Thanks to its high power prices, hot summers and large homes to cool, a greater share of Scripps Ranch residents have embraced solar power than anywhere else in California, itself the nation’s solar energy leader.

The rooftops of some 2,000 homes—approximately 26% of the neighborhood—are fitted with panels in Scripps Ranch, according to an analysis of state and utility solar installation numbers and U.S. Census Bureau housing data by the non-profit Center for Sustainable Energy and the environmental news website EcoWatch.

The growth has been rapid. In July 2014, San Diego installer Sullivan Solar put up its first solar system on Scripps Ranch’s Pinecastle Street, celebrating with a block party. The pizza and wine paid off: Sullivan installed systems on 11 of 48 homes on the street.

“If you can afford the upfront, it’s a no-brainer,” said Caroline Coats, a nearby resident who hired Sullivan to install a solar system four years ago.

As much as Scripps Ranch symbolizes rooftop solar’s success, it also illustrates the challenges facing the industry today. After rising 64% in the first half of the year in Scripps Ranch, installations tumbled 50% in July and August combined, according to utility data. Across California, growth also has slowed this year, and, in the third quarter, installations dropped year over year.

Industry watchers say many factors are at play, including shrinking incentives, wariness of future government actions and consumer fatigue with marketing tactics. Also, many of the most likely buyers—affluent, environmentally inclined homeowners in sunny places—already have rooftop systems, making winning new customers harder and costlier.

Less Incentive

California for years has required utilities to purchase excess rooftop solar power, paying homeowners in credits that lower their utility bills. But this so-called “net-metering” mandate capped the number of people who qualified for the most attractive incentive. In June, the utility serving Scripps Ranch, Sempra Energy @sempra energ(SRE) unit San Diego Gas & Electric, was the first to reach its limit, and the state’s other large utilities are expected to reach theirs soon.

Scripps Ranch homeowners who put up panels now still will be able to sell power they don’t use to the utility at the same retail rates as those who got in before the cap. But they will have to pay $100 to $200 more per year in fees and charges to SDG&E. They also eventually will be shifted to new, time-of-use power rates, which could result in lower credits.

Installers say such changes will be meager compared to the thousands of dollars in savings over the life of a system. But customers seem skeptical. At the peak, installers were putting up 55 systems a month, on average, in Scripps Ranch. In July and August, typically good months, installations dropped to 15 and 36, respectively.

Residential solar connections were down 25% in the third quarter compared to a year earlier in the utility’s entire San Diego territory. “The phones just aren’t ringing as much,” said Ian Lochore, director of residential sales at Baker Electric in nearby Escondido.

A less dramatic slowdown is playing out across California, which produces about 40% of the nation’s residential solar. The sector saw slower growth in the first half of the year, and declines in the third quarter. Installations in Pacific Gas & Electric’s service territory in Northern and Central California fell 7% year-over-year, while in Southern California Edison’s territory they fell 4%.

National installers like SolarCity (SCTY) and Sunrun (RUN) whose investors had gotten used to sky-high growth rates, slashed forecasts this year, while their stocks have been pummeled. SolarCity has agreed to be bought by electric car maker Tesla Motors (TSLA), but investors have concerns about the wisdom of merging two companies that require substantial cash to fund growth.

Fewer Potential Customers

Now that many of the homeowners best-positioned to benefit from rooftop installations have them, today’s pool of potential customers has less incentive to go solar.

“A lot of the early adopters have gone solar already, so the market is kind of shifting toward people who might need more information or explanation before they make the shift,” PG&E spokeswoman Ari Vanrenen said.

In Scripps Ranch, for instance, many homeowners without solar say their power bills are too low, or their rooftops too shady.

Ken Ingrao, a Scripps Ranch resident who said he did “tons of research” about solar, decided his $220-a-month power bill was too low to justify an investment of up to $28,000. “It’s a good option for people who are spending $800 a month putting the air on 24-by-7,” Ingrao said. “But we don’t do that.”

Working harder to win customers has raised costs. Both SolarCity and Sunrun reported large increases in sales and marketing costs in the first half of the year compared with 2015. Customer acquisition costs could rise further this year, GTM Research said.

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More aggressive marketing carries risks, however.

Some solar vendors “come across as used car sales people,” said Vikram Aggarwal, chief executive of EnergySage, an online comparison-shopping marketplace for solar. “A lot of consumers tell us that their first interaction with solar was negative,” he said.

Nearly 300 people filed solar-related complaints with the state last year, an increase of 25%, according to the California Contractors State Licensing Board, which pledged to step up enforcement.

Biggest Companies Hardest Hit

The slowdown is having the greatest impact on the industry’s biggest installers.

A drop in installations in regions served by SCE and PG&E between the first and second quarters of this year mostly involved U.S. installer SolarCity, a GTM Research analysis of installation data showed. Sunrun installations were flat, while local and regional installers, on average, showed growth.

SolarCity spokesman Jonathan Bass blamed lackluster performance in the second quarter on the fact that it was leasing installations to customers rather than offering a loan to purchase. Demand for a loan option introduced in the second quarter has increased every month, Bass said, adding that California sales, which includes leased and purchased systems, rose in the third quarter compared with the second quarter.

Sunrun Chief Executive Lynn Jurich would not comment on her company’s third-quarter performance but said in an emailed statement that the industry “does face some headwinds from time to time that can include anything from seasonality to uncertainty created in consumers’ minds when we go through regulatory change.”

Sunrun believes there are five times as many “solar-ready homes” in California than have gone solar, Jurich added.

Both SolarCity and Sunrun have said new products, such as energy storage and the “solar roofs” SolarCity is expected to unveil later this week, will create new growth.