Photovoltaic solar arrays distributed across rooftops and other structures is the most efficient way to utilize this technology and will become ever more important in our clean energy future. But it’s important that we get the business model correct.
Smart Energy Today
While Utility-scale solar is cheaper than rooftop solar, rooftop is more likely to make a bigger difference in our energy mix and carbon emissions because it is easier to install in small pieces. It also doesn’t kill birds, take up miles of pristine land in the Mohave, or require millions of dollars in financing.
Logistically, rooftop solar is just easier. There are over 170 billion square feet of residential rooftops in America, about a third of which is facing the right direction. No need to take more space away from Nature.
Rooftop solar is also more personal – owners feel they are doing something themselves in their own community. That’s why we have one on our roof.
As solar energy costs decreased significantly over the last 15 years, the United States market saw incredible growth (see figure below). But with less than 3% of the residential rooftops covered, the consumer market has already seen huge set-backs, humbling solar industry giants as well as Mom & Pop start-ups.
One small solar company in Washington State, Smart Energy Today, decided to approach this problem by building a decentralized service platform in a once very centralized and old fashioned construction market.
Think of it as the Uber of Solar.
Annual installed solar capacity by type in the United States in the 21st century, showing the effects of the Investment Tax Credit. The U.S. installed 10.6 GW of solar in 2018.
SEIA/WM
It has been difficult for companies to offer affordable systems to the homeowner with quality products, loans, labor and customer service for this emerging technology in a way that scales without incentives, while facing new tariffs and also being profitable in the long-term.
In just the last two years, big residential solar companies like Solar City, SunRun, and SunPower have struggled to make a profit, and small profitable companies have struggled to grow. NRG moved out of residential solar. And after losing a billion dollars a year several years in a row, Solar City disappeared into Telsa and then laid off all of their solar retail and door-to-door sales teams.
Companies like Sungevity and Suncrest closed their doors after what appeared to be strong growth. Some local contractors quietly disconnected their service numbers and were never heard from again.
Each of these changes left customers without the long-term support needed for what is an otherwise amazing technology.
There are several reasons why this happened.
Like most small companies in construction or home improvement, operating capital becomes a big problem as you grow. The bigger you are, the more money you need to float for inventory and salaries just to keep everything going.
This hinders growth because you don’t have enough cash to put to work. When they get a $20,000 solar installation job (the average size of residential jobs), they start spending $10,000 to $15,000 up front and then don’t get paid for months.
This limits the company to taking only as many jobs as can be paid for in advance. Net 30-day arrangements help with production but does not solve the problem or overcome labor costs, commissions, and the hard costs that need to be paid right away.
So even if they can get a large number of jobs, they might not be able to take them. And if they do them, those same jobs might put them out of business if they run out of cash along the way.
On the Sales side, it’s very hard for most contractors to sell enough jobs that evenly match their paid labor force. Inevitably there are entire weeks or months during which there is no work for the labor force to go and install. So you pay the labor for nothing. Or don’t pay them and lose them.
On the Customer side, how can they get a fair price without spending time collecting 3-5 bids. No one has time for this and it’s not fun.
Most customers want someone who lives close to them to do the work, but they can’t get a guaranteed 25 to 30-year warranty from a local contractor who may or may not be in business five years from now.
Smart Energy Today worked this in reverse. They built out a system for customers, vendors, and contractors, and reverse engineered it into a scalable platform like Uber or Airbnb that is simple for the customer and the installing contractors who want to grow their own businesses.
Solar is a strange combination of new tech and old construction. Construction companies use demonstrated practices but are almost always local. Tech companies spend millions of dollars building out costly software platforms and then struggle to get customers and vendors to use their systems wherever they are located.
Similar to the way Uber disrupted the cab industry, this new solar paradigm provides customers with a simple platform (soon to be an app) where they can take their time going through their own pre-sales learning and shopping process with or without the aid of a sales person or service agent.
Once a decision is made, the company does everything else for them – the designs, permits, financing, paying for all the equipment, scheduling the installation, inspection, showing how any rebates and tax credits apply, while remaining the single point of contact for this and all future needs.
With one twist, like Uber – who outsourced the 15 minute car ride – Smart Energy Today contracts to qualified local laborers for the 1 or 2-day installation. Since the finance is with the company, the contractors don’t have to worry about not getting paid by the customer. The customer benefits by having lower cost jobs without spending time shopping, with a 25-year warranty from the brand itself.
The future of solar must leverage technology and customer interaction to deliver a viable solution in all 50 states, and not just rely on federal and state incentives. Building a decentralized service platform that can be an app on your iPhone, in a once very centralized and old fashioned construction market, like Uber did for the car ride, is breaking the old mold of solar.
Smart Energy Today
Solar city and many other large companies have lost billions of dollars trying to build a brand in which they own every truck and laborer. That hasn’t worked out very well.
This new paradigm does not hype solar, but encourages inexpensive strategies, like high-tech insulation and solar attic fans, that could reduce utility bills without the more costly solar arrays.
If solar is chosen, they lay out the pros and cons and discuss who and where each component is made, how any rebates and tax credits apply, and just how long the pay-off period is given a range of projected electricity costs for that specific area.
Smart Energy Today has made the INC 500 and 5000 fastest growing privately held companies for four of the last six years.
So their model must be working Uber-well.
Source: Forbes – Energy