The following is a guest post written by Bill LeBlanc. LeBlanc is the chief instigation agent at E Source, an energy research and advisory firm, and the president of the Boulder Energy Group. LeBlanc previously worked on demand-side management and customer rates at the Electric Power Research Institute and Pacific Gas & Electric. LeBlanc's first piece for Utility Dive, a look at how energy decision-makers at corporations are thinking about solar, can be found here.
While residential and utility-scale solar installations have soared in the past two years, business adoption has stalled and even declined. Are there fundamental problems with solar for businesses, or is this just a temporary pause before another growth spurt?
To understand the customers’ perspective on solar, E Source conducted extensive surveys with 800 large and mid-sized businesses in eight market sectors across North America. According to our market research report, "How Photovoltaic Systems and Distributed Generation Will Disrupt the Utility Industry," more than 33% of large and midsize businesses in North America reported they have solar installed at their largest facility, and this appears to be only the beginning of a much greater trend. Two of the eight segments studied, retail and groceries, already claim over 50% market penetration.
Given that 3-5 years ago, non-residential solar installations outpaced residential by a large margin, E Source investigated whether past experience with solar was poor, whether utilities were blocking installations, or if the businesses were just not seeing offers that were attractive.
Here's what we found:
Businesses who go solar like it
It turns out that businesses with installed solar think very highly of their experience, and 57% think that solar is ready for mainstream application. That's twice as high as non-solar businesses, where only 26% think that solar is technically ready for market. And when businesses were asked about their peer groups’ experience with solar, their impression is overwhelmingly positive, with only 1% considering the experience negative. One thing was clear from our survey: Past experience is not pulling down installations.
Utility support of solar
While the trade press may lead one to believe that there is an antagonistic relationship between customers and their utility when it comes to solar, and that customers go solar because they do not like their utility, survey data does not bear this out. Customers who already have installed solar have a higher degree of satisfaction with their utility than non-solar customers, and only 3% of businesses with solar considered their utility as having a negative attitude towards their installation.
Top barriers to solar adoption
The research investigated a wide variety of barriers to adoption to see if any particular elements were universal or dominant. The results showed that a wide variety of disparate barriers contributed to blocking immediate adoption. Overall, the study indicates that businesses are looking to utilities and third parties to bring them bona fide options for solar that alleviate their fears of hardware failure, contract terms, pricing, and financing. We see strong evidence that utilities—especially those that have already built relationships with customers through energy-efficiency, demand-response, and pricing programs—are likely to be in the best position to help their business customers navigate the solar waters.
Looking ahead
Overall, the survey indicates that solar is poised for success and future growth, with 65% of business customers anticipating new solar installations in the next 5 years. And the amount of solar they plan to install is not trivial, with several market sectors, such as retail and groceries, indicating a plan to have 50% of their load covered by solar in just 5 years.
So while there is a current lull in growth for non-residential solar, if the utility and solar vendors focus on the right target customers that are primed for growth, and create offers that overcome the specific set up barriers seen by these businesses, the path to solar adoption should resume rapidly. The market is poised and ready.
So what should utilities be doing to support their larger business customers in the solar arena? Probably the most urgent action is to get them the information they need to make smart choices not only about solar, but to understand the various tradeoffs with solar, their rate options, and energy efficiency. In fact, the majority of business customers cite their utility as their most trusted advisor for energy efficiency decisions. With this as a base, there is no reason that well-prepared utilities can’t become the trusted advisor for their customers in solar, as well as storage, microgrids, and demand response.