Estimated reading time: 4 minutes
The solar industry is ripe with abusive pricing models.
For most companies, the price they're charging is directly tied to the benefit solar offers. In areas with more sun and/or higher electricity rates, traditional solar companies charge more. . . even if their costs are the same.
These abusive companies price as high as they possibly can while still saving you 10–15%. This approach makes the customer feel like they're being offered a win-win opportunity, but in reality, people are way overpaying for solar.
Picture this: If GM was charging twice as much for the same 4x4 truck in snowy Salt Lake City, UT as they charge in warm and sunny Phoenix, AZ, consumers would 1) be outraged and 2) probably go to Arizona to buy their truck.
The pricing difference isn't justifiable—the product is the same and the shipping from Detroit isn't significantly different.
While most would agree that the truck example is clearly unfair, this discrepancy happens ALL THE TIME in solar. Unfortunately, companies take advantage of local conditions.
The truth is, flat pricing is hard. In order to have the same price for all, we had to price based on the lowest denominator. We needed solar to make sense—even in states with the lowest utility costs and mediocre sunshine.
Door-knocking salespeople making $300k/year simply does not work with our goals. To make our flat and fair pricing a reality, we needed a breakthrough in efficiency. We needed the internet.
THIS is how Project Solar was born.
Unfortunately, there is variability in the raw cost of going solar.
Permit fees vary by locality, and there are many fixed costs such as site design, engineering, and electrical hook-ups. These fixed costs are the same whether you are installing a 3 kW system or a 15 kW system.
These fixed costs, spread out over larger systems, reduce the total amount on a cost per watt basis. So while you can reasonably assume that a bigger system costs more in total, the cost per watt will go down. These are basic economies of scale.
Therefore, to maintain a fair and flat pricing model, we also need to charge customers on a sliding scale where smaller systems are more expensive per watt and larger systems are cheaper. However, the range does not need to be dramatic to offset the relatively low amount of fixed expenses.
Our DIY pricing is simple: Any system larger than 13 kW is priced at $1.50/watt, and any system below 4 kW is priced at $1.78/watt.
Anything in between is priced at a sliding scale, so it's equally and fairly proportionate to the upper and lower bounds.
NOTE: These prices per watt reflect what we actually charge and do not take into account state and federal incentives. Those incentives belong to you, are designed for you, and we do not charge more based on them. An average DIY install is less than $1/watt after incentives.
Equipment costs are reducing globally as the industry matures, and we update our pricing to reflect the improvements. That being said, pricing has appeared stable in the last 2 years as maturity (pending any technological breakthroughs) seems to have been reached.
The incremental improvements in pricing/efficiency are lower than the missed opportunity costs of going solar now.
For full-service install, we use our DIY pricing as the base and simply add on the EXACT cost we pay our install partners (with whom we have negotiated amazing rates).
How to Analyze ROI From a Solar Project
We like to focus on a solar project's return on investment (ROI).
Other companies like to make ROI claims that have been calculated in many different ways and often with many assumptions about how utility rates and home values could increase over 20 years.
We determine ROI more simply by calculating as follows:
[year 1's energy cost saving / cost of going solar]
For my house (Project Solar CEO), it looks like this...
That is $1,430.91 saved a year on a $9,655.51 investment. Or a 15% ROI.
This ROI beats S&P 500 averages, real estate, and most other investments in both total return AND stability. This return doesn't even take into consideration how your home value will increase with a solar system, which conservative estimates place at at least $2.50/watt.
So, let's take this example one step further and say that I plan on moving in 5 years.
Home value increase: 2.5*9,655.51 (system cost) = $24,138.78
When you install solar, you will more than triple your investment in 5 years and basically earn your place amongst the Wall Street elite as a premier money manager! Congrats!