By: Aaron Nitzkin
There has been a lot of excitement about SolarCity’s recent announcement regarding a new BIPV solar roofing product. This excitement is combined with a healthy dose of skepticism around the company’s vision to leverage their acquisition of Silevo Solar and their desire to keep their growth engine humming by tapping into the huge reroofing market in the United States. It is bold. It is exciting. Yet it has been tried before without success.
SolarCity has proven that they are not your average solar company, having demonstrated their ability to successfully market and sell solar to the masses. But does SolarCity have the right strategy and wherewithal to successfully create a solar up-selling opportunity tied to purchasing and installing a new roof? Can they really go where no other company has gone, some of which were multi-billion dollar multinational companies (e.g. BP, GE, Sharp)? In short, I share both the market skepticism and the excitement. However, what is more important than whether or not they are successful is the impact this plan is going to have on the growth of the overall solar marketplace as we transition into the next phase of growth and maturity in the industry.
Integrating solar into a roof is inherently hard. The primary role that a solar photovoltaic system plays is one of energy generation. The primary role that a roof plays is protection of the building from the weather. The complications start with not matching the product and warranty lifecycles of these two functions, not to mention the challenges associated with optimizing the energy production performance of the solar and the weatherization performance of the roof. When you factor in the numerous types of roofs that exist (such as composition shingles, metal, concrete tile, clay tile, and low slope roofs), you now have to start thinking about a unique BIPV form factor associated with each distinct roofing application.
During my 13 years working in the solar industry and 10 years working in the roofing industry, I have been involved with numerous building integrated photovoltaic (BIPV) products. I’ve helped install hundreds of BP Solar’s EnergyTile BIPV product in the mid 2000s with homebuilders throughout California. I launched and ran the solar division for one of the largest roofing contractors in California for four years. I helped The Dow Chemical Company bring their POWERHOUSE Solar Shingle BIPV product to market and built out a network of roofing contractors to sell and install this product across the United States. In spite of some well designed products and significant efforts made by many, no BIPV product can take credit for catapulting the industry forward.
The biggest argument against BIPV is that it is too expensive relative to traditional rack mounted systems and that most people won’t pay more. Generally speaking, BIPV solutions have demanded premiums of 25% to 50%, sometimes demanding greater than a 50% premium. However, I believe that we will see significant growth over the next few decades in BIPV. Why? First, crystalline solar cells have come down significantly in cost, so I envision the cost premium dropping down to the 5 to 10% level, which I believe is sufficient for the category to take off.
Second, from experience I believe a significant number of people will pay a premium for BIPV. Solar has been sold thus far primarily based on financial returns, with a fair amount of success. Many choose to go solar if they can get a fast payback and/or generate a positive cash flow from day one. That being said, aesthetics continue to be a mental barrier for many homeowners. I believe we are going to witness strong growth in BIPV is because we, as humans, are not always rational and driven only by cost concerns, particularly when it comes to our homes. We pay significant amounts for premium features in our homes. Yes, these features often come with added functionality, but often they are more tied to how they make us feel. We take pride in how our homes look. We love it when people compliment our new landscaping or our new paint job or our new roof. Given the choice to get a 20% ROI on a traditional rack mounted system or a lower (say 8%) ROI on an aesthetically integrated BIPV system that looks fabulous, I believe that a good percentage of people will opt for BIPV.
So will SolarCity be successful? Here are the questions that need to be answered as they share more about their new product and go-to-market strategy. First – what roofing types are they pursuing? Are they going to limit themselves to one category, say composition shingles, or are they going to try to have a solution that works for everything (a tall order). Second, how will this new product be priced relative to traditional modules? With their size and buying power, SolarCity should be able to get quite far down the cost curve, keeping the premium at a reasonable level. Third, and most importantly, how will they get this product installed? SolarCity is a solar installer, not a roofing company. Roofs frequently get damaged by solar installation companies not well versed (or licensed) in roofing. Is SolarCity going to foster relationships with roofing contractors nationwide (since there is no such thing as a national residential roofing contractor), or are they getting into the roofing business themselves?
Regardless of these answers, I believe that we are moving in the right direction. Solar products have become extremely commoditized, and it is exciting to see a growing diversity of affordable solar products in the market. SolarCity’s latest product is a sign of this maturing industry and has the potential to be the catalyst for further growth and innovation.