Marketing Solar: Bring in Elizabeth Warren?

solar panelsLast month, my husband opened the door to a solicitor from a solar company and eventually agreed to let the polite young gentleman on our porch order a quote for our family to go solar. The three-page form that the company sent had several very misleading figures. I was appalled.

Let me be clear – I am no foe of solar. At some fundamental level, I can see the appeal. If we really want to reduce carbon emissions dramatically and address global warming, solar power of some form likely has to be part of the global solution.

But, I do not think companies should be allowed to misrepresent information.

Here’s half of the first page of our quote:

solar quote(I am not revealing the company’s name because I don’t want to out any one person or company. I will say that this is no fly-by-night outfit.) From the first two numbers under “YOUR FINANCIAL BENEFITS,” it looks like we will spend approximately $12,400 and save $39,500. And, if you look more closely at the savings, they are net of the upfront cost. How could we not sign up right away? Seems like we would be ripping up a check for $39,500, right?

Go to the second page, and you see how the company calculated the $39,500. They’re adding up savings over the next twenty-five years without discounting savings in the future. This company would fail my colleagues’ introductory finance course.

solar quoteWe would pay the costs of $12,400 in today’s dollars, in order to save $3,576 in the year 2038, assuming we’re lucky enough to be alive and buying $100 cheese pizza for our grandchildren.

There’s another part of the quote that’s potentially misleading. The savings the company projects reflect their estimates about our electricity bills in the future. The first two columns on the second page of our quote titled “Utility Without Solar” and “Utility With Solar” are their guesses about what our electricity bills will be with and without solar. The difference between these columns yields their “Annual Savings” estimate. The columns embed assumptions about how our usage and electricity prices will change over the next 25 years.

The company estimates that our utility bills without solar will go up by more than 5 percent a year. The escalation in electricity payments is also reflected in the upwards slope of the red and blue lines on the first page of our quote.

It’s not clear from our quote which part of this is the growth in electricity prices and which part is the growth in our usage, but apparently other solar companies break out the components. Greentech Media reports that a gentleman in California has sued Sunrun, the company that convinced him to lease a solar system, for deceptive marketing. The company’s promotional material suggested that utility prices would go up by 5 to 6 percent, while his have leveled off since he bought his system in 2011.

There are at least two more components of the quote that are misleading, but this article is already long, so I will continue with another installment.

catherine wolfram

Certainly, some people want to go solar for reasons other than saving money on their utility bills, and for them, the numbers aren’t important. But, for the rest of us, who want reliable guidance on how much money we will save with a large financial decision, companies like the one on our porch are doing a disservice. It’s time to impose better oversight on the way these companies present information.

Catherine Wolfram
The Berkeley Blog

Monday, 4 March 2013

Image: Big Stock Photo

Comments

  1. JoeWeinstein says

    This article’s main point is correct: there is no good reason to encourage basing of solar tech (or other) decisions on funny-money ‘economics’ – such as exemplified in this article – about an inherently unpredictable future. At the very least, a long-term ‘economic analysis’ should run not one but several different kinds of plausible scenarios – varying assumptions about escalating (or not) utility costs – and household demands – etc.

    Here in Long Beach, I have excellent solar exposure on my roof, but have not yet installed any solar. The main reason is that the sum of relevant utility bills – electricity plus gas – is always far under the $150 per month that even solicitous solar companies perceive as a reasonable minimum today. That could change should I eventually buy a plug-in hybrid car. Rather than invest thousands in solar – or anything else – to meet household power and heat demand, I instead forego minor pleasures which account for large parts of that demand. (And at the same time I keenly enjoy some sun-oriented ‘passive solar’ home features – e.g. skylights – whose delights go beyond merely ‘tangible’ economic benefit.)

    Given this article, one must ask whether it makes sense for state and fed policies on climate and green energy to rely so heavily on loosey-goosey marketing of solar power to small private parties. In my opinion, both effectiveness and climate urgency call for refocus of these policies.

    The focus should be a lot more on governments and power companies rapidly and visibly cutting their own use of carbon and nuke fuels, in favor of conservation, efficiency and solar (and in a few cases other renewables). Only from genuine do-their-share leadership of government and power companies can we get a big-enough soon-enough direct impact for saving our climate; these parties are in the best position to set a telling example for private and business sectors at home as well as for globally agreed-on emissions controls; and moreover large government and power-company purchases can also drive the needed technology changes – further improvements and price-cuts. A target that seems at once really helpful (for climate) and yet a do-able challenge would be a mandated 5% (of 2012 usage) cut each year in government and power companies’ carbon fuel use (without net increase in nuke use), for each of the next 10 years, so that by 2023 annual usage is only 50% of that in 2012.

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