Solar is a “hot” industry, right? In this post we examine the effects of large national solar installation companies that we feel have actually soured public sentiment on solar and created a more difficult environment for local installers. By “soured,” we mean “reduced public openness to the solar savings and sustainability message.”
Solar. A “hot” industry
“Green-friendly” sentiments are putting serious steam behind the “Solar Coaster.” And incentives… they are the oil and grease that keep its wheels from seizing as it hurls us toward the promised land of cheap electricity, environmental sustainability, and economic growth.
And yet those same incentives have proven to be a double edged sword. Sure, they’ve pushed the ball forward; solar adoption is at an all time high, and thousands have answered the call of the new economy. But they’ve also presented an opportunity to be exploited. By big money.
Big money. Big mess?
Over the last few years several large players like NRG and Sungevity (backed by tremendous capital) splashed onto the national scene, focusing their resources on incentive-fertile regions like New Jersey and New York City. They arrived with fancy trucks, armies of salespeople and installation crews, radio ads, and even television infomercials.
What drove them? Low-risk returns. Solar money is STABLE money.
And they stabilized their investment further by pushing leases.
Homeowners LIKE leases because they get savings without taking on any debt.
Lessors LOVE leases because they own the system, and thereby:
1. Collects the 30% Federal Tax Credit
2. Collects Federal Depreciation
3. Collects State Depreciation
4. Collects as many of the State-level incentives they can (in NJ they take the SRECs, in NY they take the NYSERDA grant)
5. Collects a MONTHLY payment from a lessee who is *going* to use electricity. Electricity is a consumer staple. Period.
And so they came
They established huge organizations with enormous overhead requiring loads and loads of customers and installations to stay afloat. They resorted to massive marketing budgets and salesforce funding, cold calling/tele-marketing, door-to-door canvassing, and buying expensive leads in huge quantities. They lowballed competition and gave nonsensically good deals to homeowners to get the sale, build their brand, and prime their pump. They amplified price competition to an all time high. The solar industry was no match for their funding and smarts… The product? just a widget. The crews? just a bunch of roof-crawlers. The customers? annuities. The industry? a horse to beat gold out of.
They blazed forward, taking marketshare from the local installers – spending big and winning big.
Until one day they couldn’t, because they ran out of money. NRG left the market in February 2017, and Sungevity also exited in 2017.
You see, solar is not an easy industry. Ask any solar veteran, and they’ll tell you:
1. There is a tremendous amount of orchestration to install a system. Permitting labor, design labor, office coordination, and more.
2. You won’t last long without serious fiscal discipline; solar is capital and labor intensive.
3. Quality control is very, very difficult to maintain at volume, and you need quality labor.
4. A poorly executed installation will be a serious annoyance to the customer, and a money pit of repair for the installer.
5. Crews are the horses that pull your operation. They need to be properly compensated, loyal, conscientious, and know what they are doing.
6. Customers are not annuities, they are lifeblood, and happy ones are crucial to organic growth and sustained business.
7. Solar customer acquisition costs are ridiculously high (between $1400 and $4000), further highlighting the previous point.
They didn’t respect the industry
Now they are gone. And the little guys who remain are back on the road weaving between all the debris left behind.
There are some who feel the big guys were good for solar awareness, and that should be true, but I think the market has been damaged significantly.
Why? Because we now navigate a market that:
1. Is filled with with sour sentiment, and not open to the solar message (all variations of stories we’ve heard):
“I’m sick of getting called every day.”
“My neighbor has it and he said it was a terrible decision.”
“The sales guy they sent was pushy, and I don’t trust them.”
“The sales guy didn’t know what he was talking about.”
“I have a system and its never produced what they said it would.”
“My system hasn’t worked right for months, and I can’t get anyone to fix it.”
“They sent guys out 4 times to fix the system and they still haven’t gotten it right.”
“The sales guy told me the inverter stored energy, but it doesn’t.”
2. Has artificially low job pricing – thanks to all the downward pressure exerted in the name of market share.
We who remain…
Those of us who remain now must mount a “hearts-and-minds” battle to regain trust – to get people to entertain the possibility that we aren’t slime, that we know what we are talking about, that we mean what we say, that we honestly value our customers, and that solar provides serious and tangible financial benefits. This is not the kind of battle one installer or even 5 can win. This battle requires our industry as a whole to step up and be BETTER. To proceed with INTEGRITY. To do RIGHT.
We have a long road ahead, yes, but I’m thinking the grit that got us here will get us there.
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Solar Solutions for New Jersey, New York, and Eastern Pennsylvania