Now that the price of solar hardware has steadily declined, the remaining costs associated with solar PV installation come from soft costs. In fact, customer acquisition costs have been cited as the single largest soft cost. According to SunRun, sales and marketing alone constitute over 25% of residential installation costs. How can the solar industry overcome these challenges? Maybe it should take a look at Nebraska’s Dollar and Energy Saving Loan Program.
Nebraska’s Energy Office founded the Dollar and Energy Saving Loan Program around 1990, using capital from the 1982 oil overcharge funds and the 2009 American Recovery and Reinvestment Act. The program provides low interest rate loans (2.5-3.5%) for residential, commercial/industrial, and agricultural energy efficiency, renewable energy, and waste management projects throughout Nebraska. Since its inception, the Dollar and Energy Saving Loan Program has financed a variety of projects worth $271.29 million. Also, thanks to the program’s low default rate of 0.008%, more than $125.13 million of the $271.29 million came from revolving funds. Despite regional population declines and worsening rural flight in Nebraska, the Dollar and Energy Saving Loan Program continues to transform the energy market in every one of Nebraska’s 93 counties.
This program is one of the first to consistently acquire customers from every county in the state with nearly no marketing or publicity costs. The average price of residential electricity in Nebraska is well below the national average, yet more than 93.4% of the energy efficiency projects funded by the Dollar and Energy Saving Loan Program are residential.
So we wonder – what makes these programs so attractive to customers across Nebraska? One would think that in states where electricity prices are even higher than those in Nebraska, a program such as this one would be even more desirable to ratepayers. Nonetheless, customer acquisition remains one of the greatest soft costs nationwide.
Check out this map of all the projects funded by the Dollar and Energy Saving Loan Program across the state:
So, how do they do it? What can other states do to open up their clean energy markets in the way Nebraska has?
A February 14th EnergyBiz article by Ken Silverstein outlines some of the common arguments for and against Green Banks given Obama’s recent interest in using those institutions to facilitate clean energy expansion. CGC’s Vice President, Ken Berlin, responds to skeptics by addressing the benefits of leveraging federal funds to make renewable energy more affordable to the consumer.
Silverstein sums up the discrepancy in stating that “Berlin and the president are emphasizing that other countries are investing in their clean tech sectors and if the United States fails to respond in-kind, it will get left behind. That view, though, is getting met head on by one that says that the risks are too great and that the safer bet is to let free markets reign.”
What side of the argument do you fall on?
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