Group Buying the New Thing in Residential Solar – and Beyond?

Last year, the Clean Energy States Alliance gave Energy Trust of Oregon (ETO) a 2010 State Leadership in Clean Energy (or SLICE) Award for its Solarize Portland program. SLICE awards are made to CESA member programs or projects that are especially innovative and effective at incentivizing, promoting, or deploying clean energy technologies, and the distinguished panel of judges determined that Solarize Portland deserved to be recognized for its innovative model of incentivizing residential solar.

In their comments, the judges noted, “Portland might not have the most sunlight, but it’s been able to move ahead with a major solar initiative in Solarize Portland. This grassroots effort, facilitated with a partnership between the statewide nonprofit and local neighborhoods, moved ahead in a really short time, using a relatively modest subsidy to command a good price for residents. The model is potentially replicable by communities across the U.S., and is particularly important to study in light of declining state incentives and challenges to the PACE residential financing program.”

Since then, several other “Solarize”-type programs have popped up all over the U.S. (and beyond), in cities, states, and utility territories, and, based on their apparent success, these programs may be just the ticket to keep up the solar energy momentum in these times of diminishing state and federal incentives.

So what is so great about the Solarize model? For one thing, its marketing and promotion are usually community-led. For Solarize Portland, Energy Trust of Oregon (ETO) and the City of Portland took advantage of the existence of a strong network of neighborhood associations in Portland. ETO and the City worked with Southeast Uplift Neighborhood Coalition to directly engage citizens through grassroots outreach and education about solar options and costs, as well as providing free site assessments. The enrollment process was designed to be simple, and each step was facilitated by the project partners.

Next, it lowers the technology cost, through the use of group buying power (think Groupon and Living Social). The project partners in Portland facilitated a competitive RFP process for a contractor based on set pricing tiers – i.e., once certain participation thresholds were met, progressively lower system costs were triggered. ETO also provided its standard solar incentives to the mix: at that time, $2.25/watt; and residents were also eligible for federal and state tax credits.

Finally, it is of limited duration. While the grassroots education and group buying method were designed to address the previously slow pace of solar installations in Portland (38 were installed in all of 2008), the limited enrollment period addressed another problem, identified in a 2007 market study: most Oregonians thought about installing solar for over two years before finally taking action. A good deal with a deadline seems to consistently motivate more takers than a good deal with no end in sight.

In just six months from its inception, Solarize Portland resulted in the installation of solar systems on 120 homes (more than three times the 2008 number). The 120 installations added 347 kW of new solar photovoltaic capacity, estimated to produce over344,500 kWh of electricity per year. And, buzz generated by the program had a spillover effect: it generated downward pressure on area PV system costs and contributed to a 320% increase in area non-Solarize installations during the project timeline.

The project’s success has led to subsequent Solarize efforts in four additional Portland neighborhoods, one in the rural city of Pendleton, Oregon, and another for employees of Columbia Sportswear Company.  And the model is catching on country-wide.

As a direct result of Solarize Portland’s success (and, we’d like to think, of CESA members sharing their best practices and success stories at our biannual meetings), Massachusetts Clean Energy Center (MassCEC) – also a CESA member – launched Solarize Massachusetts this April, in collaboration with the Green Communities Division of the Massachusetts Department of Energy Resources (DOER). Solarize Massachusetts will target four towns across the state (selected by lottery): Harvard, Hatfield, Scituate, and Winchester, and will be targeted to both residents and businesses. The pilot program RFP sought bulk purchasing proposals from solar integrators, with tiered costs based on participation; MassCEC and DOER will work with the selected integrator(s) to provide education, site assessments, financing models, and installation services.

Other programs in the U.S. are demonstrating the program’s success at the municipal level. In the fall of 2010, Open Neighborhoods, an organization that connects neighborhoods with clean energy opportunities through social networking tools, launched the GoSolar campaign in the Los Angeles area to offer free solar assessments and group pricing to homes and businesses. Their 2010 campaign resulted in 200 solar installations at prices under $5.00/watt – on par with utility-scale solar installed costs – and they are proceeding with subsequent campaigns based on that success.

And in mid-July, the San Francisco Department of the Environment and the World Resources Institute launched the San Francisco pilot of Solar@Work, a program that helps companies implement solar projects by offering an up-front purchase, a solar lease, or loans, all offering group purchase system discounts of 10 to 15 percent.

Meanwhile, One Block Off the Grid (1BOG), in many respects the pioneer of solar group discounts, continues to aggregate group buying initiatives across the U.S. based on demand generated through their website; individuals (and I assume businesses) can enter their zip code and find out if there’s a solar group opportunity near them. (Also see Sunny Britain, which last week announced a similar program in the UK).

1BOG has found its niche, but the state- and city-supported initiatives of the Solarize type show great potential to motivate solar installations because of specific attributes, especially the way they partner with trusted institutions such as state energy offices, public works departments, and neighborhood associations. Pairing the national expertise of group buying facilitators and solar leasing companies with the local, city, or state brand, insight, and oversight is proving to drive demand for solar, which is in turn driving down system costs, demanding increases in manufacturer and installer accountability, and sparking healthy competition in the PV industry across the U.S.

So, what’s next? Which state will next take up the Solarize torch? When will it catch on with utilities? Who of the Fortune 500 will catch the wave of company-sponsored Solarize programs for employees? What other groups/clubs/organizations could act as facilitators for these efforts? Is it too far-fetched to think my local cooperative-owned grocery store will be rolling out group discounts for its customers? Apparently not.

Innovative programs such as Solarize that leverage available funds are proving to drive down solar costs in a major way, while keeping solar installers and manufacturers employed as the states and the industry watch the federal government cut back on solar deployment in favor of next-generation R&D and manufacturing initiatives. Let’s hope the former can keep up the momentum and bridge the gap until the latter is ready for prime time.

Photo © Energy Trust of Oregon, 2010.