TODAY’S STUDY: A CLOSE LOOK AT THE SOLAR MARKETPLACE

Solar Marketplace Intel Report H2 2014 – H1 2015

September 2015 (EnergySage)

Introduction

The residential solar market is a vibrant $7 billion industry comprised of 3,000+ solar installers and hundreds of equipment manufacturers and financing companies. Consumers today have access to a wide range of options that make it easy for them to find the best solution for their needs. As a result, about 800,000 homes have already installed solar.

Every day, thousands of solar shoppers enter the EnergySage Solar Marketplace and interact with hundreds of high quality, pre-screened solar installers and financiers across the country. The sum of their interactions results in millions of data points generated by solar quotes, transactions, consumer behaviors, and much more. Our Solar Marketplace Intel Report™ is a one-of-a-kind report that provides a glimpse into the dynamic solar industry, helping the market become more transparent and efficient. We encourage you to visit www.energysage.com/data for additional data and insights, as well as results of consumer and installer surveys conducted by EnergySage.

Leading research & academic institutions (e.g., Lawrence Berkeley National Laboratory [LBNL], National Renewable Energy Laboratory [NREL], Solar Electric Power Association [SEPA], and the University of Texas) have leveraged Marketplace data for their own research and reports. Thoughts from the CEO & Founder Hello, and thank you for your interest in EnergySage’s first Solar Marketplace Intel Report™ covering the twelve month period from July 2014 – June 2015 (H2 2014 – H1 2015).

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EnergySage Solar Marketplace data revealed some interesting insights into the solar market:

• Solar continues along affordability trend. Our data confirms the overarching industry trend that solar is becoming increasingly affordable for American households. In H1 2015, consumers paid on average $3.79/watt in gross cost and achieved payback in just 7 ½ years. The cost ranges from $3.21 to $4.37 for standard to high efficiency equipment packages. By shopping around, consumers can save thousands of dollars and select the equipment package that offers them the best value.

• Solar is meeting majority of electricity needs for homeowners. Solar is helping homeowners generate almost 85% of their electricity needs in 2015. The average 7.9-kilowatt (kW) system generates about $2,000 worth of electricity each year.

• Online solar shoppers increasingly choose to own their system, rather than lease. 90% of EnergySage’s solar shoppers elected to own their system, either by paying in cash or financing with a solar loan, rather than sign up for a third-party lease or PPA. This is significantly higher than the 40% of solar shoppers nationwide that choose to own their system.

• Increasing fragmentation of solar equipment and financing providers. There are now over 40 solar panel brands, more than 20 inverter brands and nearly 40 solar loan providers being offered to solar shoppers within the Marketplace. Consumer options grew by 20% from the second half of 2014 to the first half of 2015…

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National Insights

New data from the EnergySage Solar Marketplace illustrates that solar is increasingly affordable for homeowners and businesses. The upfront costs of installation are continuing along the downward trend exhibited in previous years, and more solar shoppers in the EnergySage Solar Marketplace in H1 2015 chose to buy their solar energy systems outright, rather than lease them from a third party owner.

Upfront installation costs are decreasing The average cost per watt for a new system quoted to EnergySage solar shoppers dropped by $0.07 to $3.79 in 2015. Overall, shoppers received quotes ranging from $3.21 to $4.37 per watt. The national average gross cost of installation quoted dropped by 6%.

More solar shoppers are buying their systems outright 90% of shoppers that went solar via EnergySage own their solar energy systems, as compared to a nationwide average of just 40%.

Payback period is steady for solar shoppers The average payback period for shoppers held steady in 2015 at 7.5 years. The payback period for the average solar customer increased from 7.7 years to 8.1 years…

[Regional Insights]…

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Manufacturer: Market Share

EnergySage compiled data on the panel and inverter brands submitted in quotes within the EnergySage Solar Marketplace. Overall, our analysis indicates increasing fragmentation in the solar energy hardware market. In the second half of 2014 there were 36 panel brands and 20 inverter brands bid out. By the first half of 2015 those numbers had increased to 43 panel brands and 24 inverter brands – representing a 20% increase for both.

Top panel manufacturers are losing market share In H2 2014, the top 5 panel manufacturers held a combined 70% market share in the EnergySage Solar Marketplace. By H1 2015, they saw their market share diminish to a combined 63% – a 7% drop.

Inverter manufacturers maintain their hold The top 5 inverter manufacturers featured in quotes on the EnergySage Solar Marketplace still hold the vast majority of market share: 94% combined share in H1 2015, as compared to 93% in H2 2014.

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Manufacturer: Equipment Pairing (Q2 2015)

In the second quarter of 2015, EnergySage evaluated all of the quotes submitted by installers to solar shoppers in the EnergySage Solar Marketplace in order to identify the most common panel-inverter pairings. Overall, our analysis found that installers are not committed to a specific panel or inverter, instead choosing to pair different brands of panels with a variety of inverters.

Panels are paired with a diversity of inverter brands The majority of panel brands were paired with at least 4 inverter types. 10 of the top 12 panel manufacturers were paired with 4 or more inverter brands; SolarWorld, the most commonly quoted brand, was frequently paired with 6 different brands of inverters.

While the solar panel market is growing more crowded, inverter market share is unchanged The vast majority of inverters quoted (94%) were spread across only five panel brands, and more than 80% of quotes included either SMA America, Enphase Energy, or SolarEdge Technologies.

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Financier: Market Share and Loan Quantity

EnergySage analyzed quotes from the EnergySage Solar Marketplace during the 12-month period of July 2014 to June 2015 to identify the top loan options offered to solar shoppers.

Shoppers are receiving multiple options for financing Nearly 40% of all installers in the EnergySage Solar Marketplace offered financing options from more than 1 provider. Installers in the Marketplace offered quotes featuring as many as 7 different companies, signaling that they are not loyal to a single loan provider.

Shoppers are receiving multiple options for financing A full 90% of all loans offered to solar shoppers through the EnergySage Solar Marketplace were sourced from just 1 of 10 financing companies, but the market is diverse: the remaining 10% of loans were sourced from an additional 28 companies.

Loan providers vary in size and specialty The majority of loans quoted to solar shoppers – approximately 70% – are from are from national organizations specializing in home improvement and renewable energy financing. However, shoppers also received quotes featuring loans from regional banks and credit unions, illustrating that solar shoppers aren’t limited to specialty offerings.

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