Large Installers and Financiers DOMINATE the MASS Residential Solar Market, with 76% and 74% Market Share Respectively, and Other Interesting Data

The Massachusetts Clean Energy Center has made data on the number of project funded through the Commonwealth solar grant available public. Find the on MA CEC’s website or download it here in excel format.

The data is very detailed and tells an interesting story that can be use for industry analysis, competitor analysis and for market research for those companies still looking to enter the residential PV game. My advice to any company that is looking to enter the residential solar PV industry should look at this data to determine which companies are growing the quickest, in which cities and what their costs are.

A few notes about the quality of the data

• It’s based on state grants delivery by the Commonwealth Solar program so in 2012, this is only for residential projects.
• Every residential project may still not be listed in the data becasue there is likely some projects completed that did not receive MA CEC funds.
• Installed costs, size, etc are also self-reported by the installers and the MA CEC takes the data at face value. It’s unlike installers would lie, it’s just important to note.
• In 2010 and 2011, it included both commercial and residential programs but not utility and MW projects that were completed
• Massachusetts switched to a SREC based incentive program in 2011.
• The data from 2012 is ONLY up to 03/23/12

I spent some time going through the data trying to answer a few basic questions and here are some of the highlights

Here are the question I looked into:

• How many active installers were there in 2010, 2011, and 2012?
• What were the average installed costs in 2011, in 2012?
• What was the cheapest system in 2010, 2011, and 2012?
• What percentage of systems were financed in 2010, 2011, and 2012?
• What is average installed costs of a financed system vs cash system in 2011? In 2012?
• What was the value of all residential projects installed in 2010 worth? In 2011? In 2012?
• What percentage of the market is dominated by large installers (those that do more hen 25 systems per year) in 2010? In 2011? Who are the largest installers and who is growing the fastest?

Lastly, I discuss what other questions could be answer from the data, and the story this tells for existing solar companies or companies looking to enter the Massachusetts market.
Let’s get into the details 🙂

1. How many installers were active in 2010, 2011, in 2012?

2010: 92

2011: 99

2012: 45 (only in the first 3 months)

2. What were the average installed costs in 2011, in 2012?

2011 : $5.65/watt

2012: $5.05/watt

A use mean average and not median. A $.60 reduction in the installed cost of residential projects is a reduction is 10%. Not bad, but this is actually below industry averages across the US for the 2010/2011 period.

3. What was the cheapest installed cost in 2010, 2011 and 2012?

2010: $2.25/watt

2011: $1.44/watt

2012: $2.20/watt

As an installer, I would pay attention to these numbers. The goal is always to sell the most profitable projects, or bundle of projects, and it’s likely anyone made any money at $1.44 per watt.

4. What percentage of systems were financed in 2010, 2011, in 2012?

2010: 140 financed systems / 744 total systems installed

2010: 18% of systems were finaced

2011: 733 financed system  / 1732 total system installed

2011: 42% of systems were financed

2012: only up to 03/23/2010 = 307 finance system / 413 total system installed

2012: 74% of system installed in the first quarter in Massachusetts were financed!

Note that the AMOUNT of systems financed in 2011, is almost equal to the total number of installation in 2011.

The growth in financed is truly amazing and confirms the conclusion that solar leases are becoming the industry standard and not an exception. If you want to learn more about residential solar leases, you can take this free course with BrightGrid Renewable Energy Finance about solar leases.

5. In 2012, what is the average installed costs of a financed system vs cash purchased system?

2010:

Cash: $6.60/watt

Financed: $5.69/watt

2011:

Cash: $5.66/watt

Financed: $5.83/watt

2012:

Cash: $5.19/watt

Financed: $5.00/watt

It’s interested to see that financed systems are cheaper per watt in 2010 and 2012. One would expect to see this as driving down installed costs will increase the IRR of the annuity. However, a more accurate measure would be to calculate the LCOE of a cash vs financed system. A possible hypothesis is that the LCOE of cash based system is higher, perhaps to using more micro-inverters but I don’t have the data to calculate this.

The change in 2011 is also interest to note. My assumption is that the 100% bonus depreciation for MACRS and the 1603 cash grant pushed financing companies, due to investor demand, to get more tax credits by slightly increasing installed cost. The consumer would hardly notice in their lease payments, because it’s amortized over 20 years, but a small increase in installed costs over hundreds of system adds up to a lot of added tax credit and depreciation write offs. However, this is only a hypothesis, I would need to create a model to truly test if this would happen.

5. What is the value of residential projects in 2010? 2011? 2012?

2010: $17 million

2011: $58 million

2012: $12.4 million

6. What percentage of the market is dominated by large installers (those that do more hen 25 systems per year) in 2010? In 2011? Who are the largest installers and who is growing the fastest?

2010:

In 2010, there were only 10 companies that installed more then 25 systems in the year according. In total, the large installer put in 432 systems and have a 58% market share.

2011:

In 2011, there were 19 companies that installed more then 25 residential systems in a year and they had a 77% market share.

A few points to note:

• It’s interesting to note that pure play solar installers are gaining huge market share. Does this suggest that there are huge advantages to doing a large number of solar installations
• It’s worth noting that solar installers that were NOT EXISTENT in Massachusetts in 2010 that sold a lot of projects in 2011. Notably, Astrum Solar, Munro Electric, SolarCity, Sungevity.
• If you’re a new installed, don’t let the number of installations scare you. We don’t know if these projects were all PROFITABLE, and that is the goal of a business after all.

What other questions could we answer from the data?

• Revenue per company: The information is detailed enough that could estimate a companies revenue in residential solar PV work.
• The cheapest and most expensive towns to install solar.
• The towns that currently have the most installed capacity and the least.
• The companies that install residential solar the cheapest in Massachusetts.

How is this data useful for new installers and for market research?

• In 2011 notice that there are large installers that you might not have heard of. My learning is that while PR might influence our perception of who is dominating the market, the numbers don’t always match.
• Profit is more critical then revenue. Don’t be afraid of the large installers, just because some are growing doesn’t mean they’re making money.
• With the data you can figure out what company is growing he fastest. If you want to do competitor analysis find the 5 companies that are growing the fastest and analyze their website, research their people on linkedin, see where they are doing their installations, figure out what newspaper are quoting them. IT IS VERY easy to figure out a companies strategies these days, you just have to do a little digging.
• Find electrical contractors to work with that have solar experience. The data list ‘secondary installers’. These are typically electrical shops that have been brought in to pull permits and perform the actual installation. If you’re a new company and want to sell the projects, but need boots on the ground, use this list to find partners.
• Lastly, there is still huge room for growth. 2011 was an explosive year, but there was still less then 2,000 installations. Massachusetts has 6.8 million residents. HUGE ROOM FOR GROWTH

This article was originally published in Renewable Energy World