This week I flew to Chicago for the Illinois Solar Energy Association fund raiser. Jigar Shah delivered the keynote to 70 registrants, packed into Emmett’s Place in Palatine. I left at 9:30pm with an excited sense that Solar PV in Illinois is going to take off.
This was my second Jigar Shah presentation, (here is my […]
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.
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What strikes me most about renewable energy websites is how much companies tend to to talk about themselves and the technology and not about what the customer actually cares about. Actually, let me rephrase this, what “mainstream customers” care about. For this, we need a little review of the difference between “early adopters” and “mainstream” customers and how that is impacting the renewable energy industry.
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The solar industry is going through massive change. Module and balance and systems prices are dropping quickly, there has been an influx of new products, financing is becoming commoditized and the solar supply chain is shifting rapidly.
The results of these trends are two-fold: 1) bringing down the hard installation costs and 2) removing the financial bottlenecks in the system. Lower costs and easier financing equals more projects and faster industry growth. However, with the room to squeeze hard costs getting tougher, companies are now looking at other ways to decrease their costs in order to increase profits. One of the areas has been streamlining incentives and permitting paperwork.
Many reports have detailed ways the solar industry is drowning in huge amounts of paperwork.
The battle to reduce soft costs is being fought on many fronts. First, local governments, in Vermont for example, are working on creating more streamlined incentives and interconnection processes. The DOE has also launched a project to decrease solar’s soft costs. Several companies are looking to address this issue with software. OnGrid Solar, Clean Power Finance, Eagle Eye and SolarNEXUS all seem to be addressing the issue from many angles.
I reached out to SolarNEXUS to get their thoughts on how companies can reduce soft costs to increase their profitability. Read past the break to read the full story and watch the interview. Join HeatSpring’s facebook community to stay up to date with future updates.
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There’s an interesting split in the residential and light commercial clean energy space lately. As consumer demand is surging and some “old” solar pv players are moving to bigger projects (Nexamp no longer does residential and is installing 4.5 MW in Western, MA, Borrego sold their residential business, etc) there is room opening up for smaller, new companies.
I’ve personally noticed a major divide between the types of organizations expanding into the industry to meet the demand. There tends to be two major camps. First, the entrepreneur. The entrepreneur sees the huge industry growth and is starting a new company to take advantage the growth. The entrepreneur will tend to focus on a specific technology; solar pv, solar thermal, geothermal or energy efficiency. The second is the general contractor or construction professional who plans to expand his current business into a new technology. He does this for a few reasons. He has existing customers asking him about these new technology and he already knows 80% of what he needs to know to install these systems.
Each of these groups looks at the industry in a different way. Each has its pros and cons.
The Entrepreneur or “Pure Play”
I call it a pure play as the whole business is typically hinged solely on the sales of projects in a specific technology.
The pure play company tends to see “understanding business”. That is, the connection and optimization of marketing, sales, engineering, and installation activities as a skill in it’s own right, and they believe the reason they’ll success with the new company.
The General Contractor
The general contractor tends to already own an existing business focused on the building industry. This tends to be general contracting or a as a sub-contractor; roofer, plumber, electrician, etc. The general contractor tends to want to continue their existing business while taking their existing trade knowledge into a new field. The general contractor is already well versed in all of the aspects needed to complete a project; design, installation, project management and customer manager and this is why they feel they will be successful in a new industry.
What are the pros and cons of each?
I don’t personally feel either is better suited to take advantage of the opportunity in the huge growth of renewable energy, though I do think they will find themselves in different places in the market and supply chain, simply because of how each group values marketing, sales, and the installation side of the business.
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