EEI.SIRFall2016.Community Solar, Shelton...subscription community solar option. – Utilities should...
Transcript of EEI.SIRFall2016.Community Solar, Shelton...subscription community solar option. – Utilities should...
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EEI SRI • September 30, 2016
Solar Solutions:
Give the customer what they want!
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Our Vision: Every home & building in America is
energy responsible and sustainability is ordinary
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We create a market advantage for
organizations who create a
sustainable, energy-responsible
future.
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Context setting
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86% of the Fortune 500 now
publishes an annual
sustainability report.
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Energy efficiency
and renewable
energy initiatives
are at the
top of Corporate
America’s priority
lists when it
comes to
sustainability.
10
66% of business decision-
makers in the US and Canada
expect to increase their
reliance on more renewably
generated electricity.
Shelton 2016 B2B Pulse
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Two sustainability initiatives are important to
consumers, regardless of sector:
• Consumer Mandate #1: All companies, regardless
of sector, should address
the waste they create
• Consumer Mandate #2: All companies,
regardless of sector,
should be using
renewable energy
Shelton 2016 Eco Pulse
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The Current Residential Solar Landscape
Consideration by Type Consideration Interest
59% are interested in getting solar power for their
home 34% are seriously
considering renewable energy
options
16% are currently considering rooftop
solar
14% are currently considering
community solar
SEPA - Shelton 2016 National Study
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So what’s the right path
forward for utilities to provide
the solar energy customers
clearly want?
Shelton 2016 B2B Pulse
Community Solar
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www.sepapower.org
What is Community Solar?
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www.sepapower.org
Key Questions and Programmatic Attributes
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Who runs the program?
• Program Administrator • System Owner/Purchaser
What is the value proposition?
• Offer/Transaction • Production Guarantee • Economic Proposition • Target Customer Classes
What size system is appropriate?
• Siting & Scale • Participation Limit: Residential • Participation Limit: Non-Residential
What are the terms & conditions?
• One-Time Sign-Up Fee • Fee Treatment • Minimum Term • Unsubscribed Energy • Subscription Transferability • Program Length • REC Treatment
www.sepapower.org
Most Common Structures
• Customer pays up front to purchase or lease a panel and receives a credit on their bill tied to system production
• Bill credit reflects an allocation of actual system output based on proportionate share of system
• kWh credit • Monetary ($/kWh) credit
• Mimics a rooftop ownership model in that up front capital is required
• Economics based on a payback period analysis
• Majority of programs in existence leverage this structure
• Roughly 84% of all programs today require either an upfront payment, or allow for financing of an upfront payment over a period of time
• Customer subscribes to program in either kW or kWh blocks and receives a credit on their bill tied to system production
• kWh blocks: guaranteed output each month at fixed payment per block
• kW blocks: variable output each month at fixed price per kWh or fixed payment per block
• Customer pays a premium on day one for solar blocks, but that price is fixed for a long term (e.g., 20 years) providing a rate hedge
• Mimics a rooftop lease model • Economics based on break-even
analysis • Fewer programs historically, but
gaining interest across the country • Roughly 16% of programs today
Up Front Payment Model “Panel Lease”
Ongoing Payment Model “Block Subscription”
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Untapped Market Today
18
Source: SEPA Analysis
Rooftop Solar
Community Solar
Utility-Scale Solar
Cumulative Installed US Capacity (2014 MW)
• 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)
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14% 47% Current consideration Interest after education
Residential landscape
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19% 52% Current consideration Interest after education
Commercial landscape
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Residential:
The panel lease market
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Low-end market potential for panel lease model, or roughly 2.5%
of households
2,800,000
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Solar 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 in-consistent
production of a rooftop system
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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.
Photo Source: www.metro.us/Clean Energy Collective
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There’s definitely a “right” way to package a lease
• 20+ year term
• $595+ per panel
• No on-bill financing
• Less ownership – customer doesn’t “own” the panels or power the panels produce
• Location based on efficiency/lowest cost to utility (often distant)
• Most capacity currently generated by non-utility-owned arrays.
• Often no real-time access to production information
• 5-10 year term
• $395/panel
• On bill financing
• Customer “owns” the power the
panels produce (and even better)
“owns” the panels
• Location in the community or
within 15 minutes driving
• Utility sponsor or solar co./utility
partnership
• Real-time panel production info
via web portal or smartphone
app.
High Probability of Success (optimal model)
Low Probability of Success (common current model)
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Residential:
The block subscription market
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Low-end market potential for block subscription rate model, or
roughly 3% of households
3,700,000
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Block subscription target • Female, 45+
• 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 lease? • Haven’t really thought much about
solar before
• Utility sponsorship is more important
to them
• Adverse to ongoing maintenance
required for a rooftop system
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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
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There’s a “right” way to package a subscription
• 2 year term w/option to renew
• $100 non-refundable deposit or “sign-up fee”
• $.03-$.05 premium kWh rate
• Most capacity currently generated by non-utility-owned arrays.
• Location based on efficiency/lowest cost to utility (often distant)
• No real-time access to production information
• 20+ year term
• No sign-up fee or $50 refundable deposit (after 2-5 year participation)
• $.01-$.02 premium kWh rate
• Utility sponsor or solar co./utility partnership
• Location within community
• Real-time panel production info via web portal or smartphone app
High Probability of Success (optimal model)
Low Probability of Success (current model)
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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.
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Key takeaways
• Build your CS arrays within a 15 minute drive of most likely subscribers
• Offer a robust portfolio of options – including a panel lease and a block subscription community solar option.
– Utilities should include a rooftop option in that portfolio. Roughly a quarter of residential customers are at stake.
– Utilities should be involved in the deal. Most customers trust their utilities more than independent developers to produce and deliver solar electricity.
• Rethink price points and terms, using the guidance noted here to craft the offers with the highest likelihood of success.
• Budget for a significant marketing effort
– Most consumers have no idea there’s even such a thing as community solar. Without a big marketing push, interest will stay at 14% of market; with a push,
interest grows to 47%
• Target the right audiences for each type of program and tailor your messaging accordingly.
– Include an app that gives real-time power production information.
– Offer panel lease financing
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Commercial market
Lease and subscription
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Low-end market potential for panel lease model, or roughly 4%
of American businesses
308,000
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• 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
Panel Lease Target
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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
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Low-end market potential for subscription rate model, or roughly
2% of American businesses
132,000
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• 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
Block Subscription Target
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Messaging
Get control over your energy costs!
• The bottom line is their top driver…and they are control-oriented
All the advantages of solar without messing with your rooftop!
• They’re wary of the impact of rooftop solar on their property values and resale
value. And many don’t own their buildings
Be recognized for your contribution
• This target does want the array to be local and visible…and they want credit
for their participation
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Key takeaways
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General takeaways
• Information changes the game…so plan on a significant
marketing effort
• Community solar really is an excellent option for smaller
businesses; not so much for large corporations (they want
to own their own systems)
– Targeting the right types of businesses and the right decision-
makers is key
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Businesses are participating in/considering a wide variety
of renewable options – they want options.
• 8% say they’re buying RECS and 23% are currently considering them.
• 7% have some other renewable generation solution (e.g., geothermal) and
20% are considering them.
• 6% are participating in a green power plan and 20% are considering one.
• And many (18%) participate in more than one option and 42% are currently
considering more than one option.
RECOMMENDATION:
Offer a diverse portfolio of renewable energy options.
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The market for business community solar is
significant, but smaller than rooftop/onsite.
• 27% are currently considering rooftop/onsite.
• After exposure to rooftop cost and lease/financing examples and community
solar models, interest in rooftop increased.
• Given a final choice, most (50%) will be more likely to consider rooftop (either
leased, purchase, or financed), compared to 39% who will be more likely to
chose a community solar option.
RECOMMENDATION
Unlike consumers, community solar isn’t seen as an acceptable alternative to those who are interested in their own system, but CS does offer a viable option to a different market – particularly smaller companies who lease, rather than own, their facilities. So offer both alternatives.
SEPA conducted a survey of over 640 current community solar subscribers across multiple programs nationwide • ~40% of subscribers in qualified programs
responded • 95% CI, +/- 4% MoE
How Successful are Existing Programs?
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www.sepapower.org
Strong Customer Satisfaction
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Additional Survey Findings
Education is Critical Program Demographics
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Discussion
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Want to learn more about how your customers
are making decisions re solar and how to get in
the game?
John Sterling Senior Director, Research &
Advisory Services [email protected]
202-559-2022
Contact Information
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Thank You!
Suzanne Shelton, CEO
Shelton Group
@sheltongrp
865-524-8385