Educating homebuyers will be critical to the success of the 2020 solar mandate
By MARK VOGEL
This is a big year for California homebuilders as they gear up for the 2020 mandates requiring all new single-family homes and multifamily housing to include solar. The mandates will apply to all new construction housing, up to three stories tall that secure building permits after January 1, 2020. As the state presses forward with preparation for the mandates, there is a growing national focus on solar power as a real solution to climate change. Once California produces quantifiable and meaningful outcomes, we expect other states to adopt similar policies. This includes Arizona, Colorado, Florida, Hawaii, Nevada, New Mexico, Oregon, Texas, Washington, and Virginia.
Specializing in new residential construction, we work with more than 400 homebuilders and general contractors across the nation, for both roofing and solar. We are extremely busy helping our California clients with these mandates. One of the biggest challenges they face will be educating their buyers. Lack of knowledge and know-how could put a builder in legal jeopardy with construction defect and other litigation, which could be costly for both the bottom line and their reputation.
The more you know about solar and prepare for its installation, the better for your company and your customers. The message of sustainability does help sell homes, but how that message is communicated is important. Here are the most common questions from new homebuyers about solar and what homebuilders need to know in order to answer them.
Why should buyers be excited about solar?
Solar saves the homeowner money. A solar powered home costs less to operate. Solar also adds value to the home, allowing it to sell more quickly and command a higher value. Thanks to shorter paybacks and great pricing, homeowners can reap all the benefits of solar.
It is a simple message for builders to communicate that buyers will appreciate: they will help save the planet and they will definitely save on their energy bills.
Purchase or lease?
We believe in making the solar experience as simple and cost effective as possible for both the homebuyer and homebuilder. We work with builders on both the purchase and the lease options. There are practical differences in cost, maintenance, terms, opportunities for financial offsets, savings, returns on investment, tax credits, and other items that all have to be carefully explained to buyers whether it is a lease or purchase.
What has to be communicated to the homebuyers?
Homebuyers need to know that the ROI for them is quite significant.
The GeoStellar Solar Index shows that solar is a wise investment that can generate more wealth for homeowners than treasuries, bonds, CDs, and other investments. As electricity rates rise, so does interest in solar power. Our solar systems cost about $.08 kWh with an average six-year payback. Homeowners usually want to see a comparison of the cost per kWh for solar vs. the price per kWh being paid to the electric company (this is an average in tiered rate structure). The great thing about solar electricity is that calculating costs and savings can be done on a per kWh unit basis using simple division. From there, it is very easy to demonstrate lifetime savings and payback time frames for each customer.
What do the formulas for savings look like?
We always advise against quoting actual savings to potential homebuyers. Each household has different habits and usage. Once a system is designed for a home, the homeowner is given the approximate energy that will be generated from their solar system. This number will give them the opportunity to look at a bill from their current home to see what they would have saved with solar. Thus, over the days, months and years, the customer recoups the investment through the production offset and corresponding savings. As fossil fuel electricity rates continue to rise each year, the total savings through fixed energy costs leads to growing savings.
What are the payback periods for homeowners?
The payback periods have also dropped significantly and can be as little as three years. Residents of the top states in the index can see their investment would be completely paid back in four to six years.
What about resale values?
A solar powered home can add a tremendous amount of resale value to a home. People are keyed in to what solar energy does for their pocketbook and the efficiency of their home. If a buyer has to choose from a home that has low energy bills versus one that does not, it is an easy decision.
These are just a few of the main answers builders should be prepared to answer, but there will lots of others. PetersenDean is one of the nation’s largest roofing and solar companies and we operate across 11 states. We have a large and well-trained labor force that continues to expand as we help builders with their solar programs. We will be offering training to builders’ sales staffs and weekend classes for builders’ buyers. Educating both will become extremely important to successful execution.
This knowledge base not only enhances the marketing and sales proposition, it improves a builder’s expertise in solar planning, budgeting, and construction. Builders who can demonstrate expertise in all aspects of solar and related systems will have a significant competitive advantage over builders who are not as well prepared. Being solar smart can substantially boost marketing programs, promote sales and add to the bottom line. We believe solar will open new doors of opportunity for the home- building industry and also create new demands for competition and market positioning.
Most of the larger builders in California have nearly a decade of experience under their belts and should be able to move forward without interruption as they design and build new homes post January 2020. However, smaller builders may have challenges to overcome. While some smaller builders have already jumped on the solar bandwagon, those that have not could be behind the learning curve and should start now to acquire the necessary knowledge and expertise to fully understand the “nuts and bolts” of solar power systems. One way to achieve this is to align with an energy consultant or a company that provides solar products, most of which will also have their consulting services.
Thoughtful legislation to reduce greenhouse gases at the local, state, and national levels is creating a new outlook for the future of renewable energy. As more attention is focused on the growing importance of renewables, the homebuilding industry is a critical part of this paradigm shift.
Mark Vogel is President and Chief Operating Officer at PetersenDean Roofing & Solar-Builder Division-United States. Founded in 1984 by Jim Petersen, Petersen- Dean is the largest, full-service, privately-held roofing and solar company in the United States. With more than a million roofs under its belt, the Fremont, California-based company employs 3,000 workers and operates in 11 states: Arkansas, Arizona, California, Colorado, Florida, Georgia, Hawaii, Louisiana, Nevada, Oklahoma, and Texas. For more details, please visit www.petersendean.com.