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Solar Contagion and Lessons for Other Energy Upgrades

What makes solar power contagious, and can home energy upgrades spread the same way?

Posted on Sep 1 2016 by Jacob Corvidae

Solar is spreading like a reinvented fire. See the dropping prices, technology improvements, and rapid growth curve in residential photovoltaic(PV) Generation of electricity directly from sunlight. A photovoltaic cell has no moving parts; electrons are energized by sunlight and result in current flow. (PVPhotovoltaics. Generation of electricity directly from sunlight. A photovoltaic (PV) cell has no moving parts; electrons are energized by sunlight and result in current flow.) installations over recent years. Witness the rapid expansion of our work with major companies across the world to purchase solar. Observe the growing and unwavering appeal of solar in, for example, the recent decision by MGM in Nevada to pay a fine rather than miss the opportunity to power up with solar. The fire spreads — and reaches a point where solar has become contagious.

As this contagion takes hold across markets, homeowners and companies alike are feeling the solar itch. What is particularly interesting about the growing uptake of solar among homeowners is that homes with solar panels appear in clusters in small geographic areas or neighborhoods. This contagion, which takes the form of word-of-mouth referrals in places like Fort Collins, Colorado, is shaping the strategy of major providers like SolarCity. It appears that the notion of “keeping up with the Joneses” may now also mean getting rooftop solar.

Standing in contrast to the solar contagion taking hold nationwide, however, is the largely untapped $150 billion opportunity for valuable energy efficiency improvements in existing single-family homes. In fact, energy upgrades may be the single largest unmet demand in housing — more than affordability, safe streets, storage space, privacy, or other factors. Unlike solar, however, home energy upgrades have not (yet) caught fire. Nevertheless, there may be powerful lessons from the role of peer effects on the diffusion of rooftop solar that energy upgrade service providers can use to make energy upgrades contagious.

How solar contagion works

The solar industry is making promising headway in “cracking the nut” of cultivating and meeting rapidly increasing demand for rooftop solar. This is fortunate, because rooftop solar plays a major role in the transition to a cleaner, more resilient, affordable, and equitable electricity system that our communities and our country need to make to mitigate the effects of climate change.

Research suggests that “spatial neighbor effects” usefully predict new solar installations. What’s more, whether or not a homeowner’s neighbors have solar panels may be the most important factor influencing the decision to get solar, more important than income levels, political views, or proximity to major population centers.

When solar contagion strikes, we see initial installations followed by additional installations in nearby homes.

Marketers know that word-of-mouth referrals are generally the best advertising one can get, but it’s not always easy to drive it. Solar has some specific advantages when it comes to encouraging word-of-mouth referrals:

  • High visibility. Perhaps the greatest asset of rooftop solar is that the product does its own advertising. The panels serve as a daily reminder of their use, like a permanent yard sign that declares the homeowner’s commitment and values, while also showcasing the specific product.
  • The gleam of the “new.” Solar panels still have that compelling whiff of a technological breakthrough where human inventiveness has provided something cool and new: “free” energy.
  • Appeal across the political divide. Unlike some other energy topics, solar has an appeal to conservative and liberal Americans alike, albeit often based on different priorities.

Fort Collins leads the way for solar contagion

To better understand the solar contagion phenomenon and extract insights for the residential energy upgrades market, let’s take a look at the community that SolarCity ranked as the number one city in the country for solar contagion: Fort Collins, Colorado (a community that the Rocky Mountain Institute has worked closely with).

Referrals drive 69% of SolarCity’s rooftop solar installations in Fort Collins, making it the top city in the country for solar referrals. The Rocky Mountain Institute (RMI) helped build support for an aggressive climate action plan that ultimately crystallized in a form that aims for carbon neutrality by 2050. The municipal Fort Collins Utility provides good support and rebates for residents wishing to install solar, including quality control for the solar contractors. In addition, pro-solar policies at the state level make Colorado ripe for solar growth.

These supportive policies and utility programs in Fort Collins help create the needed infrastructure for the local solar market. Nevertheless, it appears that the motivation to invest in solar today is shaped by the presence of solar on the rooftops of neighboring homes.

Lessons from solar: How to spark contagion for home energy upgrades

Despite energy efficiency being the top unmet demand in U.S. homes, investments in energy upgrades have yet to become contagious among homeowners. In order to help home energy upgrades spread like rooftop solar, entrepreneurs across the residential energy services industry should consider applying these lessons from solar:

  • Make it simple and convenient. Simple and convenient solutions are needed that bundle various services and make it easier for residents to take action, as do the full suite of services offered by solar companies.
  • Create interest. It helps to have wider efforts in the community that create a new normal around the expectation that homes should be comfortable, quiet, and energy efficient. Even better would be specific efforts to create bipartisan support for policy infrastructure enabling energy upgrade investments.
  • Cultivate word of mouth and other forms of peer diffusion. Service providers can increase the social motivation for homeowners to invest in energy upgrades by using in-person and online platforms promoting interaction between family, friends, and neighbors before, during, and after projects.
  • Make upgrades visible. Although solar is easily visible outdoors, energy upgrades can become visible indoors. Service providers can encourage homeowners to share and show off their energy upgrades with family, friends, and neighbors through various in-person and online means, in addition to the more standard approaches of distributing yard signs during and after upgrades or affixing window or fridge stickers and plaques declaring energy ratings or program participation. Energy upgrades can also be made “visible” to our skin and ears through increased thermal comfort and reduced external noise pollution, respectively.

To make energy upgrades contagious like solar, we need innovative approaches to enhance the visibility and appeal of energy upgrades at a personal and social level. In essence, we need to make efficiency feel less like an old sweater vest and more like a Marc Jacobs coat. Less like an standard programmable thermostat and more like a Nest. Less like a typical sedan and more like a Tesla.

No one has fully lit the efficiency fire so that it spreads like solar, but many small flames are being fanned. How can we make the invisible visible and drive broader contagion for home energy upgrades? How can we make energy efficiency beautiful, cool, visually compelling, and thus social so that people want to display it? I challenge you to show us how it’s done! Let’s make energy upgrades contagious.

Jacob Corvidae is a manager at the Rocky Mountain Institute. This post originally appeared at the RMI Outlet.


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1.
Sep 1, 2016 8:10 AM ET

Visibility is more likely an impediment to adoption
by Reid Baldwin

I suspect that the visibility of solar has actually slowed the adoption rate. One of the concerns of potential users is that the neighbors will find the panels ugly. I don't think the contagion effect is explained by people seeing their neighbor's panels and saying "I like that. We should get some too." More likely, the neighbors getting solar panels ease their fears about what the neighbors will think. Once a couple neighbors install them, they say "At least a couple of our neighbors have made affirmative statements that they think they are ok and the rest of the neighbors don't seem to be complaining."

Ductless mini-splits have the same issue. How often has someone posted here "A ductless mini-split would work great but my spouse doesn't like the appearance." I suspect that if a few neighbors installed them and a few other neighbors commented "those don't look bad," then the resistance would go away. Of course, if the other neighbors say "did you see that monstrous thing the Jones's put right in the middle of their family room?" then the resistance will increase.

Somehow, I don't think that installing our drainwater heat recovery units in the family room instead of the utility room will increase the adoption rate.


2.
Sep 1, 2016 12:26 PM ET

@Reid
by John Clark

Federal Tax Credits (Collected by the installer/owner of the panels in the form of a balloon payment) and guaranteed Power Purchase agreements are a big driver.


3.
Sep 1, 2016 5:24 PM ET

RE: Is visibility an impediment
by Jacob Corvidae

Hi Reid,
Great issues to raise. It's true that visibility can be a two-edged sword. If people find them to be an eye-sore, then the visibility can have a backlash effect. But visibility is just one aspect of seeing normalization happen among neighbors. And as that normalization happens, then the scales tip in favor of visibility being an asset. I don't know that we have data to say whether visibility is generally a great impediment or asset for "contagion", but I would posit that as a variety of conditions for contagion improve, then visibility becomes an important ingredient for driving wider adoption. No one will be inspired (or simply reassured as you suggest) by their neighbors improvements, if they can't see them and don't know they've happened.

And Chris -- while certainly the finance support you mention is important (a useful ingredient for movement in the market), it doesn't explain the contagion effect. Those tools being the primary driver of adoption would suggest that we'd see patterns of adoption more evenly spread, instead of clustered the way the contagion data shows. Or am I missing something about your statement?

Thanks for bringing up great questions on this topic.


4.
Sep 1, 2016 8:54 PM ET

Valuing building improvements through energy labeling
by Bennett Sandler

I suspect one significant hurdle to the widespread adoption of energy efficiency in buildings (besides the fact that insulation just isn't sexy) is that building owners do not have confidence that their investment will be recouped when they sell. Unless they know to ask, there is no easy way for a buyer to know how efficient a building is or how much money is at stake in the question.

The fix for this seems quite simple. As a condition for sale buildings should undergo an efficiency assessment and be assigned an efficiency score or an estimated annual operating cost (similar to the tag Energy Star appliances carry.) This would force buyers to consider the value of efficiency and thereby lower the barrier for owners to do the right thing and invest in improvements. England enacted this kind of policy in 2007. All buildings sold or let must undergo "Energy Performance Certification" and carry an energy label.

Empowering buyers with this information would be a simple and comparatively painless way to raise consciousness and would remove a major disincentive from the market. But for some reason I haven't seen this discussed anywhere.


5.
Sep 2, 2016 9:43 AM ET

RE: Valuing Building improvements...
by Jacob Corvidae

Hi Bennet,

You're right that we must build mechanisms to help people understand what the energy performance of their homes now, and that time of sale is an especially important trigger moment to do so. The good news is that lots of people are talking about this, and various efforts are underway. Simply making it part of the sale itself is challenging because typically the process is too far along at that point. Making information more visible at the point that a home goes on market is more effective. The National Association of Realtors and the Appraisal Institute have done good work to develop a Green Addendum to the MLS, which can at least help capture what's been done to the house already. Various folks are now looking into ways to help populate that addendum more steadily and consistently which would help. In other areas, folks are working on estimates of energy costs to help drive that conversation in these transactions - and even before homes have gone onto the market, so that it can benefit current residents and help them prepare for later sales. We have a long way to go however, to improve the visibility of these costs.

At Rocky Mountain Institute, we are advocating that energy costs should be included as part of the total cost of home ownership, so that consumers and financiers can make better informed decisions.


6.
Sep 2, 2016 10:09 AM ET

PV vs energy upgrades
by Curt Kinder

PV is simple and visible - mount panels, wire up, and watch the kWh flow.

Home energy improvements are often subtle and muddled. Some work, others don't. There is no small shortage of pirates, thieves, and charlatans in the home energy business.


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