The global solar industry and all of its technologies (flat plate PV c-Si and thin film technologies, CSP and CPV) is and always has been innovative. That it has often been an unprofitable industry beset by unrealistic expectations for cost and price has trapped it between the need to continue innovating and the expectation that it do so cheaply.

Innovation begins with an idea or a spark or an inspiration or an epiphany.

The leap from idea to concept takes time, thought and research.

Research takes time, thought and requires a careful almost to the point of plodding methodology.

The road from concept to prototype takes research, experimentation, trial and error, more innovation, more thought, retrenching to step one and a careful, painfully conservative methodology that along the way takes into consideration more epiphanies, inspirations, sparks and ideas.

The journey from the prototype that proves the concept and embodies the ideas, inspiration, epiphanies, research, experimentation, trial and error and back-to-the-drawing board frustrations is long and fraught with data gathering, testing, retesting, more data gathering, plotting the new data, returning to the drawing board, realizing when a direction is wrong, tramping back up the research path to rethink things, more experimentation, more data gathering and plotting until finally, the idea that became a concept that became a prototype becomes a product.

Production of high quality products require an understanding of the time, expertise and inputs from idea through to commercialization and understands that a reasonable value must be established for the product. This value, or price, will continue to support necessary ongoing innovation.

Unfortunately, the global PV industry has placed itself in the position of innovating on a shoestring budget and at the speed of light.

The Invasion of Free Solar

The installation side of the solar industry is also pressured by the need to install systems faster and some of these pressures come from within. The promise of free solar, a marketing pitch, typically used to market the residential solar lease, has set unreasonable expectations of cost/price that all participants are forced to market against.

Marketing slogans that is, catch phrases developed to seize the buying public’s imagination, should not be mistaken for truth, wisdom or anything other than the means to sell a product or service.

Currently popular among residential solar lease providers, the term “free solar” refers to the ability to have a PV system installed at a homeowner’s domicile without the homeowner paying for the installation. This means that the installation charge is avoided up front and applied to the back end. That is, the installation cost is recouped over time by the lease provider via the monthly rental of the installation as well as through the annual escalation of the initial monthly lease payment. Typically ~3%, the escalation charge means that eventually the lifetime cost of leasing the PV system will be greater than the cost of buying the installation at a reasonable (and static) interest rate.

All buyers of all economic strata seek the best deal and the best deal is free. That free is an illusion is not the point. A free good can come at the cost of quality meaning that a poorly functioning free good will likely cost more in repairs and eventual replacement than a good that is acquired at a price that approaches its true value. A price set at free obscures the cost of developing the good or service and creates the illusion that the research, development, manufacturing and selling of the good was, in the worst case, free itself.

An offer of free solar commoditizes the residential installation, shores up the assumption that the cost of manufacturing a PV panel is approaching zero and undermines the true value of owning a residential PV system.

The true value of owning a residential PV system, aside from the benefits to the environment, is energy independence on a personal level. Never mind (for a moment) the ongoing attacks directed at net metering from utilities, an appropriately sized PV system gives the electricity consumer control over how much electricity is bought from the utility at retail rates. Pardon the pun, there is a power switch from utility as electricity landlord to end user – and, this is where it should be. Leasing a residential PV system does not imbue the lessee with the same power; simply put, it means that the electricity lessee potentially serves two masters, the utility and the solar lease company. Finally, the true value of independence is obscured and the value of the product (PV generated electricity) is undervalued. This is not what Adam Smith meant by the invisible hand. In the case of the solar lease, the invisible hand would seem to be implying that the value of the PV installation is zero.

The marketing phrase, Free Solar, undermines the true value of personal energy independence, obscures the true costs and benefits of PV system ownership, shores up false expectations of ever cheaper PV modules and installations, and undercuts the need of an innovative industry to continue innovating by eviscerating the revenue stream that pays for research and development, not to mention, strategic planning, marketing and sales.