Making Energy More Affordable With Solar Power: An interview with Deep Chakraborty of Enact Solar – Renewable Energy Magazine
Can you introduce yourself and give a brief background to Enact Solar
After beginning my career in the automotive industry, developing new products and leading manufacturing launches for Chrysler, I moved to Roland Berger. Based in Germany, I led strategy on new energy technologies for large firms and startups. Much of the division’s focus was on electric vehicle (EV) transportation, charging, and battery storage startups. It was here I experienced first-hand the transformational impact renewable energy can have on lowering carbon emissions. After that, I joined one of Europe’s leading suppliers of solar energy systems, where I was offered the opportunity to co-found a subsidiary for the North American market.
In less than four years, I led the company from ground zero to annual sales of $30M in more than 25 US states. This opportunity and its success was a turning point for me and gave me confidence that I could find similar success in building a company of my own. In 2014, I quit my job to start Enact.
Upon founding Enact, our primary and enduring goal has been to simplify the journey from solar power design to cost savings. We launched Enact to simplify this customer experience and accelerate the clean energy revolution. The Enact founding team has decades of solar industry experience across three continents, helping us to focus and understand the industry gaps.
Our award-winning platform now allows customers, both homeowners and businesses, to simplify their entire solar and energy storage purchase, designed through Enact and delivered by local solar professionals. Enact also enables thousands of solar professionals to design, deliver projects, and manage assets for long-term performance.
What kind of presence do you have in California, and where else do you operate outside the state?
As of early 2023, California already has over 1 million buildings installed with Solar, 50,000 new customers a month and batteries now get paired with 30 percent of new solar installations every month. This market provided the initial launchpad for the growth of the Enact platform, spreading to a dozen additional US states.
Enact’s success story in the U.S. was quickly replicated in several new markets, such as the UAE, South Africa, and South Asia and Europe, and now cater to thousands of consumers and installers in over 25 countries worldwide, processing $1.5 billion in projects annually.
Apparently, California leads the way in the US when it comes to solar panel installation, but how diverse is this installation? Is it mainly the wealthier folks in the state who install solar panels or are there programs to expand installation in poorer areas as well?
Rooftop solar has, until recently, largely been limited to customers who own their homes, have higher-than-average incomes and credit scores. However in the past few years, solar adoption has started to spread to more moderate-income households, driven by falling solar prices, better financing options and, in many states, incentives aimed at expanding access in lower-income communities.
Nevertheless, the accessibility of a rooftop solar system is still largely dependent on how much it can earn for the household installing it. For many homeowners, a cash payment for a solar energy system is unrealistic and flexible financing options need to be made available to make solar energy more accessible.
Enact has partnered with many financing providers that enable most customers’ budgets to afford our systems. Customers can finance their installations through solar loans or leases, which is outlined step-by-step in our financial proposals and reviewed before the process begins.
What is the average cost for the installation of a solar panel system in California and what does that include in terms of components etc?
There is no one-size-fits-all answer for the price of solar panel installation. The market average for a 5kW system is $14,896 in California. Multiple factors affect the price, including the system size, the equipment, and the installer fee. Luckily, California has multiple financing options so that any homeowner or business can afford solar power installation, including paying in cash, solar loans, and power purchase agreements (PPA).
Unsurprisingly, the bigger the system, the more expensive the upfront cost. But the more expensive a system costs, the more credit the owner gets back on their federal tax bill, and also higher the savings from solar due to higher generation. Consumers can use their renewable energy credits (RECs) as an alternative source of income, as their excess solar-generated energy is sold and they earn cash-back to reinvest in their solar systems, their household goods, or however they see fit. Enact helps users design their solar system to optimize their roof space, helping them save by preventing situations such as purchasing too many or not enough solar panels.
What is the average payback time for someone currently investing in a solar panel installation?
While the upfront costs may discourage some prospective buyers, investing in solar in California is always a smart long-term investment. On average, systems pay for themselves anywhere between four to ten years. Users will have lower-cost electricity bills, are entitled to federal tax credits, and could be eligible for various state incentives that will help their solar systems pay for themselves.
A custom solar design can provide greater utility savings. Enact designs solar systems that optimally provide energy for a user’s needs and reduces their dependence on the power grid, lowering utility bills. Solar panels are usually warranted for a period of 25 years, and in that time, can save homeowners anywhere between $20,000 and $75,000.
What grants, loans or other financial assistance schemes are available in the state to help people with the cost of installation?
Along with multiple financing options, California has over 150 incentives to encourage its residents to install solar energy. With the cost of living crisis and raised interest rates, these incentives are able to help families and businesses install solar and save money on their energy bills, even during a period when people are feeling economic pressure.
The main incentive, which applies to the entire United States, is the Federal Solar Tax Credit. It is a dollar-for-dollar reduction on the amount of income tax a homeowner would otherwise pay to the Internal Revenue Service (IRS). Homeowners who are eligible are able to deduct 30 per cent of the installation cost of their solar systems. This means they can use the credit to fund the cost of the solar panels, solar equipment, installation labor, storage batteries, or sales tax that is paid.
With the cost of living crisis and raised interest rates, these incentives are able to help families and businesses install solar and save money on their energy bills, even during a period when people are feeling economic pressures.
How has the California Solar Mandate helped to expand solar panel installation in the region?
The California Solar Mandate has required new homes that are built in the state to have a solar photovoltaic (PV) system – the device that turns sunlight into energy – as its energy source. Along with generous tax incentives that encourage Californians to go green, this new regulation has caused a boom in the installation industry. Often, the process of installing for the customer is costly and lacks transparency. Enact helps with this by being present in every step of the process, with an optimized design that is explained to homeowners on expert consultations, a solar monitoring app, and your feedback considered throughout. As building and development continues in California, solar energy usage will grow in the state.
What are the main challenges facing solar panel installation in California and how are they being overcome?
The main challenge for most homeowners and small businesses is the upfront cost of solar. Because of the hefty price tag attached to installation, solar energy has disproportionately benefited high-income areas. However, multiple government incentives are becoming available that help low-income families reap the benefits of renewable energy.
Another challenge now is the new NEM3.0 policy change that is designed to have energy storage paired with Solar to improve saving. This makes the design and ROI estimation more complex, and Enact’s software really simplifies this not just for homeowners but also for solar professionals who need better tools.
Additional challengers can be physical issues such as roof space, shade, and inclement weather. Enact helps with this problem by mapping out the best solar system design for users’ homes, which accounts for spatial issues and blocked areas.
What part has Enact Solar played in driving forward installation in the state, particularly for poorer communities?
Enact has partnered with financing providers, including local credit unions, which provide multiple options to customers. Customers are provided with detailed walkthroughs on each financing option, including external options. Estimated upfront costs are transparent without hidden fees and contracts are flexible.
In addition to homeowners, Enact has also helped community non-profits and businesses adopt solar. Non-profits this year include temples and places of worship, who also face the same challenge of high electricity bills.
Solar installations are also unbiased, meaning the best option is chosen for the customer’s home and price point.
The PG&E justification for raising the rate was undergrounding power lines to make the power system more resilient in the face of increasingly ferocious wildfires. Just how dangerous have these wildfires become and what is the extent of the danger to California’s power systems?
Undergrounding power-lines is indeed necessary in high-density urban areas that face the risk of wildfires triggered by faulty power lines. In recent years, climate change has had noticeable effects on our lives, such as Tropical Storm Hilary this past August. Wildfire season is starting earlier and earlier in California, impacting wildlife and communities.
Unfortunately, the smoke from these fires does have an impact on solar power generation. In 2020, wildfire smoke cut solar power generation in California by 30 percent. However, solar panels are still resilient, and despite cloudy or smoggy skies, they are able to generate energy via sunlight that filters through.
That’s one of the reasons why battery storage is becoming more important, as they store the excess energy on sunny days to use during the evening, or for back-up power needs when the grid is out.
But the ultimate answer to the grid’s failing infrastructure is more solar (not less). The huge benefit of solar is that it is decentralized power, making communities more resilient. So even if the grid goes down, the consumer can stay unaffected.
In addition to improving grid resiliency, and decreasing home and business owners’ energy bills, Solar is also helping countries reach their net zero emissions targets outlined in The Paris Agreement. That is why it is so important incentives are put in place and financing options for all incomes are available – as more and more people switch to clean energy, climate change can be slowed down.
It seems the CPUC approved a 13 percent rate hike. What will that mean for low-income citizens and who will be most affected?
With over $30 being tagged onto people’s energy bills each month, low-income citizens will struggle to keep their lights, heating, and cooling systems on.
To keep bills low, switching to solar is a viable option for many homes, including low-income ones. California has incentives for disadvantaged communities (DAC-SASH program) that allows them to install solar at no cost.
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