What homeowners who lease don’t get are the benefit of whatever incentives exist, which go to the owner of the system, i.e., the company leasing it.
Leasing has made it difficult for home improvement contractors in some markets to compete in solar. Meanwhile, companies such as One Block Off the Grid offer telephone consultation and remote design services scoping out the roof situation via Internet satellite.
CHANGING CUSTOMER Maggio Roofing, which operates in Washington, D.C., and its surrounding suburbs, took on solar in 2009. Owner Scott Siegal, who is also a columnist for this magazine, says that the stimulus bill and its 30% federal tax credit “kick-started” solar. “A year later, it got big.”
Big as in seven figures worth of business. Between that federal tax credit, generous local incentives from Maryland and the District of Columbia, and renewable energy credits that homeowners could sell, rooftop solar systems became affordable.
But 2010 was the company’s solar peak. “Then the leases came out,” Siegal says. Now the majority of new solar arrays in the D.C. market are leased. Siegal estimates that maybe 10% of homeowners, the “top 10%,” are buyers. And installing solar systems for leasing companies doesn’t generate sustainable profit margins for Maggio Roofing. This year Siegal expects his company to do about a half-million dollars of solar sales — most to owners who are getting their roof replaced.
Management at Premier Power, an El Dorado Hills, Calif., company launched in 2003, once envisioned marketing and selling solar the way home improvement companies market and sell windows and siding. Premier Power still sells solar systems to homeowners, but its president, Miguel De Anquin, says 2008 was its biggest year for residential and that the company now does more commercial. When Premier Power began it primarily sold to early adopters, that is, the environmentally minded. Today solar’s appeal is past that, a product for “sophisticated,” upper-end homeowners who “want to see spreadsheets on how these investments work.”
De Anquin also notes that there’s more competition. When Premier Power entered the solar business, there were between 300 and 400 solar contractors in California. Today the SEIA map shows 1,200.
That change in the customer profile holds true on the other side of the country as well. “The majority [of our customers] are smart businesspeople,” says Harry Leonard, of Total Exteriors, in New Jersey, which two years ago began selling the American-made Luma Resources solar shingle system, which installs directly into the roof. Leonard describes that customer as a higher-end homeowner aged 35 to 45, who wants solar because they’ve calculated how long it takes for the system to pay for itself (he says seven years). These are also buyers, not leasers, Leonard says — buyers with cash.
But what GAF, the shingle manufacturer that set up a separate solar division a year ago, found out is that not all buyers have the cash. A system can still cost the homeowner upward of $40,000. The contractor has to have a way to finance. “The analogy we use is that it’s like the car business,” Ruffine says. “Not everybody who walks in will require financing, but if you don’t have the financing, you won’t be in business to provide it for the few who pay cash.”
SOLAR OPTIONS Many home improvement contractors have passed on solar — even roofers, some of whom once felt solar was theirs, by virtue of where they work. “We just looked at it and said: that’s beyond our skills,” says Doug Plotke Jr., president of Roof Services, on Long Island, N.Y. Instead, Roof Services created “strategic alliances” with local solar contractors to install a new roof when the homeowner’s proposed solar project calls for one. That arrangement, Plotke says, has resulted in a few dozen roofing jobs in the last three years.
