U.S. Solar Power Market Assessment: An Interview with Gaelan Brown of groSolar

Recently, at Solar Power International, the MyEnergySolution team sat down with Gaelan Brown, Vice President of Marketing for groSolar, to get his take on the solar power market in the U.S. and what advice he has for consumers.

MyEnergySolution: On the residential side, how is the 2010 solar market versus 2009 and where do you see the market moving in 2011?

It’s been generally better than 2009. For groSolar, installing solar across the northeast, mid-Atlantic, and California, it’s been a mixed bag. I think California has been a little tougher this year than it was in 2009. The East Coast markets have been solid although the Connecticut solar market has been tougher this year compared to last year as they’ve changed the state level program. In addition, there is no lease option in Connecticut.

We have also seen state rebates evaporating which I believe has caused a lot of consumers to wait, thinking there is going to be some better option if they wait. Well maybe that’s true and maybe its not but the general scene on the East Coast has been much accelerated especially with Pennsylvania and Massachusetts solar power. But even without the rebates in these states, you are still looking at a 5, 6 year payback with solar financing. So when people look at the solar market in general, they still see a lot of growth. I think there is a lot of potential in the solar market but people are just sitting and waiting because of the political situation as it applies to state incentives. And predicting what’s going to happen next at the state level with all of these rebate programs is really a tough one. For example, in Pennsylvania, it looks like it might be going in the wrong direction next year. So how does one plan? But, in general, we’re still finding more people realizing that the numbers are a no-brainer if they can come up with the up-front capital to install solar, or if they qualify for a turnkey solar financing program.

MyEnergySolution: How has the difficulty with PACE financing affected the residential solar power market?

I think that is another reason that people are hesitating. In Vermont, at least, there has been publicity around the PACE program being accepted in a few municipal areas. None of the bonds associated with PACE have been floated or approved so people delay again on whether to go solar thinking all the money will come along. And even where they have had successful PACE programs, it has been overly complicated with 90 to 120 days after the installation before the money shows up. So, in some ways, PACE is making things more complicated because PACE operates at the municipal level and every municipality operates differently. It’s challenging enough with all the variables with state by state incentives but to have this other layer of uncertainty at the county and municipal level is even tougher. I don’t know…we’re optimistic that this will straighten itself out but we’re not counting on PACE being a game-changer.

MyEnergySolution: Why is now the right time for a potential consumer to consider solar power for their home?

I would say they should consider solar now because the state level incentives are getting steadily worse so there is less money to hand out. And prices on solar panels seem to have stabilized. So the longer you wait, the less incentive money you’re going to have because every state is in a budget crisis and it is likely that there is going to be less and less money set aside for these rebate programs. So that’s probably the number one reason to really look hard right now.

The other consideration is for consumers to take a look at how much they are paying and what their cost per kilowatt-hour from the power company is…what are you paying now? Most consumers do not know that number. What would your cost per kilowatt-hour be from a home solar power system during the 25-year warranty period? If you take your net cost after incentives for such a system, factor in how much power it will produce over 25 years and just do the math, in most cases it is dramatically less expensive than current utility costs. Yet consumers are all hung up about payback and breakeven and how many years and that stuff…what’s the breakeven on you car or your granite counter tops or your leather couches? These are things that people need and want and are willing to spend money on that make sense to buy regardless of the payback period. The bottom line is that a solar-generated kilowatt hour is less expensive to homeowners than utility rates. So why are people waiting for solar to be “cost effective?”

MyEnergySolution: What is the biggest misconception that the average consumer has when trying to figure out how to finance a home solar system?

The biggest misconception is that solar power does not make sense economically with consumers being hung up on a payback period. However, when one looks at the numbers, solar power is cheaper than what a typical consumer pays their power company. Consumers need to ask themselves: (1) do I want to pay less on power or more; and (2) would I like to lock in a cheaper rate for my power than I am paying now for the next 30 years…yes or no? If they don’t care about these questions, then see you later.

Also, in general, we’re going to be moving more of our energy for transportation to natural gas, which is going to drive up the cost of natural gas. There are a lot of environmental issues related to natural gas exploration that are going to, at least in the North East and in California, force the cost of electricity from natural gas to go up and it could be really dramatic. Because we need to get off imported oil, natural gas transportation is definitely the direction that I think the country is going to go for transportation. I believe that there is no real reason to doubt that utility prices are going to be ahead of general inflation going forward, especially because of this.

But again I think the biggest misconception is that solar takes too long to breakeven when it is cheaper electricity right off the bat. Solar panels will add a ton of value to your home and it makes economic sense. But I understand also that right now people have real concerns about incurring more household debt where they are already spending $1000 a month on interest service or their other debt, or already underwater on their mortgage. So we have to really recognize that too and realize that people need to take a full look at the whole household scenario.

MyEnergySolution: What is the biggest impediment to financing a home solar power system right now and how can solar companies and/or the government make it easier for people to finance solar power?

Banks. Banks will not accept a residential solar power system as collateral. You have to have home equity in your home. Residential solar systems are worth at least 3 times what they cost in terms of the energy value they’ll produce but banks won’t recognize that in terms of helping you finance with a loan to pay for your solar investment.

The best way to open up finance for solar power on a broader scale is through a feed in tariff. Where residential users of solar power become producers that get some kind of guaranteed rate from the power company, that makes solar bankable. It doesn’t have to be a huge premium but we need some kind of guaranteed rate to give the banks a clear signal for their models. I don’t think there is any likelihood of a national feed in tariff but there are several states that have it on the agenda and several municipal level feed in tariffs that are proving to be successful in terms of deploying clean affordable energy without driving up utility rates. So I think that’s the where we need more momentum but it’s really the state level policy that needs to drive this and I think it is much more politically viable because it’s not tax subsidy. A feed in tariff that’s structured right, spreads a little bit of a premium to all the utility rates so you’re not going to see any kind of significant utility rate increases until you get to 20% to 30% penetration and we’re now less than 1%. So going from 1% to 10% of the energy in the grid being from residential feed in tariff projects would not drive up utility rates, if its done right. But it would give the industry huge momentum, bankability and help smooth out the instability of the whole market.

MyEnergySolution: What would you tell a potential customer, who is on the fence about installing solar panels on his home, to help close the sale?

Again, everybody has different reason to hesitate. But there are definitely several common ones that people wonder about…is the warranty legitimate? That’s a good question which means you should get quotes from credible installers who back up their work and the brands they carry. Where are these panels coming from and how do you count on these manufacturers standing up to the warranties? groSolar offers a 10-year warranty as an installer. We also offer web-based monitoring packages so you can see that your home solar system is working and you can look at it on your iPhone or computer whenever you want and know that your system is producing and exactly how much…that’s a huge one because people have always had the question-- how do I know things even working? And how I do have the security of being able to check in on it? I think the real call to urgency is that your power rates are about to go up and the state rebate is going away. If you wait till next year, your numbers are not going to look as good.

To learn more and get estimates from qualified solar installers in your area, such as groSolar, complete our short request form at MyEnergySolution.

Courtesy: MyEnergySolution.com - Solar Power Market