Solar industry leader SunPower (NASDAQ:SPWR) and top-10 U.S. homebuilder Meritage Homes (NYSE:MTH) are giving away solar systems in California, at least for the next couple of weeks, at select Meritage housing developments. Billed as being "in celebration of Earth Month," the promotion includes a small 1.4-kilowatt solar system that would only partially offset power consumption for the majority of homes. One question comes to mind here: Is this an indication that solar is becoming a differentiator for consumers looking for a new home, or does it point toward solar panels being further considered just a commodity?

For investors in these two companies, what's the takeaway? Let's see if we can shine a little light on things.

Meritage home featuring SunEdison panels. Source: Meritage Homes.

Solar just bouncing back; growth is strong
Over the past few years, investing in solar panel and component makers such as SunPower has been a real up-and-down affair. SunPower's stock price today is almost the same as it was five years ago, but there have been a lot of rises and falls in between. A stumbling economy, and then Chinese efforts to prop up that country's solar makers, both combined to level the industry and nearly cripple many companies, including SunPower. If it weren't for a massive investment from French energy giant Total in 2011, SunPower very easily could have gone bankrupt. However, U.S. and European Union policies, and what seems to be a reduced amount of Chinese government support for solar companies there, have returned stability and growth to the industry.

SPWR Chart

SPWR data by YCharts.

After losing close to $1 billion combined in 2011 and 2012, SunPower turned a roughly $80 million profit in 2013. It is investing heavily into increasing manufacturing capacity this year and next, as projections for demand for solar panels continue to grow. Much of SunPower's advantage is in its industry-leading technology; the company has what are widely considered some of the most efficient panels on the market based on cost per unit of power production, sold at competitive prices.

Will "free solar" deals undercut SunPower's strategic advantages?
This is a short-term promotion, and it looks like it's largely designed to draw attention to specific properties. But if this draws a lot of business, it's possible Meritage will want to make this offering more often. The risk of such a regular event is that consumers come to expect that solar is something that's just free. That's bad when your business is based on having superior technology, because it undermines the value. 

SunPower's X Series panels are among the most efficient available. Source: SunPower.

Raising awareness of the affordability of solar is worth it
Meritage does a lot of business in California, which has some of the strongest state-level solar incentives for homebuilders. Add in that California is by far the most populated state, with close to 39 million residents, and it's a very important market for solar. Meritage appears willing to subsidize part of the cost of these small solar systems -- as it likely is with this promotion. This will certainly help shift consumer perception -- which still largely views solar as more expensive than the utility company -- toward an understanding that over time, solar could cost much less than power from the grid. 

The customer, Meritage, and SunPower all can win
Most people don't know how much solar panels cost, or what the return is. A residential solar system can cost $20,000 or more, which sounds like a ton of money. Actually, it is a ton of money for most people, but a solar system is designed to last 20 to 25 years. Today's consumer mindset of very few things being worth keeping for more than three to five years tends to water down the understanding that solar is a long-term investment for your home. 

Chances are, a $20,000 solar system (roughly what a 6-kilowatt or 7-kilowatt system would cost in California) could offset a power bill that was $150 per month or more. Over 20 years, $20,000 averages to only $83 per month. Simply put, the result is a 40% cost reduction over two decades, not even factoring in price increases from the utility, which could be 2% annually (about where inflation averages) or more, depending on where you live. This additional cost of the utility could add even more value over time. But without factoring any annual utility increases, and assuming your consumption remained stable, we are talking about $16,000 in power bill savings. 

Final thoughts: Where there's mystery, there's margin
Understanding the total expense of a solar system can seem complicated at first. Showing a customer a monthly mortgage increase for adding solar makes it easy to see the cost savings against a monthly utility bill. And while this is easier for many buyers to grasp, it also makes it easier for Meritage and SunPower to charge higher prices for upgraded solar systems -- with much less chance of the homebuyer shopping around. 

At the end of the day, whether this is a once-per-year special or becomes a more regular offering, increased consumer exposure to solar is a good thing. Meritage is one of the best homebuilders to invest in, and SunPower's technology makes it a solid company to own in the solar segment. There's little reason to see this move being anything but good for both companies. And that's good for shareholders.