The game has changed for solar energy

The game has changed for solar energy

I’m just going to come right out and say it. We think that the U.S. government and many U.S. utilities are out of synch with reality when it comes to expectations for renewable generation – particularly regarding the potential for solar distributed generation.

The U.S. Energy Information Administration estimates a solar photovoltaic generation growth rate of only 7.5% from 2012–2040 and projects that renewables will supply only 16% of U.S. energy use in 2040.

But these numbers are based on annual PV shipments from 1989 through 2012. Their estimates are built from a trend that doesn’t reflect recent PV sales growth.

The U.S. Federal Energy Regulatory Commission reports that 647 new MW of solar capacity were installed in the first four months of 2014 alone, in 59 new or expanding U.S. projects. Ninety-one new or expanding projects producing 977 MW were added in the same time period in 2013. Based on an analysis of the top 20 solar manufacturers, which account for two-thirds of global shipments, industry tracker Solarbuzz projects a 30% growth rate in solar PV shipments in 2014.

Based on these and other more recent trends, some industry analysts project that renewable energy sources in the U.S. could reach or exceed 16% of the energy supply by 2018.

Why? Because the game has changed. In a custom client study five years ago, we estimated that a 5 kW rooftop residential PV system would run $37,500 in an “average” cost scenario for solar installation. And our client estimated that the payback period would run between 10 and 20 years on such a system, depending on electricity rates.

Since then, the cost of solar has dropped dramatically. According to a recent Triple Pundit article, PV panel costs declined 20% in both 2011 and 2012, and last year solar generation costs again dropped a little, to $2.50 per watt (installed). Solar module prices, in particular, have fallen to around 10% of the overall installation cost.

New leasing options make solar even more affordable. Major industry player SolarCity, for instance, promises homeowners an overall cost reduction from day one with their solar leasing program.

Power purchase agreements, leases, new financing options and new models for individual or community participation/ownership are making solar affordable for (almost) everyone.

Our 2014 Eco Pulse study, which was fielded in April, finds that 40% of Americans say they are searching for “greener” electricity (renewable energy, green power, solar panels, etc.). Will they all act? No. We consistently see a huge gap between interest and actual purchase in this category. Only 4% report they’ve actually purchased solar panels.

But Americans are engaged and beginning to actively investigate – and many will be pleasantly surprised at the new options.

Five years ago, we found that the target buyer for solar was a middle-aged, conservative white guy earning $150,000 or more per year. Our Pulse research shows that the distributed generation target audience is no longer this small, extremely affluent niche. It’s younger and more ethnically diverse, and it earns a more moderate income ($50K+).

New solar options are viable for moderate incomes. The potential is huge. Utilities who aren’t actively facilitating solar options for their customers could find themselves irrelevant in the future.

It’s easy to scoff at aspiration. But momentum is a hard thing to stem.

One of my Facebook friends recently posted a link to a video about a new solar roadway technology, and I watched it spread like wildfire. As I write this, the page has received almost one million likes. What makes the link so sharable isn’t just the information or the jaw-dropping technology – it’s the laugh-out-loud Saturday Night Live tone that is absolutely perfect for the new, increasingly Gen Y target audience for solar. Is this technology viable? I don’t know. Do I want a “solar freakin” driveway? You better believe it.

Solar panel image by Andreas Demmelbauer via Flickr


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Posted on

May 29, 2014

About the Author

Lee Ann Head

Lee Ann Head

Lee Ann started Shelton Group's research department in 2000 and paved the way for us to become the insights-grounded creative agency we are today. After 17 years leading our research team, she recently handed down the title of Vice President of Research & Insights, but remains an integral part of that team as she continues to oversee proprietary studies.

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Suzanne Shelton

President and CEO

Suzanne is the voice and the vision of Shelton Group. Drawing on her extensive experience in energy and the environment – and 25+ years in the marketing and advertising industry – Suzanne provides high-level strategic insights for our clients and guidance for our research and creative departments. She regularly speaks at conferences around the country, including Sustainable Brands, Fortune Brainstorm E and the International Builders’ Show, and serves as a guest columnist for publications like Fast Company, Green Builder and

Susannah Enkema

VP Research & Insights

Susannah directs our research team and plays a key role in extracting the nuggets of information that pave the way for recommended marketing strategies and creative approaches. Susannah has nearly two decades of market research and strategy experience, including her role as president of SE Consulting, where she led the services for the likes of DIY Network and the makers of GORE-TEX®.

Laila Waggoner

VP Client Engagement

Laila leads our client engagement process, overseeing activities from both a strategic and a tactical level to ensure our work generates desired results – and clients’ satisfaction. She brings 25+ years of marketing leadership experience to her client relationships, with particular expertise in the homebuilding and remodeling industries as well as member-driven organizations, such as the Vinyl Siding Institute and Plastics Pipe Institute. Before joining Shelton Group, she led strategic marketing teams for Owens Corning’s insulation business.

Matt Brass

VP Creative

Matt steers the creative department in concepting, designing and producing campaigns. He ensures sound strategy and deep insights inform everything his team develops, and works closely with the accounts department to ensure copy and designs will meet our clients’ goals. As a designer and filmmaker himself, he’s also a principal contributor to all of Shelton’s in-house photography and videography work.

Glen L. Vesser III

VP Finance and Administration

Glen manages Shelton Group’s finances and administration, ensuring our internal systems run smoothly so we can provide exceptional client service in a seamless and timely manner. Glen’s financial and administrative expertise has been shaped by decades of experience in a variety of industries, including public accounting, media distribution and health care.

Mike Beamer

VP Business Development

Mike joined our team to help provide strategic vision and foster our agency’s growth by overseeing new business leads and managing agency marketing and website content. He arrived in Knoxville steeped in energy efficiency and renewables – he previously led client service for an agency division in Boston dedicated to marketing communications strategy and branding for B2B and B2C clients in that space.