Why? A few reasons:
- I’d argue too many people are looking at solar pv and it’s becoming more competitive. Just look at how many solar pv installers there are in Massachusetts, there’s around 50. This number is increasing as more and more tradespeople and leasing companies are getting into the game. Given the Massachusetts SREC market is structured to create 30% growth every year, it’s clear why so many companies are focusing on this.
- Solar thermal can be used for space heating, and solar cooling technology is coming online. These applications will make it extremely attractive.
- In Massachusetts, solar thermal receives great incentives, which only improve already good financials. For example, in Massachusetts you can receive up to $10k for a site evaluation and another $25k (for private) or $30k (for public) – see details under construction grants here – rebate for the installation, given the client meets a few criteria.
I think there are 7 national trends happening that are really favorable to solar thermal. Read the 7 Ways The Solar Thermal Industry is Laying the Foundation for Solid Growth, to read more including current bottlenecks in the industry.
I’m no genius, but if I wanted to make some cash in solar thermal, here is what I would do.
Identify the top 4 or 5 heavy hot water user buildings. Of these, the best will be small businesses where you can easily find and speak with a decision maker quickly. Trying to go for a national company might be attractive because if you end up signing a contract it will be for serious coin. However, this will take forever and your new business needs cash and profit. Here’s the list of heavy water users I’d go after:
- Car washes
- Apartment buildings (where the owner pays for hot water!)
- Laundromats. Read this great case study of a Boston laundry mat and car wash.
Find the above type of businesses in your home town. For example, if I lived in Cambridge, I can (FOR FREE!) find all the laundry matts in my town. Having easy and clear access to your customer is a small but critical point that most people will take for granted. Having an EXTEMELY clear view of who exactly your customer is, and where they are is very important. As you can see below, there are 10 potential customers within walking distance of where I live.
Visit the store and begin a relationship with the owner. Literally, I would advise someone to spend a day and walk to all laundromats in their area and try to get in touch with the owner. I’d start the conversation around asking the store owner what his utilities bills are, what he’s doing to reduce them, and if he’s aware of government incentives to reduce them.
Help the owner get a full grasp on the benefits of installing a solar hot water system:
- There’s so much government support. Federal (ITC, MACRS) and STATE (MASS CEC)
- Make sure your utilities bill stay constant. In addition to reducing utility bills, simply making them predictable is extremely important for small businesses.
- Decreasing your utilities is like increasing your revenue by XX amount. This is a great line for small businesses. As small businesses tend to have small margin, any reduction in utilities will be instant cash in their pocket and an increase in profits. Most times, a small reduction in utilities is equivalent to a larger increase in revenue.
- Rate of return. Remember, do you not use “Payback Period”. If they have access to cheap capital, financing can be possible. Typically rates of return on solar thermal are at least 10%.
Why Am I Not doing this?
I always get this question when I’m discussing business opportunities that I see brewing. “If you’re such a genius Chris, why aren’t you doing this?” Is what people tend to ask me.
Honestly, it’s a lot of work! Although, this could seem “easier” then competing with SolarCity, Sungevity, etc, etc in the solar pv space, it will still be hard. Secondly, I have many things going on and not enough time in the day. If this lines up with other things you’re doing or thinking about, you’ll do much better with this opportunity than I would.
The other benefit of approaching solar hot water is that many companies shy away from it because it is “difficult” to design a system. Not true. You just need to be trained correctly.
If you’re a sales guy, find a good installation company to work with. If you’re an installation company, find good sales person to drive business.