More homeowners are installing solar, but 2026 brings a significantly changed financial landscape. The federal residential solar tax credit, a cornerstone of solar economics for two decades, expired on December 31, 2025. At the same time, panel technology has advanced and prices have reached near-historic lows. Here is what you need to know before making a solar investment this year.
The most consequential shift for anyone considering rooftop solar in 2026 is the expiration of Section 25D, the Residential Clean Energy Credit. That 30% credit, which was worth up to $9,000 on a $30,000 system, is no longer available for home solar installations. The One Big Beautiful Bill, signed July 4, 2025, accelerated the phase-out that the Inflation Reduction Act had originally extended through 2034. Homeowners who installed and claimed the credit before year-end keep their savings.
However, one federal credit remains available through at least 2027. The Clean Electricity Investment Credit (Section 48E), the commercial counterpart to the expired residential credit, was preserved in the One Big Beautiful Bill. It is available to businesses that own solar installations, including systems installed on residential rooftops. A solar company that owns a system on your roof can claim a 30% tax credit on its investment and pass a portion of that value to homeowners through lower pricing on leases, power purchase agreements (PPAs), or prepaid arrangements.
Under IRS rules, a solar company must retain genuine ownership of the system for at least five years. It cannot simply transfer ownership on day one and pocket the credit. This has given rise to offers referred to as prepaid PPA and “deferred ownership” products. You pay upfront and take full title to the system after the required holding period, which is typically six years. Providers including Tesla, which launched its 25-year solar lease with a year-five buyout option in October 2025, have recast their leasing offers to meet this IRS requirement. Utility Dive reporting confirms that TPO providers will continue to offer pass-through credits for leasing agreements in 2026 and 2027.
State and Local Incentives Step Into the Federal Gap
While the federal residential credit is gone, state programs offer meaningful savings in many markets. Many of these programs run on a block system, which is worth understanding before you shop. The state sets aside a fixed pool of money for each region, called a block. When that pool runs out, a new block opens, but at a lower rebate rate. This means the longer you wait, the less you’ll receive. Applying early, before your regional block fills, locks in the higher rate.
The best states for solar incentives in 2026 include:
- New York: The NY-Sun program, run by the state energy authority NYSERDA, cuts your installation bill upfront. Your installer simply charges you less, so there’s no rebate application to file and no waiting for a check. How much you save depends on where you live: homeowners in New York City and surrounding areas served by Con Edison get about $0.40 per watt off their system cost, while those upstate get around $0.20 per watt. Income-qualified households get $0.80 per watt regardless of region. On top of the rebate, New York offers a state income tax credit worth 25% of your system cost, up to $5,000, plus exemptions from both sales tax on equipment and property tax on the added home value.
- New Jersey: The Successor Solar Incentive program pays you for every unit of electricity your panels produce, for 15 years after installation. The current rate is about $85.90 per megawatt-hour — one megawatt-hour equals 1,000 kilowatt-hours, roughly what a typical home uses in a month — an you will receive payments every three months. A standard 8 kW rooftop system earns around $825 per year this way, or about $12,000 over the life of the contract. The rate is set to rise to $95.23 for the 2026–27 program year. Your installer handles the initial registration, but you’ll need to log your system’s monthly production in the state tracking system to keep the payments coming. New Jersey also offers full retail-rate net metering, meaning the utility credits your bill at the same rate you’d pay for grid electricity, and solar equipment is exempt from the state’s 6.625% sales tax.
- Massachusetts: The state’s SMART 3.0 program pays solar owners a fixed rate of $0.03 per kilowatt-hour produced over 10 years. There’s a catch. The program calculates your actual payment by subtracting your current utility rate from that base, and Massachusetts electricity rates have risen high enough that solar-only homeowners currently receive little to nothing through SMART. Where the program still delivers real money is when you pair solar with a battery; adding storage unlocks a bonus payment that can bring your total SMART rate to around $0.05 per kilowatt-hour, worth roughly $500 per year for a typical system. Low-income households receive double the base rate. Think of SMART as a strong reason to add a battery to your solar system, not as a standalone solar rebate.
- Maryland: Maryland used to offer a flat $1,000 grant to any homeowner who installed solar, but that program ended in June 2025. Its replacement, the Maryland Solar Access Program, is more generous but limited to income-qualified households. It pays $750 per kilowatt of installed capacity, up to $7,500. All Maryland homeowners, regardless of income, still benefit from three solid incentives: net metering that credits excess solar production at the full retail electricity rate with no expiration on rollover credits; an active market for Solar Renewable Energy Certificates (SRECs) currently paying $60–$80 per megawatt-hour of production; and exemptions from both state sales tax on equipment and property tax on the added home value from the installation.
- Oregon: The Energy Trust of Oregon provides two levels of rebate depending on your income. Most PGE and Pacific Power customers receive a flat $2,500 off their system cost at the point of sale; your installer applies it directly, so you never pay the full price upfront. If your household income falls below the program’s threshold (a family of four earning up to roughly $120,000 often qualifies), you can move into the Solar Within Reach program, which pays $0.90 per watt up to $5,500, meaning a typical 7 kW system could receive the full $5,500, covering a substantial share of the total cost. Oregon is one of the better states for solar economics in two additional ways. First, the state has no sales tax, so you pay nothing extra on panels, inverters, or installation labor, a savings of several hundred to over a thousand dollars compared to most states. Second, the added value your solar system brings to your home is excluded from your property tax assessment, so your tax bill won’t rise after installation. Only customers of Portland General Electric (PGE) and Pacific Power qualify for Energy Trust rebates. If you’re served by a different utility, these programs don’t apply, and Oregon’s incentive picture looks considerably thinner.
- Illinois: Illinois has one of the most distinctive solar incentive structures in the country through the Illinois Shines program. Most state SREC programs pay you a small amount each year for the electricity your panels produce. Illinois flips that model. Instead of annual payments, the program calculates how many energy credits your system is expected to generate over its first 15 years, then pays the estimated value of all of those credits upfront, in a single payment. For most homeowners, this works out to between $7,000 and $11,000, applied as a discount on your system cost. The payment goes first to your installer, who is required to pass the full amount on to you — either as an upfront reduction in what you pay, or as a separate check. Because of administrative processing, the payment typically arrives within one to two years of installation rather than at the moment you sign your contract. Make sure your installer spells out exactly how and when you’ll receive the money before you commit.
- South Carolina: Offering one of the most generous state-level solar tax credits in the country, 25% of your total system cost, with a maximum credit of $35,000. Unlike a rebate, which reduces what you pay upfront, a tax credit reduces what you owe the state at tax time, dollar for dollar. On a $25,000 system, that’s $6,250 back against your state income tax bill. The state caps the annual payout at $3,500 per year. If your credit exceeds that amount, you carry it forward and to subsequent years until the full credit is used. South Carolina also offers full retail-rate net metering, meaning the utility credits your bill at the same rate you’d pay for grid electricity when your panels send excess power back to the grid.
Property tax exemptions, which prevent your assessment from rising after you add solar, and sales tax exemptions on equipment are available in many additional states. Use the DSIRE database to find what’s current in your state, as programs change.
2026 Solar Prices: Near Historic Lows, Without Federal Help
As of early 2026, the national average installed cost for a residential system runs approximately $2.50–$3.50 per watt before incentives, according to EnergySage’s marketplace. Actual prices vary significantly by region, and many states offer additional tax credits.
Cons
No Federal Tax Credit for Purchased Systems
In past years, the 30% federal credit was often the deciding factor that made solar financially compelling. A $25,000 system effectively cost $17,500 after the credit. That leverage is gone for homeowners who buy their systems with cash or a loan in 2026. The financial case for solar is still compelling in many markets, particularly states with high electricity rates, but payback periods are roughly 2–4 years longer without the federal subsidy.
Solar Recycling Infrastructure Remains Underdeveloped
The state of solar panel recycling in the U.S. has improved marginally but remains inadequate for the volume of panels approaching end-of-life. Most residential panels installed in the 2000s and early 2010s are now 15–20 years old and approaching their rated lifespan. The SEIA’s PV Recycling Program is a voluntary industry effort, but its capacity does not match the growing volume of end-of-use panels.
Net Metering Policies Are Eroding in Key States
Net metering, a billing mechanism that compensates solar owners for excess electricity they give back to the grid, is available in approximately 38 states and Washington, D.C., but the terms are increasingly unfavorable. California’s Net Billing Tariff, referred to as NEM 3.0, took effect April 15, 2023, and reduced consumer generation rates by roughly 75%. Arizona, Indiana, and Nevada have made similar moves toward lower rates. Understanding your utility’s specific net metering structure is now more important than ever when evaluating whether solar makes financial sense. Ask prospective installers to model your savings under the actual export rate your utility will pay, not just the retail electricity rate.
Solar Batteries Remain a Significant Added Cost
Home battery storage is still a significant investment even as prices have gradually come down. The most popular options, including the Tesla Powerwall 3 and the modular Enphase IQ Battery 5P, work very differently, and so do their costs. If you want enough battery capacity to run a typical home through a full night without solar input, you need roughly 25 kWh or more, so plan on paying $25,000 to $35,000 for the installed system regardless of brand. That nearly doubles the cost of a solar-only system for many households.
The Powerwall 3 is a single unit that holds 13.5 kWh of energy and includes a built-in solar inverter, making it an all-in-one solution for most homes. Expect to pay $12,000 to $17,000 after installation. The Enphase IQ Battery 5P is designed differently to store just 5 kWh, and they stack. A single unit runs about $8,500 installed and provides enough to power essential systems during an outage. But most homes need two to four units for meaningful coverage, pushing costs to between $15,000 and $30,000 depending on how much backup capacity is needed. This is the most flexible system because you can start small and add units over time.
One way to improve the financial case for a battery is to enroll in a Virtual Power Plant (VPP) program, where your utility pays you for occasionally drawing on your stored energy during high-demand grid periods. These programs are available in roughly half of U.S. states, though the compensation varies enormously. Some programs offer modest bill credits, while others, like Massachusetts’ ConnectedSolutions program, pay between $233 and $275 per kilowatt of enrolled battery capacity per year.
Check with your utility, not your state, to take the first step toward joining a VPP. The Clean Energy States Alliance’s VPP program page is the most current source of information directory.
Tariffs Have Pushed Equipment Costs Higher
Import tariffs on solar panels, particularly from China, Cambodia, Vietnam, and Malaysia, have added upward pricing pressure that partially offsets the efficiency gains from technology improvements. Equipment prices are not as low as they would be in an unrestricted global market.
Pros
Panel Technology Has Advanced Substantially
The industry has undergone a major technology transition since 2019. The dominant PERC (Passivated Emitter and Rear Cell) technology has given way to N-type TOPCon and HJT panels, which achieve 22–24% efficiency in commercial production. Back-contact (IBC and ABC) panels now approach 25%. This matters practically: higher efficiency means fewer panels are needed to generate the same output. The technological shift has not added cost. TOPCon panels are competitive with older PERC pricing.
Community Solar Continues to Expand Access
For renters, those with shaded properties, or homeowners who prefer not to deal with installation, community solar farms remain a viable alternative. Subscribers receive credits on their utility bills for their share of the farm’s production, typically at a 5–15% discount to retail electric rates. The community solar market has matured considerably since 2021, with strong programs now available in New York, Illinois, Massachusetts, Minnesota, Colorado, Maryland, Maine, and New Jersey. Some programs offer $0 down with month-to-month cancellation.
Solar Remains a Sound Long-Term Investment in the Right Markets
Despite the loss of the federal tax credit, solar continues to pencil out in many markets, driven by steadily rising utility rates. Residential electricity prices have increased in 44 of 50 states over the past three years. States with rates above 20 cents/kWh — including California (30+ cents in many areas), Massachusetts, Connecticut, New York, and Hawaii — still offer payback periods of 6–10 years even without the federal credit, with substantial savings over a 25-year system life.
Solar makes the strongest financial sense when: your roof is south- or southwest-facing with minimal shading; your monthly electricity bill exceeds $150; your state has meaningful incentives or a strong net metering policy; and you plan to stay in your home for at least 7–10 years. Tools like EnergySage and the National Renewable Energy Laboratory’s PVWatts calculator can help you model site-specific returns before committing to a quote.
More Reputable Installers and Better Warranties Than Ever
The residential solar installation market has continued to mature. Most major manufacturers now offer 25-year product and performance warranties as standard; Maxeon backs its panels with a 40-year warranty. There are typically several well-reviewed local and regional installers in most markets, which helps keep prices competitive. A labor warranty, which covers defects in installation workmanship, is typically offered by the installer rather than the manufacturer, so installer financial stability matters—you want them to be there later, if problems arise.
Get at least three competing bids and compare cost-per-watt figures to evaluate quotes fairly across different system sizes. Verify installer credentials through NABCEP certification and check recent reviews on SolarReviews.
Solar Is Still The Better Option 2026
Despite 2026 being a genuinely mixed year for home solar economics, equipment costs are at or near historic lows, panel technology is better than ever, and solar remains a compelling long-term investment in high-electricity-cost markets. But the loss of the 30% federal tax credit is a real setback for homeowners, effectively adding back years to the payback period.
The affordability math depends on where you live, your electricity costs, your state’s incentive programs, and your financing approach. In states like New York, New Jersey, Massachusetts, Maryland, Oregon, and South Carolina — where strong state programs partially replace the federal credit — solar economics remain solid. In states with low electricity rates and minimal state incentives, the case is harder to make at 2026 prices.
Before signing any contract, use the DSIRE database to identify all state and local programs available to you, get at least three installer quotes, and understand your utility’s actual net metering or export compensation terms. The decision to go solar is site-specific national averages are a starting point, not the answer.
Editor’s Note: Originally published on March 25, 2021, this article was updated in March 2026 to reflect current pricing, tax credit changes, and technology.
The post Should You Go Solar In 2026? appeared first on Earth911.
https://earth911.com/eco-tech/solar-pros-and-cons/
Last winter, we kept our house at 60 degrees and our electric bill was STILL $280. I’ve been interested in solar for a long time, but on the long list of house projects (especially when you’re restoring a 200 year old house on the historic registry) some are more pressing than others.
But with a few of those major projects wrapping up, and a daunting bill before me, I figured now was the time for a quick google search on solar panels, and let me tell you….. It can be very overwhelming.
Figuring out the rules (cough, cough, historic society), incentives or rebates if applicable, how much it would cost, how much we could save, etc. felt a little like a part-time job. But, one website made it really easy to compare things, and I am happy to be partnering with Aurora Solar to share that site with you.
Because I think you should be able to easily run the numbers on your house without a lot of hassle!
This post is sponsored by Aurora Solar, but all thoughts and opinions are my own.
If you’ve ever gotten a solar quote, there’s a good chance that Aurora Solar was involved. Aurora was founded in 2013 after its co-founders spent seven months trying to design a solar energy system using a patchwork of different tools.
Afterall, designing a solar system shouldn’t be harder than actually installing one. So they built software specifically for solar professionals. Today, more than 7,000 solar organizations use Aurora, and more than 20 million solar projects have been designed using the platform. They are also the largest solar software provider in the world. Their software is used by roughly 80% of the top 75 residential solar companies in the U.S.
All of this tech has been primarily used by professional installers to map your roof and then create a proposal, but now Aurora is offering this tech to us to help compare quotes.
So instead of having to call a bunch of different installers, I could use the Aurora Solar Marketplace to understand my solar potential, compare estimates, understand my possible savings, look into battery storage and other home electrification incentives, and map out different financing options.
1. know how much electricity the system will actually produce
Before you even get into the price, make sure you understand what you’re actually being quoted.
Two solar systems can have very different prices because they may not be the same size or produce the same amount of electricity. A cheaper system might simply have fewer panels and offset less of your electric bill.
With Aurora, you can compare solar estimates and see the system size, energy production, and how much electricity the system should offset.
You can also upload your utility bill to get a solar estimate based more closely on your actual energy usage, to make the quote accurate for you instead of a ‘generic household’.
2. understand the solar payback period
Aurora calculates things like payback period and lifetime savings, which makes it much easier to understand the long-term finances.
The solar payback period is basically how long it takes for your estimated savings to make up for what you spent on the system, and this is the number that surprised me most!
One estimate had a payback period of around 7 years, and another was closer to 11 years! Over 25 years, two of the estimates I looked at had almost a $13,000 difference in projected savings.
Of course, these are still projections as electricity rates can change (HELLO 2026) but when you’re trying to compare two options for the same house, knowing that one is projected to pay for itself four years sooner is pretty useful information.
3. look beyond the monthly payment
Depending on the installer, you may be looking at a cash purchase, solar loan, lease, or power purchase agreement.
But thankfully with Aurora you can compare the different financing options side-by-side which makes it a lot easier to see the trade-offs. One option may have a lower upfront cost, another may have a lower monthly payment, and another may give you better long-term savings.
4. find out which solar incentives actually apply to you
The minute you start Googling solar, you can find federal incentives, state incentives, utility programs, rebates, net metering, and a whole bunch of information that may or may not even apply to where you live.
And some of the articles ranking at the top of Google are several years old! (RIP to the federal incentives canceled at the end of 2025.) But, Aurora can account for solar incentives when calculating the cost and savings of a system, including state, local, and utility-specific programs.
I would still double check any incentive or tax benefit you’re planning to use before signing a contract, especially because programs and eligibility can change, but having all the relevant information in the same place makes the research process much less overwhelming.
5. research the installer, equipment, and warranties
Aurora lets you compare solar installers based on things like reviews, reputation, pricing, and financing options, which I think is just as important as the actual quote.
I’d also look closely at what equipment is included. What panels are they using? What kind of inverter? How long are the equipment warranties? Is there also a workmanship warranty from the installer? Who handles repairs if something goes wrong five or ten years from now?
And, I know I’ve said it a million times, but it’s nice to see it side-by-side without having to fill out a bunch of forms and be hounded on the phone just to get an idea of what solar may look like.
The post How to Compare Solar Quotes: What to Look For Before You Choose appeared first on Going Zero Waste.
How to Compare Solar Quotes: What to Look For Before You Choose
Green Living
Sustainability In Your Ear: XPRIZE’s David Babson on Why Climate Grand Challenges Need Buyers, Too
Buyers contracted nearly 30 million tons of durable carbon removal in 2025, more than triple the 2024 total, according to CDR.fyi data reported by Heatmap. About 90% of those purchases came from a single company, Microsoft, and suppliers delivered only about 450,000 tons during the year. That is a sliver of the six to 10 billion tons of removal a year that climate scenarios suggest the world will need by 2050. The technology to pull carbon out of the air works, but the customers needed to scale it remain scarce.
Our guest today, David Babson, is executive vice president of the Energy, Climate, and Nature domain at the XPRIZE Foundation. He calls the slow progress a market failure, because the technology is progressing faster than it is being adopted. Babson previously led MIT’s Climate Grand Challenges initiative and was a program director at the U.S. Department of Energy’s ARPA-E. His portfolio includes XPRIZE Carbon Removal, which drew 1,334 teams and whose participants have raised more than $3.3 billion. In April 2025, Mati Carbon won its $50 million grand prize for spreading crushed basalt on smallholder farms in India, where the rock locks away carbon dioxide. “If people could make money taking carbon out of the air and putting it underground, as opposed to only being able to make money taking it from underground and putting it in the air, we would be in a better place,” Babson says. Mati is weathering the slump in part because its rock dust also improves soil health and crop yields, giving farmers a reason to participate that doesn’t depend on carbon credit prices.
XPRIZE’s answer is to change what winners receive. Babson describes “mixed purses” that pair a cash award with a guaranteed buyer through an advance market commitment, a power purchase agreement, or an offtake contract. In one thought experiment, a carbon removal prize would come with a separate $1 billion fund raised from credit buyers, which qualified teams could draw on as they deliver verified tons. XPRIZE is applying the same thinking to a planned series of fusion energy prizes, pairing technical milestones with market mechanisms to build the supply chain that commercial fusion will require. The same gap between invention and adoption shows up in other XPRIZE competitions. On September 23, XPRIZE Wildfire awarded about $4.55 million from its $11 million purse, with defense contractor Anduril Industries taking first place in autonomous fire response along with a $1 million Lockheed Martin bonus. Babson expects costs to fall as fire agencies adopt the tools and as startups license individual components into cheaper platforms, though underfunded agencies will need a way to buy the first systems. He also notes that the competition left fuel management and ground-based autonomy for future prizes. Earlier this year, program director Andrea Santy told us that field testing had moved ahead of drone regulations. In biodiversity, Limelight Rainforest won $5 million for surveying 100 hectares of tropical forest in under 24 hours and identifying more than 250 species. Biodiversity still lacks a price, but Babson argues that once ecosystems can be measured, slow-walking policy becomes “a dereliction of what they should be doing.”
We also discuss the tension inside XPRIZE’s vision of “equitable abundance,” including a $101 million Healthspan prize that could add years of consumption to longer lives. Babson argues that abundant, cheap clean energy would let society move beyond efficiency as its organizing principle, powering uses such as indoor vertical farms that could return millions of acres of farmland to nature. You can follow XPRIZE’s new competitions and get involved in its prize ideation workshops at xprize.org.
- Subscribe to Sustainability In Your Ear on iTunes
- Follow Sustainability In Your Ear on Spreaker, iHeartRadio, or YouTube
Interview Transcript
Mitch Ratcliffe 00:36
Hello. Good morning, good afternoon, or good evening, wherever you are on this beautiful planet of ours. Welcome to Sustainability In Your Ear. This is the podcast conversation about accelerating the transition to a sustainable, carbon-neutral society, and I’m your host, Mitch Ratcliffe. Thanks for joining the conversation today.
Let’s talk about the power and the uses of grand challenge programs to kickstart low-carbon industries and respond to the changing environment. Over the past several years, we’ve talked on the show with leaders of grand challenge programs designed to accelerate progress on humanity’s most difficult challenges, from pulling carbon out of the atmosphere to fighting rapidly growing wildfire threats in cities and rural communities. Many of these competitions have been launched by XPRIZE, whose leaders have shared on the show the stories of these competitions as they launched and unfolded.
Today is a chance to take stock, to look back and think about how climate markets, technology, and politics are changing fast, and how that makes this a good moment to ask the question: Are these programs designed to accelerate progress actually delivering that progress?
Our guest today designs XPRIZE’s climate bets. David Babson is executive vice president of the Energy, Climate, and Nature domain at the XPRIZE Foundation. Before XPRIZE, he was the executive director of MIT’s Climate Grand Challenges initiative and a program director at the U.S. Energy Department’s ARPA-E energy technology research agency.
His portfolio includes the largest incentive in prize history. In 2025, Mati Carbon received a $50 million grand prize for their enhanced rock weathering solution for capturing and drawing down carbon, and XPRIZE now reports that companies participating in its programs have raised $3.3 billion. That carbon removal win arrived just as the removal market hit serious turbulence, and as XPRIZE’s wildfire competition wrapped up with its top prize still unclaimed.
So we’re going to discuss what grand challenges can really accomplish, which winners continue to build and which stall, and what the reasons are, as well as the tensions inside a portfolio that funds both climate solutions and longer human lifespans. We’ll get to the conversation right after this brief commercial break. Stay tuned.
[COMMERCIAL BREAK]
Welcome back to Sustainability In Your Ear, and welcome, David Babson, to Sustainability In Your Ear. How are you doing today?
David Babson 03:10
I’m doing well.
Mitch Ratcliffe 03:11
I’m glad to have you here. You’ve run research portfolios at ARPA-E and MIT. What can a prize purse accomplish that a well-funded grant program can’t, or are they complementary?
David Babson 03:22
They’re absolutely complementary. The way that I think about it is that the value of these different mechanisms for promoting innovation is at different parts of the innovation supply chain, if you will. A prize is not a substitute for the very necessary investments that places like governments make into basic, applied, and advanced research. In fact, those types of investments are really valuable for establishing the innovation ecosystems and the technical capacities to eventually win prizes.
Where the prize is very valuable is somewhat downstream: translating technologies, ideas, and innovations that are coming out of academia and labs to market for scale. It challenges the innovators to imagine those technical capacities as solutions to global challenges, and then the visibility that the prize brings to those translations of technologies de-risks funding to flow to those innovators so they can imagine their uses in practice.
So I actually see them as very complementary, particularly when it comes to solutions in the energy and climate space that require rapid adoption of technologies in markets to have impact. Just having an energy solution or a climate solution is not valuable unless it can be de-risked and connected to markets to scale for impact. And that’s what the prize is actually very good at doing.
Mitch Ratcliffe 05:22
That comes through in the impact report that you all published recently. About 1,300 different organizations were catalyzed. The groups came together, apparently, because of their desire to compete in the competition.
What I’ve found in my work with public-private partnerships, in particular, is that impact investors are looking for that initial traction, and to a degree, the prize and the distribution of money within the prize group is that catalyst that says there’s a real opportunity for an impact profit, something that both does good and is profitable. How does the organization consult with the financial communities that are going to back these companies once your prize has been awarded? Is there a backroom conversation about that, for lack of a better way of putting it?
David Babson 06:10
Not an explicit backroom conversation about it, but the prize itself brings attention to the innovations that are coming out to win the competition. Oftentimes, as you’re noting, these impact investing communities exist, and they are looking for technologies to invest in to have impact.
What the prize is effective at doing is casting a wider net and surfacing the best solutions across the board, where there may have been silos in the past, or there may not have been transparency to individual investors about where to put their money. The prize is capable of elevating all of them, creating better visibility, and therefore, just by its inherent operation, creates better opportunities for investment capital to flow to the right types of teams to have greater impact more quickly.
So we don’t have explicit discussions with those types of investor communities to have them directly connected to individual prizes. But we often consult with investors and experts in industry to inform the metrics that we would want to have demonstrated, so that we know that when teams are winning our competitions, the demonstrations that they do are de-risking capital to flow to those innovators so that they can be translated to market.
Mitch Ratcliffe 07:47
We’re talking about growing industries, which of course means diversifying into a lot of specializations. Once you’ve got this kind of anchor winning team or teams, how does XPRIZE think about propagating the information that’s necessary for the rest of the industry to grow and fill in around them, in order to provide the kind of comprehensive geographic coverage and range of functions that are necessary for the industry to thrive? Is that something that you think about cultivating, like you would in agriculture?
David Babson 08:22
It is something that we think a lot about. With a few of the more recent prize competitions that we’ve run, we have also paired those competitions with a subsequent impact phase, which is designed to further build the community that has been established through the operation of the prize and connect the technologies that came out of the competition to the right types of markets and investors so that they can scale.
So that is one of the things that we’re thinking about in future competitions as well: not just running an innovation competition to surface new innovations, but how do we augment the community building that the prize provides as a way to also promote the back-end business models and industries that can scale those solutions for impact?
Mitch Ratcliffe 09:19
How would you describe the patterns you’re looking for that indicate that an organization can become that durable enterprise? What separates them from the rest? Have you got thoughts about that?
David Babson 09:29
I do have thoughts about it. In a lot of ways, the rigorous metrics that we set up when we’re designing the competition are informed by what experts believe would be the necessary demonstrations to actually generate a solution that is market viable. So a lot of it is very quantitative in terms of how we architect the competition.
But what we’ve also seen is that there are elements of winning teams that can’t always be controlled by just the scientific metrics. A lot of times, it’s the composition of the team, how diverse they are, and the unique mentality that the leaders of the team have in terms of their vision and their ambition. Those are parts that you can’t control for, but the prize model is very effective at also attracting the type of entrepreneurial, big-thinking individuals that actually tend to be behind some of the most successful companies.
Mitch Ratcliffe 10:40
Those big-thinking individuals often struggle with the transition from inventor. And to your point about the academic community often being the source of many of the teams that are competing, that’s not something that academics are necessarily good at. As part of the prize process, do you also begin to coach them on how to staff for the operators who are going to be able to translate the invention into a market success?
David Babson 11:04
Absolutely. On the front end, the prize itself sets a target that is typically beyond what researchers in an academic setting are imagining for what they’re doing. It gives them a way to imagine their technical innovations as scalable solutions to big problems, so that gets them excited to be in the competition. But you’re right: they’re not necessarily all business-minded or have the types of experience that would allow even very, very good solutions to become very strong companies and business models.
So