MARY LOUISE KELLY, HOST:
Using rooftop solar panels to power a home is great for the environment, but it is not always a good deal for consumers. Keith Romer from our Planet Money program tried to understand why.
KEITH ROMER, BYLINE: It's a good pitch. Put solar panels on your roof, and you can lower or maybe even eliminate your electric bills. But BloombergNEF analyst Pol Lezcano says hundreds of thousands of the customers who got their panels from the biggest American solar companies are probably paying more than they should.
POL LEZCANO: The way residential solar systems are being sold in the U.S. today is fundamentally broken, and it's really easy for many of those sales to result in - let's not call it a scam, but not meeting expectations.
ROMER: Lezcano says the broken system is a result of the business model big U.S. solar companies adopted in the early days of the industry. Nat Kreamer co-founded a company called SunRun in 2007. He no longer works there, but back then, he says, solar companies faced this fundamental problem.
NAT KREAMER: So people get excited about the idea of solar. They get excited about the idea of clean energy. But you then say to them, you've got to go invest 50, 40, whatever number thousands of dollars - in other words, pay cash for a solar system. It's like saying, pay cash for a car.
ROMER: So SunRun offered to install solar panels on people's houses that the company would own. Customers would just agree to buy the electricity those panels generated. Other solar companies leased panels instead of selling them outright. Lowering upfront costs for customers in these ways made rooftop solar way more accessible.
KREAMER: You end up in the next 10 years with over a million homes going solar versus 40,000 in the previous 40 years.
ROMER: So far, so good. But those upfront costs didn't magically disappear. They just shifted from homeowners to the solar companies. To cover those costs, the companies employed some clever financial engineering - packaging and selling the income stream from solar leases, harvesting renewable energy tax incentives, but they also needed a steady flow of investor money. And to be attractive to investors, the companies had to grow and grow and grow. So they signed up armies of salespeople, like Walid Halty, who dropped out of college because of how much he could make going door to door selling solar.
WALID HALTY: Third month in, think I did, like, 14 installations, and it was, like, 20 to $25,000.
ROMER: In one month?
HALTY: Yeah, in one month. I'm like, holy smokes. There's no way.
ROMER: Halty says some solar companies incentivize salespeople by letting them overcharge customers and pocket the difference.
HALTY: You could sell it for as high as you'd like - as high as the homeowner would say yes to.
ROMER: And you would just get more and more money the higher the price you charged them?
HALTY: That's right. It's almost as if, you know, you got a $20,000 car, and this - you know, the dealership can sell it at $40,000 if they want.
ROMER: Analyst Pol Lezcano says this business model that prizes growth has contributed to solar being a meaningfully worse deal for many American consumers.
LEZCANO: A residential solar system in the U.S. costs about 2 1/2 to three times as much to install than in other parts of the world, such as Germany or Australia.
ROMER: Which might be slowing America's transition to solar - a transition that Lezcano, like everyone I talked to for this story, agrees should be a no-brainer for a lot of homeowners and for the planet.
Keith Romer, NPR News.
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