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February 8, 2017

Customers Think Rooftop Is the Cheapest Solar: Utilities Need to Address This … Fast!

It’s imperative that you effectively engage customers with solar education. Current utility solar education techniques are falling short, causing customer backlash and driving the perception that utilities are anti-solar. E Source studied a unique approach to educating customers in new market research: explaining the relative costs of rooftop, community, and large-scale solar. The results were remarkable. Customer support for large-scale solar dramatically increased, while customer support for rooftop solar dwindled. Check out our white paper, Customers Believe Rooftop Solar Is Cheapest, but an Educational Nudge Could Change Their Minds, for more findings.

What’s Driving Solar Appeal?

Solar appeals to customers in ways unprecedented in the modern utility industry. Efficiency is a tough sell. People aren’t exactly knocking down their utility’s door to get in an insulation installation queue. Yet solar interconnection queues are growing so quickly that utilities can’t keep up. The reasons behind customers’ love for rooftop solar are well documented (read more in the December 2015 issue of E News)—environmental benefits, bill savings, visual triggers, and social status drive emotional attachment to solar. New E Source market research uncovered an additional driving force behind this emotional attachment: Customers believe residential rooftop solar is a low-cost alternative to traditional grid-supplied electricity.

Customers Genuinely Believe Rooftop Solar Is Cheapest

In our online survey of more than 7,000 North American residential customers, 68 percent of respondents believe rooftop solar costs the same or less than traditional grid-supplied electricity. Ninety percent of respondents believe rooftop solar has a neutral effect or reduces overall electric system costs. These inherent beliefs present a major challenge for utilities. Utility communications about cross-subsidization or increased grid costs due to net metering conflict with customer perceptions and are going to come across as anti-solar. Given customers’ positive perceptions of solar, being viewed as anti-solar will certainly harm your brand image.

How can you address this complex issue and avoid the dreaded “anti-solar” moniker? The first step is educating customers about the costs of different types of solar. Our market research dove into customers’ opinions on future utility investments in solar. We asked respondents to allocate a hypothetical $100 of utility investment in solar among four options: large-scale solar, community solar, residential rooftop, and business rooftop. We included a short description of each and explained how the benefits and costs accrue to different customer groups. The result? Residential rooftop came in first, with respondents allocating $31 to it, while large-scale solar came in second at $29.

Providing Education on Relative Solar Costs Makes a Big Impact

We then tackled how customers’ allocations would change with a better understanding of the rough costs of delivering electricity from these four options. We explained the rough costs, stating that rooftop solar costs twice as much as large-scale solar per unit of electricity and community solar costs 50 percent more than large-scale. We then asked respondents, with their new knowledge, to again allocate the $100 their utility will invest. The results changed dramatically, with investment allocation rising over 40 percent for large-scale solar, the two rooftop options each dropping about 22 percent, and community solar staying about the same. With this relatively simple level of education, customer opinions about solar swayed significantly.

People’s love for rooftop solar is here to stay, and you should never try to dissuade that support. However, this type of basic cost education provides a way for you to explain why your utility pursues large-scale solar over rooftop. The lack of broader customer awareness about different types of solar demonstrates a challenge of hitting both the rational and emotional sides of this issue in order to help customers better understand what solar provides both personally and for the entire grid.

To learn more about customers’ solar cost perceptions, download our white paper, Customers Believe Rooftop Solar Is Cheapest, but an Educational Nudge Could Change Their Minds.

We performed this market research as part of the E Source Distributed Energy Resource Strategy, an annual research service that provides deep customer insights to help utilities develop robust solar strategies that meet customers’ evolving needs. Contact us today to learn more and subscribe to the service.

About the Author

Adam Maxwell


Senior Director, New Product Development

Adam Maxwell conceptualizes, develops, and implements new products for the utility industry and adjacent markets, and manages the E Source Solar Strategy Service. New products include research services, software products, market research studies, and DSM pilots. He also performs corporate strategy for existing E Source products and markets. A subject matter expert in utility DSM and solar programs, he has worked in a consultative role with North American utilities for seven years, providing them with actionable insights to develop DSM and solar strategies and optimize their energy-efficiency, demand-response, and solar programs; marketing; and communications. Adam has a BA in psychology from Wesleyan University and is a certified scrum product owner.

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Contributing Authors

Head of Human-Centered Product Strategy

Adam Maxwell designs, develops, and implements new products for the electric and gas utility industry, with a focus on human behaviors and design...