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Lower solar customer acquisition costs with…. microinverters?

Lower solar customer acquisition costs with…. microinverters?

I spent several years at SolarBridge Technologies, an AC Module company (acquired by SunPower in 2014). So, disclosure: I may have some bias. Microinverters and AC Modules generally cost more than the competing solutions – they are a premium product that provides unique benefits. You need to get very good at explaining those benefits to customers in order to close deals. Most advocates talk about better energy harvest due to module-level MPPT, higher system reliability due to no single-point-of-failure, and perhaps reduced design and installation costs due to the simpler architecture. I truly believe all these things are true.  And, the sales pitch seems to be working. Ten years ago, microinverters had a zero % share of the US solar market. Today, Module Level Power Electronics (MLPEs), including DC Optimizers, have well over a 50% share of the US residential market.

One benefit of MLPEs that I stumbled upon, and that nobody seems to talk about, is their ability to reduce your cost of customer acquisition. “Huh?” you say? This connection is not obvious to the casual observer. Here is the kind of feedback I got from customers at SolarBridge that let us know we might be on to something (paraphrased): “We love the AC Modules – we can get more solar up on the roof because I don’t have to worry about string constraints.” Or, “We went back to a house that we couldn’t make work with string inverters due to the broken up roof faces, and our designers figured out how to make it work with AC Modules.” I heard a lot of that – it made me feel good. I also got a lot of negative feedback when our stuff didn’t work well, but that’s a topic for another blog.

We started thinking about this. Getting a solar customer is expensive. The latest data I’ve seen is that it’s anywhere between $0.20 to $0.85/W to get a solar customer. $1,200 to $5,100 for a typical 6 kW system. It is a big target for the solar industry, as it is one of the most expensive line items in the solar cost stack. There are two fundamental ways to reduce customer acquisition costs ($/W):  spend less money to acquire the customer (lower the numerator), or sell more Watts to your customers (increase the denominator). MLPEs do both. Really.

  1. MLPEs enable more homes to go solar. Say you are running a marketing campaign. You spend money to reach customers – flyers, door-to-door, advertising, whatever. Some fraction of those customers that respond are going to drop out of your sales funnel because their roof is not suitable: shading, odd angles and roof sizes, complexity. MLPEs enable more of these roofs to go solar, increasing your conversion rate. For the same amount of marketing dollars, you will get more customers, reducing the $ per customer cost. Lowering the numerator.
  2. MLPEs enable you to put more panels on a roof. String inverters can be tricky. Strings need to be a minimum size. All the modules in a string need to be facing the same direction. This places constraints on how you can design a system. Microinverters, and to some extent DC Optimizers, eliminate those constraints. You can put any number of panels, anywhere you want. This lets you get more solar on a given roof. More Watts per customer. Raising the denominator.

All of this can be difficult to quantify – but, we tried to at SolarBridge. We did this by surveying 32 of our US installation customers across 16 states. What we found was that 25% of the sites they installed would not have penciled without microinverters. And that on average, they could fit 7% more modules on their AC Module sites vs. their string inverter sites.

The net result of this study showed a 22% potential reduction in customer acquisition costs. $/W.

Look, I know we weren’t exactly an unbiased third party at SolarBridge. I don’t know if our study met the standards of a peer-reviewed scientific journal. But, I know there is something there. Because I heard it from my customers.