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Freedom Forever residential solar installation

This month, Governor Jerry Brown, signed a bill that will require the state of California to derive all electricity from renewable sources by 2045. This bold commitment signals to the world that California, as the world’s fifth largest economy, is leading the charge against climate change.

Bolstered by California building code

Of course, reaching this ambitious goal will require significant investments in renewable power generation that don’t exist today. While much of this will happen at the state and municipal level, California homeowners too will have a role to play as they look to adopt solar and other renewable systems. This will be bolstered even more by recent changes to the California building code that require solar in all new construction. Not only will this new commitment to renewable energy ensure a more sustainable future for our planet, it creates new opportunities for the residential solar industry to make the case to homeowners that solar is the best investment they can make in their property.

The evolution toward alternative energy sources has changed the way people power their lives. Due to its rapidly decreasing costs and unobtrusive profile, solar energy has become a more popular form of renewable home power due to an abundance of solar resources in the US and the long run cost-savings on electricity consumption. With utility prices increasing by 20% since 2008 and the cost of solar equipment decreasing by nearly half of what it was eight years ago, the prospect of owning a solar system is an increasingly attractive option for homeowners. Why then, has the industry leaned so heavily on a leasing structure that doesn’t result in homeowners owning their equipment?

In the early days of home solar power, a number of factors converged to make PPAs (Power Purchase Agreements), the go-to mechanism for homeowners looking to adopt solar technology. But PPAs have significant drawbacks for homeowners - they don’t add long-term value to the property and they don’t allow homeowners to take advantage of critical tax breaks designed to foster green energy adoption.

The future is ownership

While many companies in the residential solar space have embraced a PPA leasing model, we know that the future of residential solar is in ownership, especially as customers begin to perceive the value that solar energy brings to a home - a value that will only rise as more states adopt renewable energy commitments like the new California law.  We already know that for every dollar invested in a home solar system, the value of a home increases by $1.85. By promoting solar ownership - and tying the system to the property - solar can be a better investment than a remodeled kitchen or a luxury swimming pool. Beyond that, ownership allows homeowners to fully take advantage of tax incentives that come from renewable investments - incentives sure to increase as more states encourage a move away from fossil fuels.

Customers as long-term partners

Additionally, residential solar companies need to begin seeing customer relationships as not just a one-time transaction, but as a long-term partner whose energy needs will change and grow over time. Solar companies should be prepared to provide a model of service that resembles something more like a consultant, creating long term and reliable relationships with their customers, understanding their needs and helping ensure their solar systems stay current and maintained.  As innovations like electric cars become more commonplace, the energy needs of customers will change. We know that for each electric vehicle brought into a household, energy consumption rises by around 50%. Customers will want to add capacity in the form of more solar panels and backup batteries to support their power needs and will want an established relationship with a company that can meet their needs. At Freedom Forever, we’re proof that this model works, helping us achieve nearly 3000% revenue growth over the last three years.

As we move toward a more sustainable energy landscape, the demand for residential solar is certain to rise. This means that the solar industry needs to adapt, moving past the PPA model and towards one where homeowners buy into their technology and solar equipment is seen in the same light as any other value-adding home improvement. By working to finance the ownership of solar equipment, companies can increase demand and grow the market for this renewable energy source.

Written by Brett Bouchy, CEO of Freedom Forever

Labels: solar installation,finance,lease,power purchase agreement,investment,residential,photovoltaics

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