Evaluating the Impact of Residential Solar Contract Cancellations in the United States
- National Renewable Energy Lab. (NREL), Golden, CO (United States)
- Clean Kilowatts, LLC, Plymouth, MI (United States)
The residential solar photovoltaic (PV) market in the United States has grown rapidly in the last decade, from less than 50,000 systems installed in 2010 to over 420,000 systems in 2020 (Davis et al., 2021). The process for installing residential PV systems includes distinct phases and costs for customer acquisition, contract negotiation and signing, system design, and permitting and interconnection applications to the local city or county and utility. Most customers who sign contracts successfully install PV systems (Cook et al., 2021; Liao, 2020); however, some customers instead choose to terminate or cancel their contracts prior to install. These contract cancellations may result in lost time and higher “soft costs” (non-equipment costs) that must be borne by the installer. Depending on installer practices, higher soft costs for installers may ultimately contribute to higher prices for customers who successfully install PV systems. To date, few studies have attempted to estimate cancellation rates or assess their impacts on installed residential PV system costs. Customer decisions to cancel contracts or purchases are common across many consumer industries. Many states have consumer protection laws allowing “cooling off periods” for customers to cancel signed contracts without penalties. Beyond these laws, PV installer practices and contract terms vary. Some installers allow penalty-free cancellations up until install, while others may charge cancellation fees out of down payments or deposits. Contract terms may also differ depending on the type of contract and ownership model (i.e., customer-owned system, leased, or third-party owned). Similarly, customer contract cancellation rates (and subsequent costs) likely vary widely between installers, with installer size and business practices likely playing a role, along with other factors such as incentive programs, system costs, project timelines, and the permitting/interconnection process (Cook et al., 2021). In this report, we utilize a project-level data set of 199,665 residential PV-only contracts from four medium-to-large installers collected for NREL’s Solar Time-Based Residential Analytics and Cycle Time Estimator (SolarTRACE) (NREL, 2021). Installers of this size install at least 100 (medium installers) or at least 1,000 (large installers) systems per year. Together the installers in this data set cover about 10% of U.S. installs each year from 2017–2019 (based on Davis et al. (2021)). With this data, we evaluate cancellation rates and trends from contract signing to install. Additional data collected for SolarTRACE also allowed for cancellation rate comparisons with installers altogether covering 22%–34% of U.S. residential installs across these three years. Finally, we estimate installer spending at each phase of the process and calculate the potential cost impact of contract cancellations.
- Research Organization:
- Lawrence Berkeley National Laboratory (LBNL), Berkeley, CA (United States); National Renewable Energy Laboratory (NREL), Golden, CO (United States)
- Sponsoring Organization:
- USDOE Office of Energy Efficiency and Renewable Energy (EERE), Renewable Power Office. Solar Energy Technologies Office
- DOE Contract Number:
- AC02-05CH11231; AC36-08GO28308
- OSTI ID:
- 1866230
- Report Number(s):
- NREL/TP-6A20-80626; ark:/13030/qt0c03f3xx
- Country of Publication:
- United States
- Language:
- English
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