We speak with Buddy Starr of Greentech Renewables to talk about the evolution of the solar power industry over the course of 2023.
John Maher: Hi, I am John Maher and I’m here today with Brian Sadler, Vice President at Solaris Renewables, a solar company in Massachusetts providing premium solar and storage technologies with exceptional customer service, and designing, installing and servicing solar systems in Massachusetts, Southern New Hampshire and Maine. Today our topic is the 2023 Solar Power Year-in-Review. Welcome Brian.
Brian Sadler: Hi, John. Thanks for having me in.
John: Absolutely. And our special guest today is Buddy Starr. Buddy is the General Manager of Greentech Renewables New England. Welcome Buddy.
Buddy Starr: Thank you. Thanks for having me.
How Has the Solar Power Industry Evolved in 2023?
John: Sure. So Buddy, how has the solar power industry evolved as far as you can see in 2023 compared to previous years?
Buddy: Sure. 2023 was challenging, I think, for a lot of solar installers. We had some interest rate volatility that was sort of challenging, but from the technical standpoint, we’ve seen a kind of positive evolution in a lot of the software from our inverter companies, from a lot of coordination with whole home automation stuff. So, the smart home movement has infiltrated solar in a positive way.
Brian: Yeah, there’s been a lot of cool additions to smart panels and, like you’re saying, the actual and border companies expanded that to have some smart home peripherals and whatnot, which is just an advancement and more opportunity for the industry to be integrated into the home.
John: Can you talk, Buddy, a little bit about some of the key milestones maybe and breakthroughs in solar technology and complementary equipment that were achieved in 2023?
Buddy: Sure. I mean, from the module standpoint, I think there’s a big movement away from the mono perk, what we were installing in the first half of the year, and going much more to the higher efficiency panels. A lot of the mainstream module manufacturers have announced a commitment to go to an n-type wafer, which is the higher efficiency design. So we’re kind of in transition at the back end of 2023 and into next year. So I’d say that getting a little more mainstream is probably going to be the biggest breakthrough.
John: Can you go into a little bit more detail on that and just kind of explain what that new technology is and the difference that it makes?
Buddy: Sure. I mean, I’m not all that technical. Fortunately, I work with a lot of really good vendor partners and they explain that much better than me. But from my understanding it’s just going to be a higher efficiency panel, which means it’s going to degrade at a lower rate and over the lifetime of the panel produce more power for the homeowner, or the utility in some cases.
Brian: And those still will have the same resiliency as the residential and commercial applications. So it’s not like that they’re making a wafer that is more efficient but more fragile. It’s still going to meet all of the wind resistance, snow resistance, and heat resistance, and actually in a better format where, a lot of times, aesthetics is actually improved with the n-type as well.
John: And Brian, that’s because typically solar panels would sort of degrade over time and you’d get less and less electricity from them after many years of use. I know that you’re working with some manufacturers that have panels that now have really long warranties on them, for example, because they know that those panels are going to be continuing to have high efficiency and to be creating a large amount of electricity even years and years in the future.
Brian: Yeah. There’s polysilicon monocrystalline and then the n-type is kind of what the new movement that Buddy’s talking about that they’re moving to, which is again, higher efficiency, a little bit of a cleaner look to them. And you have small wattage gains, I would say, but the efficiency and degradation rate that you were just asking about, essentially reduce, so there’s more power out of the gate and more power year-over-year over the life of the product.
And these products are becoming, like you pointed out, longer and longer lifespans. And now the manufacturers are willing to back those stronger, which in our industry, a lot of 25 year and longer warranties, which if you compare it to a lot of other industries, where do you get any type of warranty like that? You buy a new car. You just bought a new vehicle as a family and it’s bumper-to-bumper three years, best case scenario, it seems like, or 36,000 miles. Where this is more like lifetime or 70% even of the lifetime that it’s a fully warranted product.
So it’s a big differentiator I think for our industry. It’s something we spend a lot of time educating consumers on because there is a lot of nuance to the products.
Trends and Developments in Solar Energy Policy and Government Incentives
John: What are some of the major trends in developments in solar energy policy or government initiatives and incentives during the past year?
Buddy: Yeah, I mean the big one is the Inflation Reduction Act has a lot of policy incentives for solar. There’s a lot of domestic content policy that has not quite been defined yet, so it’s kind of been a hurry-up and wait year where they kind of passed this law at the end of last year, and we’ve just kind of been waiting for interpretation guidelines. But yeah, I would say we’re in a really, really friendly policy climate for solar and for energy broadly speaking. But until we have some kind of clear guidelines on how to apply those incentives, we’re kind of at a standstill for taking advantage of that.
John: So interestingly, we’re recording this here at the beginning of December in 2023, and you’re still not exactly clear on what the IRA is going to supply to people. Is that right?
Buddy: That’s correct. Yeah, it was a giant bill. So there’s just a lot in there and the government has a lot of priorities and sometimes energy policy gets kicked for other things. So it’s a hurry-up and wait deal. But the ITC has been extended for a long time and it’s very positive news for the industry and it’s brought a lot of investment into the space on the manufacturing side already. So yeah, it’s been very, very positive development from a policy standpoint.
Brian: I think that the 30%, like you’re saying, there was some uncertainty, right? It was declining or it had sunset dates a couple of different times, been extended by previous administrations in the past, and then it was due to essentially go away. And the IRA did firm that up with a 10-year trajectory at 30%.
So that’s one thing we do know and that is positive. But like Buddy pointed out, there’s a lot of underlying indicators for manufacturing and/or commercial applications that reward prevailing wage, domestic content, and there’s a lot of rules in there inside of that that need to be flushed out as well, which is what they’re navigating.
But I think, also, it gave a boost to a lot of peripheral and complementary industries. So heat pumps and some of that technology got a boost there with a tax credit program. EV charging. So there’s a lot peripheral things that we do. We don’t install heat pumps here at Solaris, but we do a lot of EV chargers and things like that. So there’s additional rewards nationally.
And then like Buddy pointed out, that brings in interest investment. There’s a lot of planning for domestic manufacturing from a lot of these big manufacturers because now there’s rewards to do so, so we can make sense of it given that our cost of living is so much higher that we can’t really manufacture anything here and we’ve lost out to a lot of overseas manufacturing. But this is focused on bringing that back, which I think is a huge win as well.
Buddy: Yeah. And just to give an example of how difficult this is that they haven’t defined, if you get the domestic content bonus or mere assembly of panels in the United States where we’re going to buy foreign parts or foreign cells, bring them in, assemble them in a United States factory and ship them out, does that count as domestic content or do you have to actually draw the silicon wafers here and slice them and kind of produce that in the States to qualify for the domestic content?
So those are sort of the things that have not really been defined, and it’s kind of stalling, I think, some of the investment in the industry. So I just wanted to clarify how difficult this is right now.
Brian: Yeah, all the pieces are a part. Where does the aluminum come from? Where’s the silicon? Where’s the glass? Are the screws domestic or are they not?
Buddy: So yeah, like Brian said, there’s a lot of rules that we’re trying to figure out.
Regions with Market Growth in Solar Power
John: That brings us to the adoption of solar power. And in terms of market growth, what are some of the regions, maybe, and countries that have experienced significant advancements in terms of adoption of solar power in 2023?
Buddy: Yeah, I mean, I’d say 2023 for United States nationally has definitely been down. A lot of that’s related to the interest rate. A lot of the lower cost of power markets, it’s much harder to make solar pencil.
Conversely, in our market in the Northeast, we have a high cost of power that keeps going up, and it’s a really good deal to go solar even with the higher interest rates. So we’ve seen growth in the Northeast, particularly in the first half of the year. And then in California, which is generally a third of the solar market, they’ve had some struggle with the utility changing the net metering rules, and there’s been decline in the second half in California because of some of those rules.
Brian: It was like the Wild West. I mean, we knew it was coming in California, I think there was an April deadline this year where it was just contract, contract, contract and trying to stuff the utility application portals with placeholders for systems and then we’ll figure it out later and build them later, because knowing that this net metering change waters down the ability for homeowners and businesses to save the electricity, to have savings on a solar investment, which is the baseline for going solar, is to replace the utility and to be a distributed generation plant essentially. So that’s wild.
We know that California drives a lot of the market here nationally. So manufacturers shift and everyone’s trying to scramble to figure out how to make the rest of the country successful. Then I think, like Buddy pointed out, interest rates has been a thing all year and they just keep going up, sometimes twice a month. And it’s been challenging to navigate that coming off of historic low interest rates where consumers have the potentially false idea that the interest rates are going to come back to historic lows where we’re just a little above what the mean is historically. And so it is a challenge to combat that.
But at the end of the day, like Buddy pointed out, that it still, especially here in the Northeast, it really still pencils. And you’re thinking, if you’re financing, the interest rate be damned, the monthly payment’s lower than what you’re doing today, and that is the end game is to have savings.
And then fortunately for us here in the Northeast, we’re really lucky that there’s robust programs statewide. All the states have something. Massachusetts leads the nation in a lot of programs, Maine, New Hampshire, all the New England states. You have New York has programs as well to further offset with local rebates and performance-based incentives as well for the system.
So it still makes a ton of sense here, but we see in the Southeast where they have really low electric rates, it’s hard now to look at a monthly payment. It’s a little bit more on the lines of let’s spend a little more and save money over the lifetime of the system. And when is my break-even point and when am I going to start saving?
And we’re a little spoiled here in the Northeast that not only we’re saving money, a lot of times month one, and then “how much” is the question. How much are we saving on? I’m only saving $10, $20. Or some folks have the idea, “Well, my bill’s 300. I should be saving $300.” It’s like, “Well, you’re saving a hundred. I mean, isn’t that great?” So there’s some challenges, but at the end of the day, our region remains strong and still is really a no-brainer in terms of the conversion to solar.
Economic Factors That Change Consumer Behavior with Solar
John: Right. Buddy, can you talk a little bit more about that in terms of, we mentioned interest rates and Brian was talking about how just kind of crunching those numbers affects behavior in consumers in terms of adoption of solar power. Are there other economic factors like that that kind of change the behavior in consumers?
Buddy: Yeah, I mean interest rate is kind of the story of 2023, I’d say, driving a lot of the consumer shifts. The other big factor is the utility and the cost of power we’ve had. They’re announcing continued raising in cost of power for the Northeast, at least for a lot of these states, which definitely drives consumers to think about it. I think last year was some kind of extreme. You heard about extreme electric bills in our markets. I mean, one of my coworkers got a bill for like a thousand dollars one month.
So if that doesn’t have you pick up the phone and call Solaris Renewables to get a consultation, then I don’t know what does. So those are kind of the two drivers. It’s like, what are you paying every month for your electricity? And what’s the cost of borrowing money to put a system on your house? And does that cost offset by your savings?
And I guess the other factor is these systems are 25-year systems. So over the next 25 years, what do you think the cost of power is going to do, and kind of taking a longer term view to stabilizing your electricity rate.
I mean, even our local utilities, the rate will go up and down, kind of indexed to natural gas or some other energy source. When you invest in solar, you’re basically locking in a rate for 25 years, which is pretty valuable in the long term.
Brian: Yeah, absolutely. The folks don’t think of that when you pay your bill monthly and then it keeps going up. But to take a little bit of a longer term stance and look at what you could be saving, yeah, you’re shaving it close maybe in year one depending on your site conditions, but then year over year you’re saving. And then what does that look like in 25, 30, 40 years? In some cases for these premium systems, it can be hundreds of thousands of dollars difference by going solar.
So yeah, the interest rates have been a challenge to continue to change consumer behavior. But I think if you’re looking at the monthly payments, it’s still an absolute win.
Buddy: Yeah. And sometimes from an investment standpoint, there’s always the cost of doing nothing. You can just project how much you’re going to pay the utility over the next 20 years, 25 years, and you can look at the total cost of owning a solar system in that timeframe. And it paints a pretty obvious picture for a lot of our customers in New England.
Whole Home Electricity
John: And Brian, Buddy mentioned the cost of electricity going up and that making people maybe want to give you a call to switch over to solar and start creating their own electricity. But the cost of other types of fuel is also going up, fuel oil or gas or whatever. And also I think a lot of people are sort of switching to a whole home electric format. You mentioned heat pumps before and some people are switching to solar panels to power their heat pumps so that they can just completely get off of fossil fuels. Do you see that as being a driver as well for consumers?
Brian: Yeah, absolutely. There’s a huge movement of electrification at the home. We see the utilities and the state’s really driving that by pushing it and pushing it onto the utilities. So there’s a whole grid modification conversation going on now. It’s a long-term play, but consumer behavior is driving that as well and going to force it faster by electrifying their homes.
Our family’s a good example of that. We just put a whole home heat pump system in to remove and replace our oil fired boiler heat system. And it’s a learning curve to a certain extent on how it works and how it works for us. But it’s been, I think, a dramatic improvement. We’ve had solar for about eight years, and so we have a lot of credits that we have built up because we oversized our system with the plan of electrification. We just got a plug-in hybrid and have an EV as well. So we’re charging at home.
But that’s been a common theme that we’ve heard from customers for the last few years, and I think it’s more and more prevalent as time goes on. There are a lot of incentives out there for EV charging for heat pumps and for a lot of electrification of your home to help offset that cost and obviously incentivize behavior. So we’ve certainly seen a lot of that.
We get asked a lot of questions about it. Our customers ask about a lot of these peripheral items and how these systems interact with their home and their lifestyle and their daily lives. So it’s certainly something that we’ve seen a lot more of.
The Cost of Solar Energy
John: And Buddy, in terms of the cost of solar energy, has that changed in 2023 and has the industry been able to adapt to that?
Buddy: Yeah. Again, not to go back to the interest rates, but that is the highest input cost I think for a lot of these solar proposals. So that’s certainly gone up. We’ve seen equipment prices fall pretty significantly coming out of the supply chain crisis over the last few years that’s kind of been able to reverse course. So that’s been helpful.
Here in the Northeast, I mean, labor costs are still really high. It’s still very low unemployment rate, still really hard to train people to get qualified installers. So I would guess that’s a factor to consider. But overall, I think the price is up based on interest rates. The cost of borrowing the money is a pretty big input factor for a lot of these systems.
Brian: Historically, we’ve had the cost of the equipment coming down as labor rates and cost of living and permits, right? In Massachusetts, regulations are some of the most stringent in the country, in the world. And we have high regulation and permitting costs. So the utility applications cost a lot. There’s a lot of red tape for us to get through. Same thing with each of the 351 towns and cities in Massachusetts alone to deal with what their permitting cost is. And some of them are really, really high. All of them are higher than we see in abutting states and across the country.
But, generally speaking, as those things rise and material costs fall, they kind of remain the same. And there’s maybe a net flat line or maybe a little drop, but with the interest rates, that’s bounced it up and kind of washed those material savings. But I think because of some of the market structures here nationally and really internationally, Europe’s going through some changes there and interest rates are affecting there, and we’ve seen more of an influx of equipment into our region, which has fortunately been successful. Our region’s remained a growth or at least a relatively flat for our industry.
So we’re seeing a manufacturer asking us to move the equipment, which has in turn lowered some of the price in terms of the equipment. But again, the other factors are a big piece that have risen.
John: But you’re generally telling people, Brian, not to wait to see if interest rates come back down or something like that. I mean, interest rates could fall a little bit, but then the material costs could go back up again or the cost of labor or something like that. And it’s probably all going to kind of wash itself out. So you’re telling people now’s the time to go ahead and install solar, right?
Brian: Yes. Folks always ask, “When’s the best time?” And we say, “Yesterday, last year, five years ago was the best time.” But of course, if it makes sense. So folks do get hung up by seeing the interest rate, but if the monthly payment is still less than what you’re doing now, plus you’re getting other incentives to offset that cost further, your savings is really what you’re trying to do here.
Some folks are more environmentally motivated and consumers are like, “Listen, I just think it’s the right thing to do and I’m interested in the technology and I want to move towards electrification. I want this and I’m willing to pay the same or greater.” But that is not the general class. Like most folks want to see the bottom line have some type of savings. Again, we’re spoiled here in the Northeast where we are able to show monthly savings usually immediately with a viable solar site. So it really comes down to that.
And if, I think, for any of us that are waiting for interest rates to go back to all time lows, you’re probably going to wait a really long time. So if that’s a driving factor, seeing an interest rate and you’re going to make your decision based on that, I think it’s going to be really challenging for homeowners to overcome that. I think what we’re looking at is you’re paying this now and able to save this much and have a lower fixed payment as well with solar as opposed to not only a constantly rising, but a variable payment with the utility.
Buddy: Yeah. And there’s a cost of doing nothing. The cost of waiting is a real thing. If you’re losing out on the opportunity to save $100 every month because you’re waiting for an interest rate to change, there’s a point in time where it just makes sense to start saving now and to kind of accelerate that. And maybe your payback period, your ROI period pushes out a year. But what are you going to do? Wait a year and then maybe the interest rates change or go right now and start saving now? So yep.
Brian: Yeah. Us in New England, we are all consolidated under the same kind of utility infrastructure. So our rates go up depending on which utility, but it’s the winter. So National Grid for instance, just went up in November, Eversource utility is going up December, and you’ll see these on your following month’s bills. And then they do come down for the summer rates, but they don’t come down to where they’ve ever been prior. They come down off of the high of the year, which is winter.
So because we do make cleaner overall power than some of the other regions by not using coal and using a lot of natural gas, will we also heat our homes with natural gas? And that drives up the demand, therefore drives up the price. So that’s why we have a high winter spike in rates.
So what we find is consumers start to get their December and January bills and then they’re like, “Oh my goodness, I’ve got to look back at that solar project again because here’s a huge spike.” Last year was an all time record. In National Grid for instance, we were 28 cents a kilowatt-hour, October 31st, November 1st, 49 cents. So I mean record, huge increase. I mean, not quite double, but very significant again.
Buddy: Yeah, it’s hard for a family to budget for that sometimes, budget for that increase. It’s hard to just say, ‘Hey, let’s turn off some more lights. There’s a certain amount of electricity that we just consume.” And to Brian’s earlier point, we’re consuming more and more of that as the electrification happens, as folks are driving electric vehicles. So yeah, still a really awesome time to go solar.
About Greentech Renewables
John: All right. Well, that’s really great information guys. Buddy Starr, do you want to tell people a little bit more about Greentech Renewables?
Buddy: Sure, yeah. We’re a supply house. We service local solar companies just like Brian here on the call, and we’re fortunate to be part of this for our folks. But yeah, we offer distribution equipment solutions, finance solutions and design services.
John: All right. Well, that’s great to talk to you today, Buddy. Thanks.
Buddy: Thanks guys. Thanks for having me.
John: And as always, Brian, great to talk to you as well. Thanks for joining us.
Brian: Thanks a lot, John. Thanks. Thanks Buddy for joining us.
John: And for more information, you can visit the website at solarisrenewables.com or call 781-270-6555.