The cost of solar hardware has fallen 80+% over the past decade, driven largely by China’s massive production scaling. Rooftop solar in many countries fell nearly in proportion to the hardware costs. Total installed cost of solar in Australia, Germany & UK are now very low, and adoption rates are correspondingly high in these countries. In Australia, for example, average rooftop solar installed cost was $0.99/W in 2023, while in the US it was $3.20/W. So why is the cost of rooftop solar so frustratingly high in the US? There are a few reasons:

1. Customer acquisition costs in the US are extremely high. In fact, the cost of acquiring a customer in the US are higher than the cost of all the hardware combined. There is a saying that “rooftop solar is sold in the US, and bought in Australia”. This is alluding to the fact that US the solar companies work very hard to gain customers (though advertising, sales commissions, etc), while in Australia rooftop solar sells itself. In Australia, majority of customers come asking for solar since its an economic no-brainer, and the whole process takes one week rather than multiple months. This delay is responsible for more than doubling customer acquisition costs, as over 50% of potential customers fall out of the process during this period between initial contact and installation.

2. Permitting and inspection processes in the US are manual, confusing, slow, and hyper-local. Every jurisdiction has unique permitting forms and rules and inspection practices. Mid to large residential solar companies in the US pay large teams of lawyers, inspectors, officials, etc to navigate these messy processes across all jurisdictions the company operates in. The US has an additional step absent in most other countries: after permitting and inspection, an application must be submitted to the utility company for review (which requires payment) before the system is allowed to be turned on. All these processes are costly, and due to their complexity increase the barrier to entry and reduce competition (vast majority of rooftop solar in the US is deployed by 3 companies).

3. Cost of borrowing in the US solar industry is un-necessarily high. The solar finance industry offers loans on a per-residence basis. Solar financing companies borrow large pools of funds from banks, and carve those funds up into many small loans to homeowners. These loans have high fixed costs in the form of origination fees, or what is known in the industry as “dealer fees”. These loans also have high interest rates since these “middle men” need a cut, and because the solar industry has a bad reputation for defaults due to installation companies not servicing warranties, poor install practices leading to roof leaks, predatory sales people signing customers who are at high risk of missing payments at some point, etc.

4. Utility electricity prices are very high in the US. High electricity prices means the US solar industry has little or no downward pressure on their pricing. As rates continue to rise, these companies can keep raising the price of rooftop solar while still presenting their customers with a good long term cost saving opportunity. This partially explains why average profit margin in the US solar industry is far higher than Australia and other solar leaders.

The reasons above are all interrelated / reinforcing. Through this reinforcing effect, these reasons lead the cost of rooftop solar in the US to be ~3x the price it is in Australia and Germany. Most of these issues can be largely fixed. We have designed our solar program to avoid and/or minimize these issues in order to get costs down to the point we can introduce a significantly more compelling residential solar program.

While its true our regional electricity grid has enough solar capacity to serve demand for a few hours on sunny days, we need to keep expanding solar (paired with storage) until it can serve demand around the clock in the way that a fossil fuel power plant does. Only then will we fully displace the fossil fuel plants. Solar has an effective capacity factor (utilization rate) of ~20%, meaning that roughly five times as much solar generation is needed to serve demand around the clock. In addition, our regional (and national) electricity demand is projected to at least double over the coming 10-20 years. This expected increase is due to the electrification of transportation, heating, industrial processes, and more. For both of these reasons, we need far more solar capacity in our region, we are nowhere near true saturation.

We need both. Rooftop solar is more expensive per unit capacity, but it has several unique advantages over larger solar farms:

1. No transmission and distribution costs. Grid costs are dominated by transmission and distribution, not by generation. Thus, even if PG&E effectively had an infinite well of free power to pull from whenever you need it, your PGE bill would only fall ~20%. The distribution infrastructure to move the power to wherever you need it is 80% of the overall cost (check your bill to confirm!). By generating (and storing) power at home, these costs are avoided. In addition, grid costs are actually dominated by peak power demand, not by total energy delivered. Distribution networks typically have a peak power capacity 5x greater than the average power. By generating power at the home, loads on the grid can be more evenly distributed in time, leading to higher utilization and lower costs in the long run.

2. No grid interconnection required. Large utility scale solar farms must connect to the grid via an ultra-high power, ultra-high voltage subsystem. This circuitry is extremely expensive and long lead (there are multi-year lead times for these unique transformers). Major grid interconnections also require extensive permitting and analysis. The waitlist for connecting to the grid transmission network is multiple years in most of the US, a major problem that is currently the main bottleneck to decarbonizing our electricity grids (via connecting new renewable sources). The Federal Government is finally working to improve these issues, but it will take time.

3. No impact on land use. Utility (and community) scale solar farms, by contrast, impact land which is not otherwise affected by human use.

4. No transmission and distribution losses. Power losses from transmission and distribution lines are minimal on average (~5%), but losses increase when the path to your home is heavily loaded with demand (high current). Losses on parts of the grid reach 20% during peak times, and those peaks will be more and more common as the world electrifies. Since grid costs are dominated by peak power demand, these losses raise grid costs by over 20%.