I just had a solar-plus-storage system installed at my new home in Tempe, Arizona. It was surprisingly complicated, and I research distributed solar for a living.
Don’t get me wrong — I love our new system and take immense pride in all the carbon-free energy it will produce for us and the grid. But as my husband and I read through multiple project proposals, we were surprised by the lack of information that installers could give us about the value of a solar-plus-storage project.
Answers to seemingly simple questions about equipment and design choices were hard to come by. It became clear to me that the residential solar industry has some catching up to do as utilities move away from simple net energy metering and toward more dynamic rate designs for distributed energy resources.
Installers struggle to communicate system value
I live in SRP (Salt River Project) territory — a utility known as being one of the first to put residential solar customers on a separate rate plan with demand charges in 2015. This new rate plan, with low volumetric rates and new demand charges, introduced a level of complexity usually reserved for commercial and industrial customers.
In our case, we pay anywhere from $3.50 to $34 per kilowatt of demand per month and 3.6 cents to 6.2 cents per kilowatt-hour depending on the time of day, time of year, and amount of demand. In May of this year, SRP added more rate options for solar customers, including a simplified plan with no demand charges. But for the last several years, the original 2015 rate structure has been the status quo for new solar customers in SRP.
This is not an optimal scenario for lucrative savings from rooftop solar. But it’s also not 2015 anymore. Costs for solar and residential batteries have dropped precipitously. Tools for optimizing and managing home energy demand — smart thermostats, demand managers and accompanying software — have become more affordable and user friendly.
More installers are offering solar-plus-storage products as utilities move away from traditional, full retail-rate net metering and toward rate designs that mimic those in SRP. And finally, SRP has a generous battery storage incentive (up to $3,600, or about one-third of the cost of our battery), and we qualified for their pilot program to install a free demand manager.
Given all this, we were optimistic. We figured an installer could tell us an approximate payback period (or range) for a solar-plus-storage system, even if it was longer compared to customers in other utilities' territories.
But no one could. We received quotes from several installers; despite over three years of mandatory demand charges for solar customers, none of them included an anticipated payback period or system-life savings.
We understood that energy usage patterns can vary dramatically from customer to customer based on several factors (square footage, natural gas or electric heating, whether you own a pool, etc.). But because we hadn’t lived in our new home for more than a few months, installers were skittish about even approximating how much we might save on our bills. One of the quotes showed some very attractive savings for our proposed system — but based on another utility’s rates.
We also found ourselves asking installers to modify their quotes to include larger system sizes. Many of the first proposals we received were only 5 to 6 kilowatts in size (below the national average of over 7 kilowatts) despite our large, unobstructed roof and plenty of Arizona sunshine.
We want our solar and battery system to fully cover our electricity use, requiring a larger 10-kilowatt system size. Installers were happy to accommodate our larger investment but couldn’t tell us what the added benefit would be in terms of generation and demand-charge savings.
Lacking clarity on technical design choices
Our desire for a system that would fully cover our electricity consumption also provoked several technical design questions. We wanted to know: How big of a system could we install based on the capacity of our service panel? Was it better to have a larger solar system and have the battery absorb electricity that exceeded the inverter’s capacity, or to size the solar to match the inverter? Since we split our array into south- and west-facing portions, would the system ever produce its full nameplate capacity?
Many of these types of questions went unanswered or were met with vague responses.
In the end, we chose Sun Valley Solar Solutions, and we’ve been extremely satisfied with their service. They’re an Arizona-based solar and battery installer that’s installed the most residential battery systems in SRP territory, which was a big reason why we chose to do business with them. Since the day that we signed a contract, they’ve managed our project beautifully, giving us ample updates and coordinating all the proper steps with SRP to initiate our system.
Our final installed system has 10.2 kilowatts (DC) of solar PV with REC 320-watt n-type monocrystalline modules, a 9.8-kilowatt-hour LG Chem battery, and a SolarEdge StorEdge SE 7600A-US inverter. It will start producing power on September 23.
But getting to that final signed contract was no small effort. It’s no wonder that customer-acquisition costs in this industry are high. If other prospective customers don’t understand the value of their system or aren’t getting straightforward answers to technical questions, they are probably ditching the idea entirely.
Increasingly, more customers will have rate structures like ours as the electric grid continues to evolve. Many utilities are moving toward rates that better reflect the time-value of electricity through time-of-use structures and demand charges.
This, combined with the fact that 3 percent of owner-occupied homes in the U.S. already have solar installed, means there are fewer enthusiastic early-adopter customers to tap into. Clearly communicating the economic value of solar and solar-plus-storage systems under various rate regimes is critical for continued residential solar growth.
So, to the residential solar installers out there: It’s time to get to work. Prospective customers are relying on you to translate panels and batteries in their home into something they can understand.
I know this can be a complicated and wonky industry. But the future of your business — your small slice of the clean energy revolution — depends on it.
Editor's note: The author did not receive any discount or other form of compensation for writing this article.