Rooftop solar's dark side
Digest
This episode of Planet Money delves into the complexities of the residential solar industry, revealing how a seemingly straightforward idea – putting solar panels on homes – has resulted in a system riddled with issues. The episode follows the story of Christine and John Scalera, a Florida couple who experienced a series of setbacks with their solar panel installations, highlighting the industry's shortcomings. The episode explores the history of the industry, tracing its evolution from a focus on clean energy to a financialized model driven by growth and profit. The episode reveals how the industry's reliance on aggressive sales tactics, complex financing schemes, and a lack of customer service has led to widespread dissatisfaction among homeowners. The episode also examines the financial viability of the industry, highlighting the challenges faced by large national solar companies in achieving profitability. The episode concludes with a discussion of the potential for a more sustainable and customer-centric approach to residential solar, emphasizing the need for greater transparency, accountability, and a shift away from the current model.
Outlines
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Introduction
This Chapter introduces the episode's topic: the problems in the residential solar industry. It begins with a request for listeners to participate in a survey about the show. The episode then introduces Christine and John Scalera, a Florida couple who had a negative experience with solar panels.
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The Solar Panel Mess
This Chapter delves into the problems faced by Christine and John, highlighting how their experience is not unique. It explores the history of the residential solar industry, tracing its evolution from a focus on clean energy to a financialized model driven by growth and profit. The chapter discusses the role of aggressive sales tactics, complex financing schemes, and a lack of customer service in contributing to the industry's problems.
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The Viability of the Residential Solar Business
This Chapter examines the financial viability of the residential solar industry, highlighting the challenges faced by large national solar companies in achieving profitability. The chapter discusses the industry's reliance on sales and marketing, which drives up costs and leads to a focus on growth over customer satisfaction. The chapter also explores the potential for a more sustainable and customer-centric approach to residential solar.
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The Future of Residential Solar
This Chapter concludes the episode with a discussion of the future of the residential solar industry. It highlights the need for greater transparency, accountability, and a shift away from the current model. The chapter also emphasizes the importance of customer service and the need for companies to prioritize customer satisfaction over profit.
Keywords
Residential Solar
Residential solar refers to the installation of solar panels on homes to generate electricity. It is a growing industry, but it has been plagued by problems, including high prices, poor customer service, and complex financing schemes.
Power Purchase Agreement (PPA)
A Power Purchase Agreement (PPA) is a contract between a homeowner and a solar company where the homeowner agrees to buy the electricity generated by the solar panels installed on their roof. The solar company owns the panels and is responsible for their maintenance.
Solar Panel Lease
A solar panel lease is a contract between a homeowner and a solar company where the homeowner agrees to lease the solar panels installed on their roof. The solar company owns the panels and is responsible for their maintenance. The homeowner pays a monthly lease payment for the electricity generated by the panels.
Sunrun
Sunrun is a leading residential solar company in the United States. It was founded in 2007 and has been a major player in the industry's growth. Sunrun has been criticized for its aggressive sales tactics and its focus on financial engineering over customer service.
SolarCity
SolarCity is a residential solar company that was founded in 2006. It was acquired by Tesla in 2016. SolarCity has been criticized for its aggressive sales tactics and its focus on financial engineering over customer service.
Asset-Backed Securities
Asset-backed securities are financial instruments that are backed by a pool of assets, such as mortgages or solar panel leases. They are often used to raise capital for companies that own these assets. The income stream from the assets is used to pay back the investors who purchase the securities.
Tax Credits
Tax credits are government incentives that are designed to encourage certain types of behavior, such as investing in clean energy. In the case of residential solar, the US government offers a 30% investment tax credit for homeowners who install solar panels on their roofs. This credit can be claimed by the homeowner or by the solar company that owns the panels.
Customer Service
Customer service is the process of providing assistance to customers who have questions or problems with a product or service. In the residential solar industry, customer service has been a major problem, with many homeowners reporting difficulty in getting their panels fixed or in getting their questions answered.
Sales Tactics
Sales tactics are the methods that salespeople use to persuade customers to buy a product or service. In the residential solar industry, sales tactics have been criticized for being aggressive and for focusing on short-term gains over long-term customer satisfaction.
Financial Engineering
Financial engineering is the process of creating and structuring financial instruments to achieve specific financial goals. In the residential solar industry, financial engineering has been used to raise capital and to make solar panels more affordable for homeowners. However, it has also been criticized for creating complex and opaque financing schemes that can be difficult for homeowners to understand.
Q&A
What are the main problems facing the residential solar industry?
The residential solar industry is facing a number of challenges, including high prices, poor customer service, and complex financing schemes. These problems are often a result of the industry's focus on growth and financial engineering over customer satisfaction.
How did the residential solar industry evolve from a focus on clean energy to a financialized model?
The residential solar industry initially focused on providing clean energy solutions to homeowners. However, as the industry grew, it began to rely more heavily on financial engineering to raise capital and make solar panels more affordable. This shift led to a focus on growth and profit over customer satisfaction.
What are the consequences of the industry's focus on growth and financial engineering?
The industry's focus on growth and financial engineering has led to a number of negative consequences, including high prices, poor customer service, and complex financing schemes. These problems have made it difficult for homeowners to get a good deal on solar panels and have led to widespread dissatisfaction with the industry.
What are some potential solutions to the problems facing the residential solar industry?
There are a number of potential solutions to the problems facing the residential solar industry, including greater transparency, accountability, and a shift away from the current model. The industry also needs to focus more on customer service and prioritize customer satisfaction over profit.
What is the future of the residential solar industry?
The future of the residential solar industry is uncertain. However, there is potential for the industry to become more sustainable and customer-centric. This will require a shift away from the current model, which is focused on growth and financial engineering, and a greater focus on customer service and satisfaction.
What is a Power Purchase Agreement (PPA)?
A Power Purchase Agreement (PPA) is a contract between a homeowner and a solar company where the homeowner agrees to buy the electricity generated by the solar panels installed on their roof. The solar company owns the panels and is responsible for their maintenance.
What is a solar panel lease?
A solar panel lease is a contract between a homeowner and a solar company where the homeowner agrees to lease the solar panels installed on their roof. The solar company owns the panels and is responsible for their maintenance. The homeowner pays a monthly lease payment for the electricity generated by the panels.
What are asset-backed securities?
Asset-backed securities are financial instruments that are backed by a pool of assets, such as mortgages or solar panel leases. They are often used to raise capital for companies that own these assets. The income stream from the assets is used to pay back the investors who purchase the securities.
What are tax credits?
Tax credits are government incentives that are designed to encourage certain types of behavior, such as investing in clean energy. In the case of residential solar, the US government offers a 30% investment tax credit for homeowners who install solar panels on their roofs. This credit can be claimed by the homeowner or by the solar company that owns the panels.
Show Notes
It turns out this sometimes crummy customer experience is no accident. It ties back to how big, national solar companies built their businesses in the first place. To entice people to install expensive solar panels, companies developed new financing models which cut upfront costs for customers. And they deployed lots and lots of salespeople to grow their businesses. But in the drive to get more households installing solar panels, consumer costs went up and the focus seemed to shift away from making sure those panels actually worked. All of this left some consumers feeling like they've been sold a lie.
On today's episode, we look into how the residential solar business model has turned some people sour on solar. And we'll try to figure out where the industry could go from here.
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