Community Solar Overview and Market Projections Jennifer Szaro, Senior Director SEPA
About SEPA SEPA’s mission is to facilitate the utility industry’s smart transition to a clean energy future through education, research, and collaboration. www.sepapower.org
Growth of Community Solar Programs 300.0 140 120 250.0 There are 67 Planned CS Programs that will account for an additional 313 MWs 100 200.0 80 150.0 60 100.0 40 50.0 20 0.0 0 pre2011 2011 2012 2013 2014 2015 2016 2017 (May) Cumulative CS Capacity Cumulative Number of CS Programs Source: SEPA Annual Member Survey www.sepapower.org
Status of Community Solar Programs Utility-Managed Community Third-party Managed Solar Programs Community Solar Programs Currently implemented Currently implemented No interest No interest Planning/researching/considering Planning/researching/considering www.sepapower.org Source: SEPA Member Survey
Untapped Market Today • Median program is 102.5 kW • 75% of programs leverage systems less than 800 kW • Largest programs are around 20 MW (TEP, SRP, Xcel, RMP) Cumulative Installed US Utility-Scale Capacity Solar (2014 MW) Rooftop Solar Community Solar Source: SEPA Analysis 5 www.sepapower.org
Understanding Customer Perspectives on Community Solar Jennifer Szaro Senior Director, SEPA
Methodology Stratified A mix of multiple random sample Sample of 2,001 choice, fixed included a mix of regionally response, Likert genders, ages, diverse U.S. Margin of error scale and home residential utility +/-2.2% at a 95% discrete choice ownership, customers from confidence level (conjoint) ethnicities/races, a national online analysis education, consumer panel questions incomes and geography www.sepapower.org
The Current Residential Solar Landscape Consideration Interest Consideration by Type 59% are interested in getting solar 16% are currently 34% are seriously power for their considering rooftop considering home solar renewable energy options 14% are currently considering community solar 8 Source: 2016 SEPA-Shelton Group Survey
But DO customers UNDERSTAND community solar?
Residential Community Solar Landscape 14% 47% Current Interest after education consideration
Commercial Community Solar Landscape 19% 52% Current Interest after education consideration
How Do Customers Respond to Different Program Designs? 12
Residential Customer Research 13
Panel lease • Pay up front fee to lease a certain number of panels • Receive bill credit per panel per year based on production of the panel • Time-certain contract
Solar le lease target • Younger, affluent couples (25-54) • Suburban • White collar • More likely to live in the NE Care about: • Saving money • The environment • Being good role models for their kids • Time management Why a Community Solar lease? • Like having an ownership stake • In-community location is more important to them • Worried about inconsistent production of a rooftop system
2,800,000 Low-end market potential for panel lease model, or roughly 2.5% of households
Messaging Community solar is good for the planet! • Promote environmental benefits, including curbing climate change. Take your kids to see your solar array! • Talk about future generations/being a good role model. Solar without the hassle! • Note key community solar strengths: lower risk of inconsistent output or maintenance headaches.
An Effective Lease Design Low Probability of Success High Probability of Success 20+ year term 5-10 year term $595+ per panel $395/panel No on-bill financing On bill financing Less ownership – customer doesn’t “own” Customer “owns” the power the panels produce the panels or power the panels produce (and even better) “owns” the panels Location based on efficiency/lowest cost to Location in the community or within 15 minutes utility (often distant) driving Most capacity currently generated by non- Utility sponsor or solar co./utility partnership utility-owned arrays. Often no real-time access to production Real-time panel production info via web portal or information smartphone app.
Block Subscription Offering • Subscribe to blocks of power produced by a solar array at a slight price premium per kWh ($.01-.03) • That rate is locked in for the duration of the contract, even if the utility’s rates go up
3,700,000 Low-end market potential for block subscription rate model, or roughly 3% of households
Blo lock Subscription • Females, 45+ Target • Suburban • Well educated and middle class • No kids at home • More likely to live in the South Care about: • The environment • Locking in lower energy costs • Being responsible Why a Community Solar Subscription? • Haven’t really thought much about solar before • Utility sponsorship is more important to them • Adverse to ongoing maintenance required for a rooftop system
Messaging Community solar is good for the planet! • Though they haven’t considered solar viable for themselves, they’re concerned re climate change Community solar is affordable! • Point to the economic benefit of locking in what will likely be a lower-than-average rate over a long term. You can be part of the solution! • Help them feel empowered
An Effective Subscription Design Low Probability of Success High Probability of Success 2 year term w/option to renew 20+ year term $100 non- refundable deposit or “sign -up No sign-up fee or $50 refundable deposit fee” (after 2-5 year participation) $.03-$.05 premium kWh rate $.01-$.02 premium kWh rate Most capacity currently generated by Utility sponsor or solar co./utility non-utility-owned arrays. partnership Location based on efficiency/lowest cost Location within community to utility (often distant) No real-time access to production Real-time panel production info via web information portal or smartphone app
Overall, the best package from a customer perspective: • “Community Shared Solar” = best description • If leasing: • Shorter (5-10 year) terms; < $495/panel • If subscribing : • Longer (up to 20 year) subscription rate term is OK; premium kWh subscription rate won’t fly above $.01/kWh • No sign-up fee • Non- refundable deposits don’t fly • Utility involvement in community solar projects preferred • Siting in their community or within a 15 minute driving distance preferred • Need access to panel power production info.
Community Solar Program Participant Feedback Survey Education is Critical Program Demographics Single w/ kids, 7% Rent, 2% Subscribers who Single w/o Partnered w/ kids, 26% felt program was kids, 36% clearly explained Own , 98% Partnered w/o Inner Circle is kids, 32% Community Solar Subscribers Outer Circle is National Population $25k – $49k, < $25k, 2% 18-34, Subscribers who 15% 4% felt program was 35-54, not clearly $100k+, 21% 37% 65+, explained 48% $50k – $99k, 55-64, 27% 45% 25 www.sepapower.org
Key takeaways Build your CS arrays within a 15 minute drive of most likely subscribers Offer a robust portfolio of options – different customer segments need different solutions Rethink price points and terms, using the guidance noted here to craft the offers with the highest likelihood of success. Education is key to community solar recruitment Consider the customer journey when designing a program – are you making it easy or difficult?
Commercial Customer Research 27
308,000 Low-end market potential for panel lease model, or roughly 4% of American businesses
Panel Lease Target • Younger executives (CEO/CFO/COO; 18-44 years old) • Small to mid-size companies (revenue less than $10 million – majority have fewer than 10 employees) • Own their building and operate in a single location • More likely than average to be located in the Midwest • More likely than average to be in business services. Cares about: • Being a good corporate citizen • Reducing energy costs Why a Community Solar lease? • Less risk and better monthly cost benefits • Likes the idea of sponsorship by a reputable solar company, working in partnership with the utility
Messaging Be a good corporate citizen! • They feel a strong sense of responsibility and report already undertaking at least 5 sustainability initiatives Community solar is good for the bottom line! • If they can’t make the economic case for it they won’t do it. They’re also not willing to pay extra for visibility of the panels
132,000 Low-end market potential for subscription rate model, or roughly 2% of American businesses
Block Subscription Target • Older owners/partners(at least 45 years old) • Small companies (1-9 employees; revenue less than $5 million) • Lease their buildings • Located in the Midwest or Northeast • More likely than average to be in business services, manufacturing or technology. Cares about: • Reducing energy costs • Control and independence from their electric utility Why a Community Solar lease? • No maintenance costs • Sponsorship by local utility
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