Businesses small and large – but particularly those with high electricity costs – can achieve considerable savings and create long-term price certainty by installing a solar electric system instead of purchasing electricity from their utility. In fact, every business with a minimum of space (for the solar system) and high electricity costs should examine solar’s potential to reduce overhead in the short- and long-term.
Economists generally take a dim view of such claims. Why, they would ask, is commercial solar uptake still relatively light if business owners truly stand to benefit? Are they not rational actors with every economic incentive to reduce their costs?
These skeptics have a point. Even in California and New Jersey – the top two solar markets – fewer than 5,000 individual businesses in each state utilize solar electric systems. Despite the solar industry’s significant growth (our own company REC Solar currently has more than 20 megawatts of commercial projects under construction) few forecasts suggest that commercial solar will experience explosive or exponential growth in the near future.
How then do we understand this conflict? Why does solar adoption seem to lag behind what the often-attractive financial returns would otherwise suggest?
Let’s knock off the low-hanging fruit first. Many businesses of course have limited electricity demand, little useable space, don’t own their facilities, or lack either tax liability or the ability to finance or lease solar. While these aren’t disqualifiers in every situation, they complicate the process (and economics) of going solar.
With that in mind, let’s examine the remaining population of businesses which use reasonably-high amounts of electricity for lighting, cooling, machinery, or electronics, have the necessary amount of space on a rooftop or elsewhere, and which own or control their facilities. Solar makes the most economic sense for these businesses, so why wouldn’t they at least look closely at solar energy?
The answer, the evidence suggests, is comprised of the above-mentioned factors combined with a significant lack of consumer awareness. Polling suggests that while most in this country hold generally positive feelings about solar – one recent study found that 92 percent of Democrat and Republican voters feel the U.S. should develop and use more solar energy – other data (including our own consumer-focused research) finds that while many understand that solar benefits the planet and the economy generally, a far-smaller subset of the population understands that solar also provides real economic benefit to a household or business. Customer acquisition costs in the solar industry tend to be extremely high, reinforcing the notion that solar sales and marketing professionals expend significant resources educating potential customers before closing deals.