A solar sales pitch

A few nights ago I attended a sales pitch at my local Home Depot.  I was not impressed.  The benefits of decentralized solar electricity (and solar thermal) are so obvious it seems almost a no-brainer to go ahead with it.  Yet sales efforts like this guarantee a “no thanks” response.

[Update 8/15/2010 at end]

  • The audience was three people.  Why only three?  HD made little effort to drum up interest apart from a hand drawn sign which then disappeared altogether in the 2 or so weeks before the event.  (Of the three people, one seemed to be a genuine prospect, the other was seeking work in the solar industry and the third was me gathering information, but not really a prospect – my house faces totally the wrong way and has shading problems as well)
  • There was no sign pointing to the location of the “seminar”.
  • The seminar, on a humid evening when air conditioning would be welcome, was set up in the outside garden section, in an aisle with bags of fertilizer and lawn seed.  It smelt bad and shoppers wandered by loading their carts.  We sat on the display patio furniture.

Is this the right venue to sell a $60,000+ system?

  • The presenter had a computer with him, but instead used a three ring binder of black and white slides to make his pitch.
  • The basic message was that solar energy saved money and reduced the user’s carbon footprint.  A major point was that energy prices will inevitably rise.  This is all accepted and probably not news to anyone who is even remotely interested in solar power.
  • The sales “hook” was why would you “rent” your electricity from the power company, when you could “own” it.  I have to admit; this is good angle on the whole discussion.
  • One pricing example showed a “6.88K” system (presumably that means 6.88KWh per day – (see correction at end of post)) at $43,344 initial cost.  [Which is $6.30 per W].  Another example had 13.44KWh at $67,725 [$5.04 per W].  The examples then deducted the 30% federal tax credit – which is applicable if one pays enough tax – and a possible NJ Clean energy of 75 cents per watt [$5160 in the 6.88KW case.  There is a $7500 cap on the residential incentive.]  A full explanation of current (July 2010) New Jersey incentives is at the NJ Clean Energy site.
  • The big drawback of the NJ system is that it is a LOTTERY – applications will be selected at random.  [This is a quite unworkable system and many comments from the industry bear that out]
  • The presenter quoted some research that showed house values increased by $20 for each $1 of energy saved per year.  That would increase the value of a house with a 10KWh system by about $32,000.  [I don’t think this would influence buyers of solar systems, because most have a long term commitment to their houses.  If one had to sell after installing a PV system in the current market a solar system will probably attract buyer attention and may make the house sell faster.  How to put a number on that is another problem]
  • Financing such a large initial home improvement expense is of course the problem.  The presenter did not want to get very specific, but the options appear to be:
    • Finance it yourself – from cash that happens to be lying around, a home equity loan, or a special loan, apparently a special through HD [I am not sure about this] at 5.99% over 15 years.  [If one has the cash, or can get a good loan, solar PV is a good investment – always providing the SRECs work out as planned.]
    • Lease the system – for 15 years, at a price roughly equal to the current electrical bill.  The upside is that the lease costs will stay stable, where the electricity costs are sure to increase.  What happens at the end of the lease is not clear – enter another lease, or purchase the system at some agreed residual?  [The real benefit of the lease approach is that the leasing company (which I assume will work with HD or the subcontracted supplier – this was not made clear) assumes the SREC risk.  The downside is that there is no immediate saving in electricity charges, and there is the future purchase or lease renewal.]
    • The numbers will differ by individual, depending primarily on electricity usage and federal taxes.
  • The SREC paybacks make all the difference [see my separate earlier blog on SRECs].  The HD presenter said they were based on a federal mandate that the industry reach a 20% alternative energy goal.  There is no such federal mandate, and now that the energy bill is dead, little likelihood for any reintroduction for a while. [This will be my next entry in this blog]  This Wikipedia article shows details of the various states’ renewable industry goals.

Bottom line?  Still not convincing.  Financing needs to be far more crisp and attractive, and the sales people need to be professional and informed before solar PV has a chance to grow in the residential market.

UPDATE – In the original post I throw some doubt on the calculations of increased market value for a house fitted with solar panels.  An article in the Wall Street Journal makes the same point.  Some buyers may find the panels a turn-on, some will be turned off by them.  The WSJ bottom line: buying or leasing solar panels is a marginal proposition unless you intend to stay in the house for 10 years or more.  OR – and the WSJ does not say this – unless fossil fuel prices increase a lot – as they should…

CORRECTION – this number was originally given as KWh per year, it is of course per day.

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