Rooftop solar

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Publication February 20, 2018

US residential rooftop solar installations fell for the first three straight quarters in 2017 as some of the major players adjusted their business models to make upfront cash more of a priority than rapid growth.

The national brands now account for 30% of the residential solar rooftop market.

Use of the third-party ownership model, where the rooftop company installs solar for free on roofs of customers who enter into long-term power purchase agreements to buy electricity or leases to lease the systems accounted for 37% of the residential rooftop market in 2017, down from 53% the year before. More customers are buying their rooftop systems rather than merely buying electricity or leasing a system owned by a solar company.

Utilities are under pressure in 16 states to reduce retail electricity rates after Congress cut the corporate tax rate from 35% to 21% effective on January 1. This, plus the new tariffs on imported solar panels, could make the rooftop model relatively more attractive, since pricing starts at a discount to local retail electricity rates. Customers were deciding earlier to purchase systems after watching equipment costs fall more rapidly than retail rates.

Andrew Birch, former CEO of Sungevity, a prominent early residential rooftop company that went bankrupt, wrote in GTM in January that the average installed cost for a rooftop system in the US was $3.25 a watt in December compared to $1.34 a watt in the main Australian markets. Birch attributes the higher cost in the United States to local red tape. He said it can take two to six months to get permission to install and turn on a rooftop system in the US, while in Australia, interconnection is a simple matter of completing an on-line form.

Birch said city-level bureaucracy adds 47¢ a watt to solar installations in the US. Import tariffs add more.

The National Renewable Energy Laboratory reported in January that a three- to 10-kilowatt residential solar system cost $2.80 a watt to install in the US in the first quarter of 2017.


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