the entire 102 respondents, 54 (52.9%) said the type of panel mattered and 48 (47.1%) said it did not.

So what conclusions can we draw from the above? Let’s first remember that I pulled these questions out of my Solar Fred head without any scientific considerations or accounting for any statistical variables or prejudices.

That being said, my personal conclusion is that solar PV panels are not a per watt widget commodity—yet. But I think the pressure is on and without some major efficiency breakthrough, it will be difficult to see installers paying much of a premium when efficiencies start to plateau in the next few years. By that time (2016?) the 30% tax credit may be expiring and local rebates may be scarce.

So what can solar PV companies do to compete when the lowest cost per watt overwhelms the benefits of maximum efficiency?

Good question. The answer will be in the added values the solar PV panel company provides. Commercial, utility, and residential sectors will want different added values. The results of this survey give companies some hint about what might be desirable, but it should be noted that the majority of responders here (30.4%) had a residential-only perspective.

My recommendation? Start your own customer research now. If you're a solar PV manufacturer, get your sales people to pick up the phone and ask current customers one simple question: "How can I help?" The answers you receive should guide your company into creating a great product with added values and service that will make your company (and panel) stand out when price and efficiency become relatively equal.

More thoughts on these results in future blog posts. In the mean time, as always, UnThink Solar.

Tor Valenza a.k.a. “Solar Fred” advises solar companies on marketing, communications, and public relations. Contact him through Unthink Solar or follow him on Twitter @SolarFred.