Increasing Residential Solar Penetration

Marketing costs have become the largest driver of residential solar system costs, with customer acquisition costs averaging $0.81 per watt.

$0.81 is 26% of the $3.16 per watt that National Renewable Energy Laboratory estimates residential solar systems cost in 2022. 

Residential Solar Market Penetration

According to USAFacts  3.9 million homes have installed solar as of 2022, compared to 3.2 million as of 2021. 700,000 installs (22% YOY growth) is good for a nascent market. At the same time, 700,000 installs is less than 1% of America's 85 million detached homes. In comparison, 10% of homeowners renovate their kitchens each year. 

"With less than 1 out of 100 detached homes installing solar each year, it costs a lot to educate homeowners."

In the short term, Wood Mackenzie Power & Renewables expects marketing costs will stay elevated costs, while over the longer term, expect these costs to come down as the market moves from early adopters to the early majority. 

It's common for market costs to increase as new product categories move from the innovators (first 2.5% of market penetration) who seek out new solutions to early adopters. (next 13.5% of market penetration).

New product categories, especially those with high price points require significant consumer education and brand building. And, solar technologies are unique home improvement projects since they represent the first time in many decades that mainstream homeowners are considering a high-priced home improvement project in a brand-new product category.

Increasing residential Solar Adoption

Between once-in-a-generation incentives, solar cost decreases, and higher quality brand building & education, expect marketing acquisition costs to decrease in the years to come, reducing what has become the biggest driver of solar system costs.