Across large parts of the United States, customers are able to get solar power on-site with no money down. Yet, both residential and commercial property owners continue to put off buying solar because of concerns about solar “payback time.”
Even if payback time is no longer a helpful concept, it remains a powerful myth that keeps too many people from getting solar. According to Lyndon Rive, CEO of SolarCity, the single biggest challenge to spreading solar today is “getting consumers educated on the value proposition.”
This means that now is the time for solar companies to bust the myth of solar payback time.
Solar payback time becoming irrelevant
At least 25 states allow solar power purchase agreements, according to the U.S. Department of Energy. PPAs and solar leases allow solar companies to offer no-money-down financing to their customers, removing a key barrier to solar for homeowners, commercial property owners and governments.
These days, many customers are getting solar with no investment on their end. So, what’s the solar payback time?
That’s a trick question, of course.
If a customer paid nothing upfront and is making a monthly payment less than what he saves on grid electricity from using his new solar array, then the concept of solar payback time is irrelevant.
You can say that the payback is zero days, because the customer starts to benefit right away. Or you can say that the payback is never, because there’s nothing to pay back.
Either way, it’s pretty silly to talk about solar payback time if your company installs solar systems financed through a power purchase agreement or solar lease that requires no-money-down and charges monthly payments less than what the customer saves on their electric bill.
PPAs and solar leases rising
If you’re in a state that allows PPAs or, if you can’t do a PPA but you can you do a creative lease that requires no money down and cash positive monthly payments, then your customers don’t have to worry about solar payback time.
By the way, if you’re not lucky enough to do business in an area where you can offer no-money-down solar and you’re still in the business of selling solar panels instead of selling electricity, I can certainly sympathize. That’s how it still is in my part of Virginia, at least for homeowners, who can’t qualify for PPAs by law.
That requirement for capital investment really puts a crimp in residential solar sales. How many homeowners these days have $20K or $30K just sitting around to invest in buying solar panels? All of us in the solar industry should fight as hard as we can on the policy front to allow PPAs for everybody across America, especially residential solar customers.
I hope that, in the future when every PV installer in America can offer solar with no money down, the concept of solar payback time will disappear — except for utility industry analysts.
In the meantime, if you’re in California or the Northeast or another area where no-money-down solar is common, it can be frustrating to deal with people who keep asking about solar payback time. Especially since 70% of customers are getting solar with no investment, according to SolarCity’s Rive.
But too many potential customers still think they need to make a big capital investment to buy panels.
Rive shares the frustration of many solar company execs:
It’s mind-blowing to me even when I communicate to my own friends who are thinking of getting solar, they ask me “what’s the payback?”…I’ve been at this business almost ten years and they’re asking me what’s the payback? There’s no payback — you’re not making any investment. You just pay less for the clean energy! And, so when my own friends don’t know that…it takes a while to get the message out.
Rive explains that when a sales rep can explain the value proposition to a potential customer, that the adoption rate for solar is very high.
But unless that potential customer is educated, they may let the myth of solar payback prevent them from getting solar.
To kill solar payback time, your marketing needs to be educating
In the solar industry, the way you educate your potential customers is through marketing. Good content marketing can bust the myth of solar payback time. Blog about it, post it on social media, talk with people about it in chat threads.
And if you want to enjoy some of the success that Rive’s salesforce has achieved at SolarCity, then you need to do marketing that is more about educating and less about the hard sell.
But don’t change your marketing just to help the industry. Do it to help your own company.
Because these days, potential buyers will do their research online and largely make up their mind about solar before they ever talk to one of your salespeople.
Leading solar companies have already made the move online from hard-sell to education. Solar companies that drag their feet on making the shift to content marketing will find more and more of their potential customers going to the competition.
— Erik Curren, Curren Media Group