THE BLOG
07/31/2012 03:45 pm ET Updated Sep 30, 2012

Avoiding a Solar Black Eye

On paper it looks good, too good. When salespeople representing solar companies visit homeowners interested in tapping the sun to meet some or all of their energy needs, they come armed with lots of charts and graphs to illustrate what a great deal it is. The numbers that get turned into bar charts and pie graphs of dollars saved and return on investment are a complicated stew of available state and federal incentives for going solar, estimates of how many kilowatt hours of electricity a solar system can be expected to produce and projections of where traditional utility rates are headed in the future.

The August issue of Photon Magazine delves into why this approach is wrongheaded both for consumers and, ultimately, for the solar industry itself. In a nutshell, the problem is that solar installation companies use projections that assume that the price households will have to pay for electricity will steadily rise. Some solar companies argue that this has historically been the case and there's no reason to suspect anything to change in the future, especially with many utilities facing the need to upgrade transmission and build more power plants. But there's also a self-serving reason why solar companies use aggressive assumptions about future spikes in utility rates. Quite simply, the steeper the increase, the bigger the savings a homeowner would reap by shelling out the bucks to go solar -- and it's that big savings that comes across very clearly in any solar sales pitch.

What makes these assumptions dubious are a couple of things. First of all, solar installers don't all share the same assumptions about where utility rates are headed. Which means that making apples to apples comparisons of bids from two different solar companies can require far too much digging. It's as if banks didn't agree on a standard interest rate to be used for loans from one financial institution to another (interest rate manipulation aside, of course). But the bigger problem is simply this: utility rates may not be on a steady climb into the stratosphere. Thanks in part to the influence of cheap natural gas some utilities are reducing their rates -- a lot. Indeed, National Grid in Rhode Island cut its rates by more than 17 percent in 2011 (a slight increase followed in 2012) and Alabama Power Company slashed its rates by almost 15 percent in 2010.

A different approach to quantifying the very real value of going solar would be wise, a topic discussed at greater length in our article. At the very least, solar companies should jettison the practice of using past rate increases to predict the future, something that is far too common these days. It is as flawed an approach as predicting tomorrow's forecast based on the weather today or assuming that a stock's past gains are a promise of ever greater riches. The perils of maintaining this standard sales approach are real. Already, some customers are feeling burned when the promised savings don't materialize. For a still-growing industry, customer confidence is essential and the solar industry should be doing everything in its power to build and strengthen its credibility. This is especially important now that solar is being demonized by Republicans willing to say anything to deny President Obama a second term, even if it means derailing one of the few industries seeing consistent job growth. With opponents of renewable energy willing to spend boatloads of cash to trash solar, it would be smart to avoid self-inflicted wounds.