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Kellogg School of Management

Independent Study
Winter 2016
Topic: Residential Solar PV in California
Prof. Ozge Islegen

Luke Liu

Table of Contents

Introduction and Background ............................................................................................................ 3


Independent Study Overview ................................................................................................................ 3


Research Question Overview ............................................................................................................... 3


Initial Scope ........................................................................................................................................... 3


CA Electricity Market Overview ......................................................................................................... 5


Key Highlights: ...................................................................................................................................... 5


Market Structure: ................................................................................................................................... 5


Rate Structure: ...................................................................................................................................... 7


Customer Load Profiles: ...................................................................................................................... 11


CA Residential PV Market ................................................................................................................ 12


Key Highlights: .................................................................................................................................... 12


Residential Solar Incentives ................................................................................................................ 12


CA Residential PV Market Growth Trends: ......................................................................................... 15


CA Residential Market Shares: ........................................................................................................... 18


Residential PV Systems Overview: ................................................................................................. 20


Key Highlights ..................................................................................................................................... 20


PV System Pricing Trends: ................................................................................................................. 20


Residential Solar Ownership Models .................................................................................................. 23


Key Terms in Residential Solar Agreements (copied from CESA): .................................................... 26


SolarCity Solar Lease Summaries ...................................................................................................... 29


Literature Overview: ......................................................................................................................... 31


Key Highlights ..................................................................................................................................... 31


Individual Summaries .......................................................................................................................... 33


Introduction and Background


Independent Study Overview

I am a second-year MBA candidate at Kellogg and am interested in learning more about the
renewables industry/utility markets. I have asked Kellogg professor Ozge Islegen to sponsor my
independent research project for winter 2016 as she is currently undergoing academic research on the
residential PV markets. My independent study comprises of compiling market information to aid her
research in addition to other general research requests.
We are seeking to determine what factors affect residential solar PV adoption in California and
other geographies in the US. Potential factors could include solar system financing models, utility rate
structures, and the availability of net metering/rate compensation for excess electricity. We will also
attempt to speak to CA residential solar installers for more insights if possible.
I will be studying abroad at NUS (Singapore) for the winter quarter 2016, so most of the work will
be done remotely with weekly or bi-weekly Skype calls. The project should take between 7-10 weeks with
~8-12 hours of work each week. The first half will focus on the overall CA market and macro-level trends,
while the latter half will delve into the specific offerings of various CA developers. After the independent
study, I hope to have a better understanding of the renewables industry and the US electricity markets.


Research Question Overview

2015 was a very volatile year for U.S. residential solar. In Arizona, the Salt River Project utility
unveiled a new demand charge for residential solar customers. In Nevada, the states public utilities
commission announced drastic and retroactive rate increases for all existing and new solar customers. In
California, Net Metering 2.0 was unveiled, keeping residential net metering at retail rates but adding new
interconnection fees and mandatory time-of-use schedules by 2019. Given these new policies and other
changes in the federal and state incentives, important questions for utilities and solar finance firms


How do the changes in federal and state incentives for residential solar PV affect the adoption
How do new net metering rules and TOU pricing affect the adoption of residential solar PV?
Under the new pricing rules and incentives, how will different options to finance the residential
solar PV projects such as lease or PPA contracts and bank loans affect the adoption of solar PV
by different customer segments?

Initial Scope

Proposed Timeline:
Part 1: Overview of CA utility & residential PV market
CA Electricity Market Overview (Weeks 1-2)
Description of CA utility market structure (e.g. ISOs, utilities by region etc.)
Identification of major utility companies (SDG&E, PG&E, SCE) and rate structures
Overview of state-wide utility regulatory incentives and policies (e.g. RPS mandates, statespecific, net metering proposals)
Identification of major residential PV developers and market shares
Recent Market Trends (Weeks 2-3)
Overall residential PV market trends, growth rates
Recent market trends installed $/W of major residential installers
Policy trends / net metering rates
Other relevant insights/trends
Part 2: CA residential solar market developers

Agreement and selection of CA regions and residential PV installers. Will further narrow down
scope at this point (Week 4)
For agreed-upon installers, information for (Weeks 4-8)
o Average system price, lease/purchasing terms, contract length, O&M service costs
o Major distribution channels retail (e.g. Best Buy) vs. door-to-door vs. telemarketing
o System product offerings system size, other factors (inverters, smart trackers)
o Rate compensation for excess electricity (e.g. net metering) and utility rate structures
Potential calls with residential installers (e.g. SolarCity, SunRunetc.) (Weeks 9-10)
Wrap-up other outstanding items/to-dos

Other Logistics:

I will send through weekly updates with project updates via e-mail, typically with MS word
attachments (backup excel data/attachments if necessary). The final deliverable will also be
a MS word report with excel backups.
Expectation of 10-12 hours of work per week
We can hold biweekly calls or video conference chats for updates. Im in Singapore which
is ~14 hours ahead (i.e. your 9am is my 11pm), so it would be great if these could take
place either weekday mornings (before noon CST) or after 5pm CST if possible.


CA Electricity Market Overview


Key Highlights:


The California Independent System Operator (CAISO) operates a wholesale market

exchange comprised of a day-ahead market and real-time market. CAISO dispatches
generation and coordinates the movement of wholesale electricity in California
California is served by three major investor-owned electric utilities: Pacific Gas & Electric
(PG&E), Southern California Edison (SCE), and San Diego Gas & Electric (SDG&E)
collectively serve over 30m residents in California.
PG&Es residential rate structure (E-1 plan) is currently an inclining block tiered system customers are charged based on tiered usage, where pricing increases based on
quantity used. Baseline quantities and rates (i.e. Tier 1 allowance) differ in the ten
climate zones in PG&E and are verified by the CPUC every three years. PG&E also has
a voluntary TOU plan, though it has seen low residential adoption.
A four-tiered residential electricity rate structure has been in place for the past 15 years.
In July 2015, a new plan was put in place by the CPUC that collapses the four tiers into
two flatter tiers. In addition, the recent rate structure requires IOUs to begin piloting TOU
structures by 2018 and unveil TOU as the default pricing by 2019.
Net metering 2.0 was unveiled in December 2015, which keeps residential net
metering at retail rates but includes added interconnection fees on residential customers
in addition to mandatory time-of-use schedules by 2019.
The EDF recently released a paper stating the effect of the residential rate structure
change on residential solar system returns (NPV). It found that for high-use customers,
NPV went down since customers are no longer able to net off the highest tier (tier 3 and
4) prices. However, the opposite holds true for average load customers since
consumption is concentrated in the lower tiers, the flatter rate structure increases the
average retail rate of electricity resulting in a higher payback from net metering. For TOU
customers, returns are lower than under the four-tiered structure, but still provide a
positive NPV under a conservative set of assumptions.

Market Structure:

The California electricity market is a deregulated market primarily served by three

investor-owned utility companies, an independent system operator (CAISO), and
governing authorities (e.g. CUPC).
The continental US is divided into three interconnections (Eastern, Western, and
ERCOT/Texas), and FERC is responsible for regulating wholesale electricity markets outside of
ERCOT. Markets generally fall into two types - organized competitive markets operated by
independent system operators (ISOs) or regional transmission organizers (RTOs), and
regulated bilateral markets, where electric utilities are vertically integrated and choose which
generation to dispatch.
California is an organized competitive market regulated by an independent system operator CAISO operates a wholesale energy market comprised of day-ahead and real-time processes.1
The day-ahead market is comprised of three market processes that run sequentially the dayahead market opens for bids and schedules seven days before and closes the day prior to the

trade date. The real-time market is a spot market in which utilities can buy power to meet the
last few increments of demand not covered.
The three major IOUs in California serve over 30m CA residents who collectively
consumed ~67 billion kWh of residential electricity in 2014.
There are three major investor-owned PG&E, SC&E, and SDG&E are mapped below with short
descriptions of each.

Electricity consumption by sector is shown in the below graph, showing the relative sizes of the
three IOUs.
2014 California Electricity Consumption by Sector
Source: Energy Consumption Data Management System

San Diego Gas and Electric Company




Commercial Building

Pacific Gas and Electric Company


Southern California Edison Company

Millions of kWh




















Other Notable Players Within CA Electricity Market:


Many other CA utilities are owned by municipalities and are not subject to state
regulation the Los Angeles Department of Water & Power (LADWP) is the largest
municipal utility in the United States.
The California ISO (CAISO) was established in 1996 which deregulated private utilities.
CAISO oversees the operation of power system and transmission lines its primary
mission is to operate the grid reliably and efficiently, provide fair and open transmission
The California Public Utilities Commission (CPUC) questions and analyzes rates utilities
charge customers and sets the final rates charged to customers.
The California Energy Commission (CEC) forecasts energy needs, licenses power
plants, and promotes conservation and alternative energy resources.
The Federal Energy Regulatory Commission (FERC) is the US federal agency with
jurisdiction over interstate electricity sales, wholesale electric rates, hydroelectric/natural
gas pricing, and oil pipeline rates.

Rate Structure:

Residential Electricity Rates Utilize an Inclining Block Structure. The current 4-tiered
structure was recently changed to a flatter, 2-tiered structure.
PG&E uses an inclining block rate (IBR) structure that charges incrementally higher costs for
increased usage. The standard plan (E-1) has four tiers and is described below. A voluntary
time-of-use plan is also available for those residents with smart meters (E-6) and who can
minimize loads during defined period.
E-1 Rates Structure:
For the past fifteen years, PG&E has used a four-tiered pricing system.2 The standard tiered
base plan has four pricing tiers as customers use allocated electricity, they enter into higher
tiers. A detailed rate schedule can be found here:


How Baseline quantities (Tier 1 allowance) is determined:

The baseline quantity (Tier 1 allowance) for moving into additional tiers varies by region.
PG&Es service area is divided into baseline territories - a monthly baseline quantity is indicated
on each customers bill based on the number of billing days in each cycle. The Public Utilities
Code established baseline quantities for average residential electricity, requiring baseline
quantities to fall between 50-60% of average use for customers. These baseline quantities are
recalculated and submitted to the CPUC for approval approximately every three years.
Baseline allocations for summer and winter differ in the various climate zones in California: ten
for PG&E and six for SC&E. The baseline map is pictured below, with rates for each zone.

Tiers 2-4 are determined as a multiplier of the baseline quantity, as shown below:

Tier 1: Up to the Baseline amount

Tier 2: Electricity usage from 101% to 130% of Baseline
Tier 3: Electricity usage from 131% to 200% of Baseline
Tier 4: Electricity usage above 200% of Baseline
E-6: Time of Use Option Plan:
PG&E has a voluntary time of use program allowing customers to conserve energy during
periods of peak load. Similar to the tiered-rate plan, the time of use rate plan includes tiers
Rates are lowest in the morning, late evening and weekends from May through October, and at
all times outside of 5-9 on weekdays from November through April.


New Rate Structure Agreed Upon in 2015:

In July 2015, the CPUC unanimously approved a plan that raises rates on more efficient users
while giving breaks to big energy users. The new proposal calls for a return to two tiers, plus a
surcharge for the highest electricity users.
Furthermore, the three IOUs had lobbied the CPUC to impose fixed monthly charges on
residential solar competitors, but these requests were denied in favor of a minimum bill
approach. As a result of the rate structure, the existing four-tier rate structure will become two
tiers, with a 25% cost difference between the two.
As TOU adoption is currently limited, the new rate also structure requires the three IOUs to
begin the process of designing TOU pilots by 2018 and to come up with default TOU rates for all
customers by 2019.

SC&E Residential Structure:

SC&E has a historically similar pricing structure to PG&E, with 4 tiers. In July 2015, the CPUC
agreed to the following changes:
Increase in monthly minimum delivery charge these will be $5 to $10 depending on region.
Beginning in 2016, SCE will reduce the number of tiers from four to three. In 2017, SCE will
reduce the three tiers to two tiers. Also in 2017, SCE will impose a surcharge when a
customers monthly usage exceeds twice the average amount of electricity, or 400% of the
baseline allowance.
RPS Mandate: Californias RPS mandate was recently updated to 50% by 2030, one of the
most progressive in the country.
California has historically been one of the most progressive states in the country, with an RPS
mandate expressing 33% of renewable generation by 2020. In October 2015, Governor Jerry
Brown signed into law a bill that required utilities to procure 50% of their electricity from
renewables by 2030. The 50% RPS by 2030 mandate is one of the most aggressive in the
nation (second only to Hawaii, which in June mandated all utilities move to 100% renewable
energy by 2045).
However, it is worth noting that RPS mandates apply only to utility-scale projects and do not
apply to distributed solar, so residential solar does not fall within the policy outlines.
Net Metering Policy Update: Net Metering 2.0 was approved in December 2015, keeping
net metering at retail electricity rates for the foreseeable future, with minimum bill
charges for residential customers
Under AB327, the CPUC had until the end of 2015 to create a successor Net Metering 2.0 tariff,
once the three big IOUs reach a threshold of 5% of generation capacity under NEM capacity or
mid-2017, whichever comes first. 3 Given this threshold was coming, the CPUC worked with
IOUs to create a new net metering proposal.
Unsurprisingly, utilizes companies lobbied to cut retail compensation rates and include monthly
fixed charges for residential solar customers. PG&E and SCEs proposals include a levied fixed
charge on residential customers to help pay for the fixed portion of maintaining the transmission
and distribution infrastructure. PG&Es proposal based its rates on the customers highest
demand over the month (essentially a demand charge similar to the C&I industry), while SCE
proposed assessing a $3 per kilowatt-month grid access charge.
In December 2015, California regulators proposed a future net metering regime that preserves
retail payments for residential rooftop PV. However, the proposal would add new
interconnection costs ranging from $75-100 and non-by passable charges to distributed solar
systems, while also imposing new minimum bill requirements and mandatory time-of-use rates
that would complicate residential solar.4 Under the ruling, NEM customers who sign up in 2018
or later must utilize TOU rates when they sign up, with all residential customers going on default
TOU rates in 2019.


Lyndon Rive, CEO of SolarCity, described the time-of-use charge as concerning:

As we saw in 2007 when time-of-use rates were briefly mandated for solar customers, they
dont work for everyone who wants to go solar, and would reduce the motivation for installing
solar. While these rates can send helpful signals about when to use electricity, we urge the PUC
to closely examine the impacts of mandating time-of-use rates.5

Customer Load Profiles:

Note: Incomplete section. Better to ask PG&E expert.

Load profiles are categorized between static and dynamic. Regarding static profiles, there are
twenty-six normalized annual load profiles represent all of PG&E's major rate classes (only two
appear to be residential). Each load profile is presented in a separate .csv file.
Static load profiles can be downloaded here:
The dynamic load profiles can be downloaded at this link:
With regards to PG&E rate mapping, it looks like residential rates are mapped to only two load
profiles: E1 and E7. E1 appears to be the load profile for regular customers whereas E7 for
those on TOU plans.

File: PG&E Rate Mapping 102003



CA Residential PV Market


Key Highlights:


Key incentives driving residential solar include the statewide California solar initiative
(CSI) and the federal ITC. Local incentives are also available by county, but largely
outside the IOU territories.
The California Solar Statistics website ( has
complete data for the approximately 137,000 residential PV applications between 2007
and 2015 approved through the CSI program.
Residential PV system prices are still falling NREL reports that median 2014 CA
system prices were $4.60/W. Data from the CSI suggests that net prices were just under
$5.00/W, however some sources such as PickMySolar, a private market exchange,
suggests that CSI values are overstated for tax benefits.
Private market exchanges such as EnergySage, which connects customers with
installers, suggest that CA installed costs are now at $3.87/W. PickMySolar finds that the
most recent residential cost to be $3.60/W.
Residential PV systems can be owned directly by homeowners or third-parties.
Approximately 70% of residential systems in California are owned by third-parties.
TPO models are done either through a solar PPA or solar lease. Direct ownership of
systems can be financed through home equity loans, PACE, or more recently solar
Consumers should check for certain terms when signing PPA or leasing agreements.
Important terms to consider are buyout options, contract length down payments, home
ownership transfer provisions, production estimates/guarantees, and incentives.
According to GTMs 2015 2015 PV leaderboard, SolarCity controls roughly 1/3 of the
national residential market, with Vivint and SunRun at 11.6% and 2.6% respectively.
Specific data on CA residential market is not available for free, but CA market shares
can be estimated using CSI data (i.e. those accepted through the CSI program). In 2013,
the largest installers in CA were SolarCity, Verengo Solar, and REC.
Quarterly residential solar installations in CA were ~200M in 1Q 2015. Annual CA
residential solar installations are likely in the 600 -100MW range.
In Q2 2014, California residential solar continued to expand with 140MW of installed
capacity. This represents a 65% YoY growth over Q2 2013.

Residential Solar Incentives

There are more than 100 different solar tax credits, rebates, and incentives for residential solar
in CA, including state incentives, federal incentives, and local incentives. A full list is available
from DSIRE (the Database of State Initiatives for Renewables & Efficiency), and summarized by


State Incentives:
California Solar Initiative Multiple Family & Single Family Affordable Housing: In January
2006, the CPUC adopted a program to provide more than $2.3 billion of incentives for PV
projects. The CSI is one element of the Go Solar California campaign, which also includes the
New Solar Homes Partnership. The program opens and closes at various times throughout the
year, so there often exists a waiting list for residents. While these rebates were once sizeable at
~$2.50/W, the CSI rebates have decreased in recent years and essentially stopped by 2014 a
graph of the declining rebates are shown below.

CSI Residential Solar Rebates (2007-2013)


However, the CSI program remains an excellent source of data for residential CA and has been
used in several recent academic papers. The California Solar Statistics website
( has complete data for approximately 137,000
residential PV applications between 2007 and 2015 and summary graphs of the data.
Customers in PG&E and SCE stopped receiving CSI programs as of mid-2014, with nearly no
new applications past 2015.

CSI Residential Installations (2007-2015)



Property-Assessed Clean Energy (PACE) PACE allows homeowners to finance a solar

system upfront with little or no down payment, regardless of credit score, paying back the
money over 20 years through property tax assessments. GTM notes that while PACE sounds
good in theory, the rules were written that in the event of default, solar panels payments have
first priority over mortgages, forcing mortgage lenders to refuse to lend on any home with PACE
financing. However, some regions In CA have set aside reserves in the events of default.
Various other state-incentives also exist but are more minor these include the New Solar
Homes Initiative providing incentives for newly-built homes in CA and the CSI Thermal/solarWater Heating Initiative for solar water heaters.
Federal Incentives:
Investment Tax Credit: The ITC is a 30% federal tax credit on solar systems. The company that
installs, develops, or finances the project uses the credit. Specifically, Section 25D residential
ITC is used for residential projects, and the homeowner applies the credit to his or her income
taxes this credit is used when homeowners purchase systems outright and have been
installed on their homes.
If a homeowner gets a solar system through a solar lease or a solar PPA, he/she does not get
the 30% tax credit. SEIA notes that the ITC helped annual solar installation grow by over 1600%
since the ITC was implemented in 2016 a CAGR of 76%. 7
The federal investment tax credit was set to 30% for residential and commercial systems in
2014, and was set to revert to zero for residential customers and 10% for commercial customers
by 2016. In December 2015, Congress approved a lengthy extension of the ITC tax credit for
solar beyond 2022, with the current 30% level remaining until 2019 followed by gradual stepdowns.


Local incentives:
Many counties offer individual incentives for solar PV these counties vary by location. DSIRE
has a full list of available subsidies available at GTM reports on some
of the local ones below:
Anaheim Solar PV Buy Down Program: Like many municipal agencies, Anaheim Public
Utilities has incentive programs that open and close. The next Solar Rebate Application
period will offer a $1.25 per watt residential rebate. It takes place over a two-week period from
May 14, 2015 (8:00 a.m.) through May 28, 2015.
Azusa Azusa Light & Water Solar Partnership Program: The City of Azusa has a waiting list
for the next time the program opens. Rebates during the last go-round were$1.03 per watt.
Bear Valley Electric Service: Bear Valley is at step one of its residential solar initiative with an
attractive rebate of $1.60 per watt.
Burbank Solar Support Program: Burbank Water and Power has a solar rebate program
that opened July 2015. Rebates were $.96 per watt on the most recent go-round
Corona: The Corona Department of Water & Power currently offers a $.98-per-watt discount.
The maximum credit available is $2,940 (for a 3-kilowatt system), but the catch is that most of
Corona is actually served by Southern California Edison, with only 3.4 percent of Corona
actually served by the Corona Department of Water and Power.
Did Incentives Lead to The Growth of California Residential Market?
There are many reasons why California leads the nation in residential solar, including the CSI
initiative, tax rebates, but Severin Borenstein from the Energy Institute at Haas concludes that a
large factor is the solar friendly residential electricity prices.8 Californias two largest utilities
have some of the countrys highest average residential electricity prices.
Borenstein recently published a working paper entitled Private Net Benefits of Residential Solar
PV (2015). Borenstein uses 2007 to 2014 residential data from PG&E to examine the range of
private incentives for installing residential solar, from direct payments and tax credits to indirect
incentives from the residential tariff design and NEM. He studies the income distribution of solar
adopters, and finds the skew to wealthy households adopting solar is significant, but has
lessened since 2011. Finally, he shows that rate design greatly influences the economic
incentives for residential solar adoption.

CA Residential PV Market Growth Trends:

SEIA notes that the national residential PV market remained strong in Q1 2015, adding more
than 400 MWdc on a quarterly basis for the first time ever. While the national residential market
grew 11% over Q4 2014, the continued top-level growth remains primarily pegged to demand in
California, which drove 53% of national residential installations.9 Thus, CA residential solar
installations were ~200MW in Q1 2015.
The following data comes from the full SEIA/GTM Q2 2014 Solar Market Report, which was
published in January 2015: In Q2 2014, California residential solar expanded with 140MW of
installed capacity. This represents a 65% YoY growth over Q2 2013. California residential still
leads the residential market, with approximately 40-50% of new installations. Q2 2014 marks


the third consecutive quarter in which California accounted for more than 50% of the residential
market. Beyond California, the residential market relies on a select number of states where
installers and customers can bank on attractive rate design, decreasing reliance on state
incentives, high levels of customer awareness, and strong referral bases to achieve scale.
After California, the next three largest residential state markets have consistently been Arizona,
Hawaii, and New Jersey.

Source: GTM Research Q2 2014.

California has reached a growing retail rate parity. In Q1 2014, over half of residential
installations came online without a state incentive.


Source: GTM Research Q2 2014.

Note these forecasts were done prior to the ITC being extended in December 2016, so 2016 is
skewed higher while 2017 is lower.



CA Residential Market Shares:

According to the latest GTM Researchs US PV Leaderboard: Q4 2015, the market share of
the leading US residential solar installers in this period was the following:
SolarCity 34.1%
Vivint Solar 11.6%
Sunrun 2.6%
NRG Home Solar 2%
Sungevity 1.9%
These five installers combined for more than half of all residential solar installations between Q1
and Q3 2015. Specific data for California market shares is not available publicly, but is
available through a GTM research subscription.
However, by using data from the CSI, one can extrapolate the market shares in California. Alex
Chun, a business intelligence manager at Sungevity, blogs the following insights using CSI
data. Furthermore, GTM suggests that CSI data are approximately representations of the
broader market however in 2013 the CSI covered only 22% of all new California residential
solar installations and in 2012, 48%.



Other Useful Resources:
Solar Financing Models via GTM:



Residential PV Systems Overview:


Key Highlights


Residential PV system prices are still falling NREL reports that median 2014 CA system prices
were $4.60/W. Data from the CSI suggests that net prices were just under $5.00/W, however
some sources such as PickMySolar, a private market exchange, suggests that CSI values are
overstated for tax benefits.
Private market exchanges such as EnergySage, which connects customers with installers,
suggest that CA installed costs are now at $3.87/W. PickMySolar finds that the most recent
residential cost to be $3.60/W.
Residential PV systems can be owned directly by homeowners or third-parties. Approximately
70% of residential systems in California are owned by third-parties.
TPO models are done either through a solar PPA or solar lease. Direct ownership of systems can
be financed through home equity loans, PACE, or more recently solar loans.
Consumers should check for certain terms when signing PPA or leasing agreements. Important
terms to consider are buyout options, contract length down payments, home ownership transfer
provisions, production estimates/guarantees, and incentives.

PV System Pricing Trends:

Residential PV system prices can differ wildly depending on source, data, and methodology.
Furthermore, comparing data can be complicated given differencing in reporting (i.e. Third-party
owned vs. host, gross vs. post-incentives). Regardless, most sources seem to have CA
residential PV at $3.00 - $6.00/W post-incentives (e.g. a 4kW residential system equates to
about $4*4000 = $16,000).
Energy Informative provides a simple example on purchasing a solar system for a single-family
home10. A typical residential PV system is about 3kW 8kW in size, and a breakdown may look
like the following example, resulting in a $3.42/W net cost.
Breakdown for a single-family home in LA choosing to supply 70% of the household electricity
consumption with a 3kW system

The most reliable sources pricing sources may come from NREL and SunShot, who released an
updated report in mid-2015 on residential PV pricing trends based on 2014 data. California has
higher costs than the median US at $4.60/W.


Data from the CSI shows the fall in residential solar prices throughout the years, falling to
slightly below ~$5.00/W in 2015.
CSI Residential System Pricing Trends

There also exists several different sources for data on residential prices. Several companies
such as EnergySage connect buyers with residential installers and provide their data.
EnergySage released their 2015 report on the CA market showing prices at $3.87/W.

CA Residential System Pricing Trends 1H 2015


Source: Energysage
Pickmysolar, another online market exchange, recently published its 2Q 2015 CA report. The
CEO noted that the average $/W data from CSI was off as high as 39%:
The statistics the CSI is looking at are limited for the most part to where utility rebates still
remain. Many third-party owned systems that are reported to CSI are based off of bloated prices
for tax purposes. If homeowners are truly purchasing solar systems at the CSI reported $5.37
per watt [July 15, 2015 update], were not doing our job of promoting solar transparency. Max
Aram, CEO of Pick My Solar


Source: PickMySolar
Finally, GTM notes that in Q2 2014, residential system pricing average to $4.52/W, with
California reporting $4.74. The lowest reported pricing came from programs in Florida ($3.04/W)
and Texas ($3.67/W), whereas the highest reported pricing came from Massachusetts
($5.16/W), Minnesota ($4.79), Colorado ($4.74W), and Wisconsin ($5.68/W).

Source: GTM Q2 2014 PV Report.


Residential Solar Ownership Models

Residential PV systems are either owned directly by homeowners (i.e. host ownership) or thirdparties (TPO). TPO systems continue to drive new residential markets. While direct ownership

has recently grown popular as installers partner with national/regional banks to provide
loans/PACE offerings, the TPO market continues to hover around 70% in California.

Source: GTM Q2 2014 PV Report.

Third-Party Models:
Third-party financing of solar energy primarily occurs through two models the solar lease or
solar PPA. A customer can sign a traditional lease and pay for the use of a solar system or the
customer can sign a power purchase agreements (PPA) to pay a specific rate for the electricity
that is generated each month.11
Solar Leases - By leasing a solar system, a customer will sign a contract with an
installer/developer and pay for the solar energy system over a period of years or decades,
rather than paying for the power produced. Solar leases can be structured so customers pay no
up-front costs, some of the system cost, or purchase the system before the end of the lease
term. Similar leasing structures are commonly used in many other industries, including
automobiles and office equipment.
Power Purchase Agreements - Under a "PPA," a third party owns and maintains the customer
solar system, selling the kilowatt-hours back to the customer. In the PPA model, an
installer/developer builds a solar energy system on a customers property at no cost. The solar
energy system offsets the customers electric utility bill, and the developer sells the power
generated to the customer at a fixed rate, typically lower than the local utility. At the end of the
PPA contract term, property owners can extend the contract and even buy the solar energy
system from the developer.
Third-party financing of solar PV has become the predominant business model in some of the
largest residential markets in the U.S.; today, third-party financed residential installations
comprise greater than 50% of new capacity in California, Arizona, Colorado and Massachusetts.
SolarCity and Sunrun pioneered the residential third party financing model, closely followed by
Sungevity. SunPower entered not long after, offering residential. Each company has a unique
business model; some have an in-house solar renewable energy credit (SREC) trading


business, while others offer energy management services such as energy audits in addition to
solar installations.

Source: EnergyInformative

Direct Ownership Models:

Home Equity Loans - Many customers go through their commercial lenders to finance their solar
energy systems, and home equity loans have been the most common method for homeowners
to purchase their solar systems. EnergyInformative provides the following information on home
equity loans: 12
Interest rates range from 3.5-7.5%.
Terms are typically 7-20 years.
Interest may be tax deductible.
Property Assessed Clean Energy (PACE) - Solar customers likewise may have the option to
finance their solar systems through their local governments. Local governments can create
property tax finance districts to issue loans for energy efficiency and renewable energy such as
solar PV systems. PACE allows local governments to provide low-cost, 20-year loans to eligible
property owners seeking to install these technologies. The solar customer then pays more on
the annual property tax bill to repay the loan. The loans are permanently fixed to real property,
so that residents need not worry about their system's break-even point and can pass the loan
payments on to subsequent buyers of the property.
Peer-to-Peer lending: While less common, peer-to-peer lending programs such as Prosper,
Mosaic, and Lending Club allow homeowners to access capital for financing.
Solar Loans: Loan financing is becoming another popular to way for homeowners to pay for
solar. Similar to leases and PPAs, solar loans allow customers to spread the systems cost over
time, but unlike leases or PPAs, they enable customers to retain ownership of the system.
Unlike third-party solar owner-ship, because a solar loan arrangement enables a customer to
own a solar system outright, the homeowner can benefit directly from state and federal
incentives. However, the customer also incurs any liabilities associated with ownership
Note on SolarCitys MyPower:


In October 2014, SolarCity introduced MyPower, a solar loan financing option which imitates the
structure of a PPA but allows for individuals to retain ownership of the systems. With MyPower,
the customer receives the ITC and then has the option of applying the credit toward the
principal, effectively reducing monthly payments, or taking it upfront. Rates are fixed at 4.50% to
5.49% over a 30-year period, and the product is marketed to those with a minimum FICO score
of 680. Prospective customers are typically presented with a preliminary design proposal which
offers a side-by-side comparison of the PPA and MyPower products.13
The below charts come from a UBS analyst report on SolarCity showing the adoption of
MyPower. Note that this report was written in summer 2015, with the ITC expected to expire in
December 2016 (hence explaining the significant forecasted drop-off in loans post 2016E)

Source: UBS Research. SCTY Initiation of Coverage. 17 August 2015.


Key Terms in Residential Solar Agreements (copied from CESA):

The Clean Energy States Alliance (CESA) and the US DoE SunShot program released a
homeowners guide to solar financing.14 In the document, it lists key contractual elements in a
residential solar comment. Specifically, CESA notes the following:
Buyout Options: Many third-party financing contracts allow the homeowner to buy out or pay off
the remainder of your payments in one lump sum at any time after a designated period of time.
Some contracts provide for an option to buy out at the fair market value of the system. If a clear
buyout option is not included in the offer, the customer can always try to request one.
Contract Term: Contract term, duration, and payback period all refer to the period of time under
which a customers solar financing agreement is operative. Most residential financing contracts
last for between 5 and 25 years, and some last even longer. By way of comparison, solar panels
typically come with a 20-25 year warranty and their productive lifespan can exceed that.
Inverters have separate warranties, which are typically 5-10 years, though some are longer. At
the end of a solar lease or PPA term, the homeowner may have several options: 1) renew the
contract and continue the monthly payments, 2) purchase the system at a designated price or
the fair market value of the system, which may or may not be negligible after the term of a

UBS Research Report.


contract, or 3) have the third-party lender arrange for system removal. In the case of a solar
loan, the homeowner will continue to own the system after the loan is fully paid off.
Credit Requirement: As a prerequisite to entering into most third-party financing contracts, thirdparty lenders require a credit (or FICO) score. Many third-party financing arrangements are
only available to customers who have a credit score of 680 or higher. Some financing
arrangements may be available to customers with sub-680 credit scores, but they may come
with higher interest rates. Knowing a credit score at the outset can be a useful way to determine
eligibility for third-party financing. Some states have developed special loan programs for lower
income or lower FICO score customers.
Down Payment: Many third-party lenders offer options for initial customer down payments.
Generally, initial down payments range from zero dollars to $3,000. By putting some money
down upfront toward the cost of a solar system, the homeowner will likely receive a lower
monthly payment, a shorter duration contract term (in the case of a solar lease or loan), or get a
lower per kilowatt-hour rate (in the case of a PPA). With a down payment, some third-party
lenders will waive or reduce escalators.
Escalation Clause: Many third-party financing options contain a clause that increases a
customers monthly payment on an annual basis to account for inflation and projected annual
increases in electricity rates. This is often referred to as an annual escalation clause,
escalator clause, or simply an escalator. In many solar lease and PPA contracts, payments
escalate at an annual rate between 1 percent and 3 percent.
Home Ownership Transfer Provisions: It is important to look for contract terms that clarify the
allocation of obligations in the case of a transfer of home ownership. Under a third-party
ownership model, the homeowner can usually transfer the solar lease or PPA to the next
homeowner for the remainder of the contract term, provided the new owner is approved (usually
a credit score qualifying a person for a mortgage also meets the criteria to take over the thirdparty lending agreement obligations). Leases, Loans, and PPAs solar ownership can also be a
complicating factor during the sale of a home. Some buyers may be wary of buying a house with
a solar system. If a solar system is third-party owned, a seller may have to buy the system
outright before transferring the home, so the system can be removed upon transfer. A
homeowner may also be able to move a third-party owned system to a new home, but will likely
have to pay all costs associated with relocating the system. With a relatively scant history of
solar home sales data, it can be difficult to calculate the value of a residential solar system
during the home sales process, especially when a system is third-party owned and the buyer
would like to assume the remaining lease or PPA payments.
Late Payment Charge: Solar financing contracts may allow for additional fees or penalties to be
charged by the financing company in the event a homeowner is late on making a payment.
Minimum Production Guarantees: Many lease and PPA arrangements offer solar production or
output guarantees, usually in terms of a certain number of kilowatt hours of electricity produced
per year. With such a guarantee, if an installed system fails to meet the minimum level of
production output guaranteed, the third-party owner will compensate the homeowner on a perkilowatt hour basis for the electricity production shortfall. Prospective solar lease or PPA
customers should check to see if a minimum production guarantee is included in the terms of
their contact and what accommodations are provided in the case of a production shortfall,
including whether compensation is based on a wholesale or retail per-kilowatt-hour price. When
a customer directly owns a solar system, production shortfall risks are incurred by the owner. In
this case, no production guarantees are provided unless offered by a panel manufacturer or


Net Metering: Net metering, sometimes referred to as net energy metering, enables solar
system owners to use their solar electricity generation to offset their electricity consumption.
Simply put, the customers meter runs backwards for the amount of solar electricity produced by
the solar system and added to the grid. In some cases, customers can receive a payment or bill
credit from their utility for the excess electricity they produce and add to the grid over the course
of a certain billing period.13 Different states treat net metering differently.
Operations and Maintenance: If the homeowner chooses a lease or PPA model, the third-party
owner owns the solar system and will likely cover operations and maintenance over the course
of the contract term. Under most third-party ownership arrangements, the third-party owner also
incurs accidental risks associated with panel ownership, including unforeseen destructive
events or panel malfunction. Under the solar loan model, the solar customer owns the system
directly and therefore incurs the liabilities associated with such ownership. A homeowner who
owns a solar system outright or finances through a loan may be responsible for insuring the
solar PV system, which could be added to homeowners insurance or an existing property
policy. Because large, third-party financing entities have established relationships with
insurance companies, they often receive more favorable rates than do residential customers
looking for solar property insurance.
Pre-Payment: A pre-payment option can be similar to a buyout option and allows homeowners
to pay some or all of the payments for a PV system before the payments become due. Prepayment can range from zero to full pre-payment. Full, upfront pre-payment can allow a
homeowner to reap some of the benefits of third-party ownership, such as maintenance
coverage, while avoiding ongoing interest payments.
Production Estimates: Residential solar systems usually come with electricity production or
output estimates. System underperformance of a production estimate can be costly for a solar
homeowner. Under the lease model, system underperformance can be particularly problematic
because a homeowner owes the solar developer a fixed payment regardless of the amount of
electricity produced by the leased system. On the other hand, the homeowner gains if the
leased solar system overproduces. Under a PPA model, the homeowner only pays for the
amount of electricity actually produced by the system. Thus, when actual system output falls
below the production estimate, homeowners leasing their solar system may do worse than PPA
Solar Incentives: As noted in previous sections, the federal government provides a 30% percent
federal investment tax credit (ITC) for the purchase of residential solar systems. States, too,
often offer incentives for going solar. In some states, for example, Solar Renewable Energy
Certificates (SRECs), which are valuable, tradable commodities representing the green
attributes associated with solar energy generation, are available to solar system owners (not the
case in California).


As a refresher, third-party financing of solar energy primarily occurs through two models the
solar lease or solar PPA.

SolarCity Solar Lease Summaries

In 2013, SolarCity made their residential solar contracts publicly available. Ive attached two
contracts from SolarCity and an actual PPA from Vivent. Some key terms from the Solar City
contracts are summarized below. The Vivent PPA has similar terms to the SolarCity PPA (i.e.
15 cents per kWh, with annual rate increases of 2.9%)

SolarCity PPA

15 cents per kWh, 20 year agreement, $0 upfront cost

Customers purchases all of the power the System produces for $0.15 per kWh
Each year, price per kWh increases by 2.90%
Customer has system buyout options for system at certain times during 20 year
agreement, including at end of term
After 20 years, customer may renew agreement for up to ten (10) years in two (2) five (5)
year increments

SolarCity Lease

20-year lease
Monthly payments of $68.79 year 1, increasing by 2.9% each year. In year 20, monthly
payments accrue to $118.40.
Minimum production guarantees at the end of each successive 24 month anniversary,
if the cumulated kWh is less than the guaranteed, SolarCity sends a refund check equal
to the difference between cumulative Actual and Guaranteed. (Guaranteed production
figures/rates are listed on page 17 of contract).


At the end of 20 years, SolarCity can 1) remove the system at no cost, 2) upgrade to a
new system, 3) renew agreement for up to 5 or 10 years. If the customer doesnt choose
an option, agreement automatically renews for one additional year at 10% less than the
then-current average rate



Literature Overview:


Key Highlights

Denholm, Drury, and Margolis (2009) from NREL have written several papers on PV
adoption focusing on how financial considerations (NPV, IRR) lead to PV adoption. Their
model is often cited by various authors and is available on the NREL website. However,
most NREL papers non-empirical and do not rely on historical data sets, thus not sure
how useful these papers are.
Rai (2012) uses a 60-question survey (365 completed responses) to understand and
discuss the socio-demographics and decision-making process for solar PV adoption in
Kwan (2012) uses data from the NREL Open PV project and geographic information
system software to investigate how various social and economic variables affect
residential PV adoption nationwide.
Macal, Graziano, and Ozik of Argonne National Laboratory (2014) created the BE-Solar
model, an agent-based model that incorporates residential home owner characteristics
(age, income, educationetc.), economic characteristics of solar PV (equity, debt, loan
paymentetc.), and housing unit characteristics (building size, electricity profileetc.) to
represent the decision-making behaviors affecting solar PV adoption. It seems like the
most comprehensive paper on residential PV adoption to-date.
Crago et. al (2014) use county level panel data, NREL Open project data and GIS
systems to assess the effectiveness of state-policies on residential adoption.
Graziano and Gilllingham (2014) analyze spatial adoption patterns of residential PV in
the Connecticut market.
Davidson and Margolis (2015) of NREL are the first to analyze how solar quote variation
affect adoption they use private data from EnergySage, a national online solarmarketplace.
Boreinstein (2015) looks at the residential solar market in CA and discusses how role of
electricity tariffs, tax incentives and rebates affected PV adoption.
Potential Sources for Data:
o NREL Open PV Project: Data for the project are voluntarily contributed from a
variety of sources including solar incentive programs, utilities, installers, and the
general public
o State-levels incentive programs (e.g. CSI, Connecticut CEFIA)
o Consumer-sentiment surveys
o Utility NDAs: PG&E provided data to Boreinstein for his research.
o Third-party finance exchanges: e.g. Energysage
o 3rd-party installers (e.g. SolarCity, SunRun): Have not seen anyone obtain data
from a residential installer




Individual Summaries

1. The Solar Deployment System (SolarDS) Model: Documentation and Sample Result September 2009
Authors: Paul Denholm (NREL), Easan Drury (NREL) Robert Margolis, (NREL)
Solar Deployment System (SolarDS) was a model developed by the National Renewable
Energy Laboratory (NREL) to examine the market competitiveness of PV based on regional
solar resources, capital costs, electricity prices, utility rate structures, and federal and local
Model is a geospatially rich, bottom-up, market-penetration model that simulates the potential
adoption of photovoltaics (PV) on residential and commercial rooftops in the continental United
States through 2030
The PV market share calculator within the model uses financial performance metrics to simulate
PV purchasing probabilities that are unique to each solar resource region, local utility electricity
rate and rate structure, customer type, customer financing, panel orientations, building size, and
building age
Financial performance metrics are used to calculate both the total potential PV market share
and the adoption rate. Different PV market-penetration curves are used to characterize
residential and commercial customers in new and retrofit markets.
Written as a collection of Visual Basic for Applications (VBA) modules with a Microsoft Excel
interface. Given the model does not rely on empirical data, model outputs are highly subject to
inputs and various assumptions
Main SolarDS module combines the annual revenue and the cost of the PV system (including
various incentives and financing scenarios) to produce a financial performance metric.
Performance metric is then used to calculate a market share, which is aggregated over all
regions to estimate state and national PV market share. SolarDS forecasts PV market share in
two-year increments from 2008 to 2030


2. Break-Even Cost for Residential Photovoltaics in the United States: Key Drivers and
Sensitivities - 2009
Paul Denholm, Robert M. Margolis, Sean Ong, and Billy Roberts
Paper examines the break-even cost for residential rooftop photovoltaic (PV) technology,
defined as the point where the cost of PV-generated electricity equals the cost of electricity
purchased from the grid. Authors examine the break-even cost for the largest 1000 utilities in
the United States as of late 2008 and early 2009
Overall, the key drivers of the break-even cost of PV are non-technical factors, including the
cost of electricity, the rate structure, and the availability of system financing, as opposed to
technical parameters such as solar resource or orientation.
To determine the annual PV generation at each location, authors used hourly insolation data for
2003-2005 from the National Solar Radiation Database (NSRDB) (NREL 2007
Considered a base-case scenario evaluating the break-even cost for residential PV in the
largest 1000 utilities in the United States as of late 2008 and early 2009. This base case
includes a single set of assumptions for financing, technical performance, and several other
factors. Ran sensitivities to determine break-even costs under different scenarios.

3. The Impact of Different Economic Performance Metrics on the Perceived Value of Solar
Photovoltaics - October 2011
Authors: Paul Denholm (NREL), Easan Drury (NREL) Robert Margolis, (NREL)


Paper compares PV economic returns for different PV customers using the following economic
performance metrics:
Net present value (NPV)
Profitability index (PI)
Benefit-to-cost (B/C) ratio
Internal rate of return (IRR)
Modified internal rate of return (MIRR)
Simple payback and time-to-net-positive-cash-flow (TNP) payback
Annualized monthly bill savings (MBS)
Levelized cost of energy (LCOE).
The choice of economic performance metric by different customer types can significantly shape
each customers perception of PV investment value and ultimately their adoption decision.
Authors find that different economic performance metrics frequently show different price
thresholds for when a PV investment becomes profitable or attractive
Several project parameters, such as financing terms, can have a significant impact on some
metrics (e.g., internal rate of return (IRR), net present value (NPV), and benefit-to-cost (B/C)
ratio)while having a minimal impact on other metrics (e.g., simple payback time)
The different price thresholds for when a PV investment becomes profitable or attractive and the
different sensitivities to varying system parameters have significant implications for policy
To calculate the sensitivity of PV economic performance to a range of system parameters,
authors first define reference PV price, performance, and financing assumptions and apply
these to all PV market participants.
Base reference values are not meant to characterize representative U.S. PV economic
performance; they are meant only as a starting point for the sensitivity analysis, which is used to
compare the relative value of PV, as shown by different economic performance metrics.
The sensitivity of PV economic performance to varying prices provides insight into how different
economic metrics can exhibit unique price thresholds for when a PV investment may begin to
look attractive.


4. Decision-Making and Behavior Change in Residential Adopters of Solar PV (Proc. of the

World Renewable Energy Forum) - 2014
Varun Rai (UT-Austin)
Report results from a survey of residential owners of solar photovoltaic (PV) systems.
Conducted during August-November 2011 in Texas, first-of-a-kind survey seeks to understand
the experience of PV adopters in selecting and installing a PV system.
Reports descriptive findings on (i) aggregate socio-demographics of PV adopters in Texas, (ii)
the decision-making process of adopters leading to PV installation, and (iii) the impact of PV
adoption on the adopters awareness of their electricity use, on their (perceptions of) changes in
their electricity-usage pattern, and on their outlook towards the environment.
Overwhelming majority, 87% of the responding PV owners, used the payback period to
calculate the financial attractiveness of a PV system (Table 2). Internal rate of return (IRR) was
the next most frequently used tool (36%) to calculate the financial attractiveness of a system
The survey consists of 60 questions, which are organized in the following seven sections: (i)
system details (ii) decision-making process (iii) financial aspects (iv) sources of information (v)
expectations/evaluation (vi) environmental attitude (vii) demographics.
Survey was administered electronically (online) in Texas during August-November 2011. Total
number of complete responses received was 365, or 40% of the 922 PV owners contacted.


Influence of local environmental, social, economic and political variables on the spatial
distribution of residential solar PV arrays across the United States
5. Calvin Lee Kwan (note: couldnt access actual paper, but Kwan is cited various times in
other papers. Now apparently a Kellogg EMBA based in HK) - 2012
Study used ZIP code level data from the 2000 US Census to investigate the influence of local
environmental, social, economic and political variables on the distribution of residential solar PV
arrays across the United States
Current locations of residential solar PVs were documented using data from the National
Renewable Energy Laboratory's Open PV project.
A zero-inflated negative binomial regression model was run to evaluate the influence of
selected variables. Using the same model, predicted residential solar PV shares were
generated and illustrated using GIS software.
The results of the model indicate solar insolation, cost of electricity and amount of available
financial incentives are important factors influencing adoption of residential solar PV arrays

6. Modeling Solar PV Adoption: A Social-Behavioral Agent-Based Framework - 2014

Charles M. Macal, Diane J. Graziano, and Jonathan Ozik
Argonne National Laboratory
Describes a new conceptual agent-based model, BE-Solar, that incorporates a social and
behavioral decision framework for technology adoption decisions. Authors demonstrate the

feasibility of including heterogeneity and behavioral factors into an agent-based model of the
solar PV market, which is being applied to the Southern California market.
In the BE-Solar model, a residential owners decision to seek more information on solar PV is
initiated by several factors including a general increase in the awareness of solar PV options
and benefits through information dissemination.
Authors apply adaptation concepts from innovation diffusion theory and marketing to model a
five-step consumer decision process:
(1) Recognition: consumer becomes aware of PV systems or the opportunity to purchase or
lease PV;
(2) Information search: consumer is interested enough in PV to seek more information, which
results in the consumer forming a favorable or unfavorable opinion about adopting the
(3) Evaluation of alternatives: consumer applies their value proposition to comparing PV
purchase options and the null option to not adopt;
(4) Purchase decision: consumer chooses to purchase or not purchase a PV system
(5) Post-decision behavior: consumer seeks reinforcement of their adoption decision (or
reverses it) and communicates positive (or negative) PV perceptions within their social network
A baseline set of agent attributes were drawn from publically available data sources including
the U.S. Census. This was supplemented with data from specialized sources, such as solar
technology adoption data from the California Solar Initiative (CSI 2014), and residential energy
consumption data from the residential energy consumption survey (RECS 2014). Housing and
parcel data were obtained from the County of Los Angeles, California

7. Solar PV Technology Adoption in the United States: An Empirical Investigation of State

Policy Effectiveness - 2014

Christine Lasco Crago (Umass Amherst) and Ilya Chernyakhovskiy (Umass Amherst)
Paper uses county level panel data to investigate whether state policy incentives are effective in
increasing residential solar PV capacity. Paper seeks to answer whether policy incentives are
effective at promoting adoption, which incentives are most effective, and what are the prevailing
characteristics of homeowners who are likely to invest in a solar PV system.
Data on residential solar PV installations were obtained from the National Renewable Energy
Lab (NREL) Open PV Project. The Open PV Project is a public database which provides
location and capacity rating information for all solar PV projects in the United States.
Authors obtained data from 2005-2012 for the following states: ME, NH, VT, MA, NY, RI, CT,
NJ, PA, DE, MD, WV, and the District of Columbia.
Geographic Information System (GIS) software was used to spacially reference and aggregate
individual residential PV systems to the county level. State policy incentive variables were
constructed using the Database of State Incentives for Renewables and Efficiency (DSIRE

8. Spatial Patterns of Solar Photovoltaic System Adoption: The Influence of Neighbors and the
Built Environment
Marcello Graziano, Department of Geography, University of Connecticut ; Kenneth Gillingham,
School of Forestry & Environmental Studies, Yale University

Paper empirically examines the diffusion of residential solar photovoltaic (PV) systems. Using
detailed data on PV installations in Connecticut, authors identify the spatial patterns of diffusion,
which indicate considerable clustering of adoptions.
Clustering does not simply follow the spatial distribution of income or population. Authors find
that smaller centers contribute to adoption more than larger urban areas, in a wave-like
centrifugal pattern.
Empirical estimation demonstrates a strong relationship between adoption and the number of
nearby previously installed systems as well as built environment and policy variables.
Adoption data: CEFIA collects and maintains a database with detailed technical and financial
characteristics of all residential PV systems adopted in state that received an incentive since the
end of 2004. The database, updated monthly, contains detailed PV system characteristics for
nearly all installations in CT.
Authors employ socioeconomic and demographic data from several waves of the U.S. Census.
They also use voter registration data provided by the Connecticut Secretary of State (SOTS)



9. Selecting Solar: Insights into Residential Photovoltaic (PV) Quote Variation - October 2015
Carolyn Davidson and Robert Margolis
National Renewable Energy Laboratory
Davidson and Margolis attempt to address the following questions:
1. What are the ranges of system design parameters for quotes for the same property?
2. Does price dispersion exist within quotes for the same property?
3. What metrics can we use to characterize quote complexity and price dispersion and track this
variation over time?
Potential PV consumers must weigh many payment and ownership options, as well as physical
attributes, including the percentage of electricity load to offset and the use of premium versus
standard equipment. Before investing in a system, a prospective PV customer must not only
have initial concept buy-in, but also be able to evaluate the tradeoffs associated with different
system parameters.
In addition to the effort involved with evaluating PV system parameters, prospective customers
might need to evaluate disparate costs for each system attribute by comparing multiple bids
Analysis relies on privately provided data from an online residential and commercial PV solar
marketplace, EnergySage ( Analysis is the first-ever data-driven
characterization of quote variation faced by prospective PV customers
Prospective PV customers submit house-specific information (such as electricity use) and their
preferences (such as quality of equipment, financing options like loans and leases) online, and
those data are sent to EnergySages independent installer partners for bids.
Analyzed over 10,000 quotes submitted to approximately 5,000 customers in about 20 states
over the 2013 2015 period. Note that if an installer provided a PPA or a lease quote, they
often included two financing options - both a zero-down and a prepayment option. In many
cases, they also included a cash purchase option.


10. Private Net Benefits of Residential Solar PV: The Role of Electricity Tariffs, Tax Incentives
and Rebates - Revised July 2015
Severin Borenstein
Author uses 2007 to early 2014 residential data from Pacific Gas & Electric the utility with
largest number of residential solar customers in the U.S. to examine the full range of private
incentives for installing residential solar, from the direct payments and tax credits to the indirect
incentives that result from the residential tariff design and the crediting of solar production under
net energy metering.
Adoption continues to be dominated by the heaviest electricity-consuming households, probably
due to the steeply tiered tariff structure greatly increases the private value of solar to such
customers while reducing the incentive for consumers who are below median consumption.
Financial incentive for those who adopt solar over the sample period may have been due nearly
as much to Californias tiered tariff structure as to the 30% federal tax credit.
Primary data sources used in this analysis are a public dataset from the California Solar
Initiative and confidential billing data obtained from Pacific Gas & Electric under a nondisclosure agreement.
For those systems that received rebates under the CSI, author matched these data (based on
the CSI application number), which then indicates a solar PV customers consumption before
and after PV installation, along with detailed data on the PV installation and the census block
group (CBG) of the customer
Most recent solar adopters have not filed with the CSI and submitted the CSI data. Even in peak
years, only about 80% of new systems installed by PG&E residential customers appear in the
CSI as PG&E administered systems.