Do Environmental Preferences or Peer Pressure More Affect if People Go Solar?

Is it "Keeping up with the Jones," predisposition to sympathy with environmental concerns, like owning a Prius or electric vehicle, or marketing by solar companies that is driving adoption? A webinar recently put on by Agrion explored recent research exploring why and invited Sungevity's Danny Kennedy to speak about how their company is revolutionizing delivery of solar energy systems. In the webinar, NYU Stern School of Business Assistant Professor of Marketing Bryan Bollinger presented preliminary findings of his solar adoption research "Environmental Preferences & Peer Effects in Diffusion of Photovoltaic Panels," a study he co-authored with researcher Kenneth Gillingham. Using California's San Francisco Bay Area as a study radius, Bollinger's research explored possible reasons for a very visible clustering of PV installations shown clearly in a two slides:

 SF Bay Area Installation Clusters: 2001-2003

SF Bay Area Installation Clusters: 2001-2003

 SF Bay Area Installation Clusters: 2001-2006

SF Bay Area Installation Clusters: 2001-2006

Bollinger and his colleague poured over CSI data from 2001-2009 covering 34,110 installations in order to analyze for possible correlations both within complete zip codes and then on a street-level basis. Some top-level findings include:

  • The average time between adoptions in a given zip code was 64 days with a 21 day median.
  • When crossing demographic information with a zip code, peer influence was clearly influential amongst populations with higher median home values.
  • Perhaps somewhat shockingly, a trait that generally shows to lead to solar adoption, hybrid vehicle ownership, did not to carry much peer influence in further solar adoption.
  • As with other studies, populations  that were highly educated and over 65 were shown to be adopters.

So far, the clustering behavior does seem to be influenced by both peers and environmental leanings, but with peer leanings showing far greater statistical relevance with 1% driving a 1% decrease in time until the next adoption. Peer effects were also shown to correlate with specific contractors especially within a small geographic area, such as a street. This shows that companies that rely on word of mouth/social networking, who reward customer loyalty, and who provide excellent customer service will win business.

Strangely, great environmental leanings showed to decrease the peer effect. Why is this? It's unclear, but perhaps those with high environmental leanings were more self-motivated in their purchase decisions and lifestyle choices and less likely to succumb to peer influence. We will have to see with the next iteration of the study!

After Bollinger's presentation, Danny Kennedy presented a case study on how Sungevity is using the "solar as a social network" principle to drive its business and move toward mass-market adoption. While virtualizing much of the purchasing procedure and positioning itself as "the Netflix of solar," the business is seeing its success in its services-oriented solar leasing program.  Kennedy recounted that 50% Sungevity's sales last month were due to the leasing program.

Kennedy predicted that the continued growth of the residential industry would be driven by leasing or other third-party ownership models. He likened traditional solar ownership to purchasing a cell phone and paying for all the calls you would ever make up front. While traditional ownership might still be a better option for most people, he hypothesized that 3rd party ownership models would take solar to the mainstream, as evidenced by Sungevity's explosive growth and entry into the Northeast markets.

The take away: Start driving customer loyalty programs, neighborhood marketing, and ride the natural peer influence wave to help catapult your solar business to success!

Visit the webinar event page for more information.