What Is The ROI Of A Granite Countertop?
Stop saying you can’t sell solar thermal systems because of
high cost and low return on investment.
In my position as the training manager at the Wales-Darby Learning Center in Warren, N.J., I conduct classes on many subjects, but my favorite subject may be “Introduction To Thermal Solar Heating.” Solar always gets a big crowd and the subject is fun; and anyone who has attended one of my classes knows I always have fun.
There was a glitch, however, in my early version of the class. I would be cruising along, feeling I was getting my point across. The attendees seemed to be pleased and ready to take on their first solar project when, just before we ended the evening, it all came to an ugly end - someone would inevitably ask, “What is the return on investment?”
Initially, I was unprepared for the reaction from the audience when they were told it wasn’t good, not good at all. It was as if I evacuated the classroom of all oxygen; you could hear them gasping for air!
I allowed this to happen two or three times before I said, enough!
Now I end each solar class with a real-life residential domestic hot water example based on what I believe to be real usage of an American family. (Most solar equipment is manufactured in Europe, where hot water is still considered a luxury in many places and Europeans’ daily usage is much less than Americans’ usage.)
My average American home example includes: four people; two full baths; a dishwasher; and a clothes washer. The total domestic hot water requirement for this home equals 90 gallons per day. (These numbers come straight from A.O. Smith sizing data, which is accepted and used by engineers throughout the country, as well as its competitors.)
After we establish this domestic water usage criteria, we then design a real thermal solar system to attempt to get the highest “solar fraction” - the solar system yield divided by the total energy requirement.
The following thermal solar system will do 71 percent of our sample home’s requirement: a Viessmann Combi package No. 2 and one additional 30-tube array. The total material list price is $13, 536.
As a less expensive option, this system will do 70 percent of the home’s requirement: a Viessmann Combi Package No. 1; two additional flat-plate panels; and a 120-gallon tank instead of the standard 80 gallon. The total material list price for this system is $10,021.
Then I nip the return-on-investment argument in the bud by discussing the ROI of a Toyota Prius, which has an MSRP of $23,500.
Our thermal solar system saved 1.55 tons of CO2 in one year. The
Prius can’t claim to save one ton; Toyota
tried to do so and could not prove it, so it had to retract the statement.
What is the return on investment of a Prius? It doesn’t
exist; the Prius depreciates the second it is driven off the dealer’s lot.
The Prius costs $3.25 per mile driven over a lifetime of 100,000
miles (the expected lifespan of a hybrid). A Hummer costs a more fiscal $1.95
per mile over an expected life of 300,000 miles. (The Hummer comparison is made
with tongue planted firmly in cheek, but there is a study done by CNW Marketing
Research written by very smart people that attempts to substantiate the
claim.)
The annual gas savings of a Prius compared to a Honda Civic is $503.
The Honda Civic MSRP is $15,010, $8,590 less than the Prius. It would take 17
years to make up the difference in price based on gas savings.
Are you getting the point yet?
Upfront cost and return on investment are not what drives this market! More than 350,000 hybrid cars were sold in the United States in 2007. This is your target audience.
If each person who bought a hybrid in 2007 bought our sample solar system, there would have been 22.4 million square feet of collectors sold that year.
Stop saying you can’t sell solar systems because the price is too high and the return on investment is not there - hybrid cars are sold without any possibility of payback and at a significantly higher cost than a comparable nonhybrid.
I believe the issue of ROI is being driven by potential installers and not the general public. Established thermal solar equipment installers know how to sell these systems. Send your potential solar installers to me for a little re-education!
One of Wales-Darby’s leading manufacturers, prior to entering the solar market, commissioned a study conducted by a prominent independent marketing firm asking home-owners who had already purchased a residential thermal solar system what was the single most important motivating factor of the purchase. The No. 1 answer was “anger”; yes, anger! These people were angry at the gas pump … angry at their utility bills … angry at dependency on foreign oil. Their solution was to make a difference in their own world by installing a thermal solar system to reduce their dependency on volatile energy sources.
In New Jersey, per the recent enactment of the Residential Development Solar Energy Systems Act, when a homebuyer contracts for the purchase of a new unit within a residential development of 25 or more units, the builder must provide an option for the purchase and installation of a solar energy system. Wow! What an opportunity to align yourself with the local builders in your market and be their “solar guy”!
At the end of a class, after I gave my Prius diatribe, I had a student ask the rhetorical question: “What is the return on investment of a granite countertop?”
I’m with ya, brother!
In my position as the training manager at the Wales-Darby Learning Center in Warren, N.J., I conduct classes on many subjects, but my favorite subject may be “Introduction To Thermal Solar Heating.” Solar always gets a big crowd and the subject is fun; and anyone who has attended one of my classes knows I always have fun.
There was a glitch, however, in my early version of the class. I would be cruising along, feeling I was getting my point across. The attendees seemed to be pleased and ready to take on their first solar project when, just before we ended the evening, it all came to an ugly end - someone would inevitably ask, “What is the return on investment?”
Initially, I was unprepared for the reaction from the audience when they were told it wasn’t good, not good at all. It was as if I evacuated the classroom of all oxygen; you could hear them gasping for air!
I allowed this to happen two or three times before I said, enough!
Now I end each solar class with a real-life residential domestic hot water example based on what I believe to be real usage of an American family. (Most solar equipment is manufactured in Europe, where hot water is still considered a luxury in many places and Europeans’ daily usage is much less than Americans’ usage.)
My average American home example includes: four people; two full baths; a dishwasher; and a clothes washer. The total domestic hot water requirement for this home equals 90 gallons per day. (These numbers come straight from A.O. Smith sizing data, which is accepted and used by engineers throughout the country, as well as its competitors.)
After we establish this domestic water usage criteria, we then design a real thermal solar system to attempt to get the highest “solar fraction” - the solar system yield divided by the total energy requirement.
The following thermal solar system will do 71 percent of our sample home’s requirement: a Viessmann Combi package No. 2 and one additional 30-tube array. The total material list price is $13, 536.
As a less expensive option, this system will do 70 percent of the home’s requirement: a Viessmann Combi Package No. 1; two additional flat-plate panels; and a 120-gallon tank instead of the standard 80 gallon. The total material list price for this system is $10,021.
ROI Comparisons
This is where I hit the switch on the 100 horsepower exhaust fan I have installed in my classroom and get the guys choking - I explain to them that it costs somewhere around $500 or less per year to heat that 90 gallons per day with typical conventional water heating equipment (obviously, this varies with oil and gas prices, which are volatile right now). It should also be noted that this same solar system can, and should be, used for supplemental space heat as well, which we are not throwing into the equation here.Then I nip the return-on-investment argument in the bud by discussing the ROI of a Toyota Prius, which has an MSRP of $23,500.
Are you getting the point yet?
Upfront cost and return on investment are not what drives this market! More than 350,000 hybrid cars were sold in the United States in 2007. This is your target audience.
If each person who bought a hybrid in 2007 bought our sample solar system, there would have been 22.4 million square feet of collectors sold that year.
Stop saying you can’t sell solar systems because the price is too high and the return on investment is not there - hybrid cars are sold without any possibility of payback and at a significantly higher cost than a comparable nonhybrid.
I believe the issue of ROI is being driven by potential installers and not the general public. Established thermal solar equipment installers know how to sell these systems. Send your potential solar installers to me for a little re-education!
One of Wales-Darby’s leading manufacturers, prior to entering the solar market, commissioned a study conducted by a prominent independent marketing firm asking home-owners who had already purchased a residential thermal solar system what was the single most important motivating factor of the purchase. The No. 1 answer was “anger”; yes, anger! These people were angry at the gas pump … angry at their utility bills … angry at dependency on foreign oil. Their solution was to make a difference in their own world by installing a thermal solar system to reduce their dependency on volatile energy sources.
In New Jersey, per the recent enactment of the Residential Development Solar Energy Systems Act, when a homebuyer contracts for the purchase of a new unit within a residential development of 25 or more units, the builder must provide an option for the purchase and installation of a solar energy system. Wow! What an opportunity to align yourself with the local builders in your market and be their “solar guy”!
At the end of a class, after I gave my Prius diatribe, I had a student ask the rhetorical question: “What is the return on investment of a granite countertop?”
I’m with ya, brother!
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