Solar thermal, solar hot water, solar hot air, solar heating, solar cooling

Solar Financing Options and the Benefits of Each

The residential, commercial and utility scale solar financing markets are different and have their own dynamics.
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The residential market is driven by 3rd party PPA providers and companies offering their own in-house financing. For example, 3rd party providers include SunRun and BrightGrid , as well as companies offering their own in-house financing, like SolarCity. The 3rd party companies provide a useful tool because it allows smaller companies to compete with the larger SolarCity types by allowing them to offer competitive financing. Each of these companies has been able to tap into large amounts of institutional capital by providing stable returns.

The utility market (20MW+) on the other hand, is very concentrated and is typically dominated by manufacturers who create or buy their own development department. In the SEIA’s last report 51% of the utility market was dominated by only 12 firms. As you can see from the list of top utility solar developers below most are manufacturers, and the majority of the independent developers, like Recurrent Energy, have been bought by manufactures. Recurrent was recently acquired by Sharp last year.

The commercial market in the built environment is a different environment from both utility and residential scale, as it requires a more technical understanding of solar, structural and roofing of the building then residential but is also heavily dependent on financing.


How to Use Lean Startup Methods in Renewable Energy to Increase Profits

In the last few posts I’ve written about the process of expanding an existing construction company into renewable energy business and the single thing our marketing planwill focus on. If you’re new to the solar industry, go to the Solar 101 Reading list. It has free tools and articles on solar design and installation, sales and marketing, policy, finance and best practices.

The main metric I’m using is “profit per time invested”. I’m not as interested in increasing top line growth rather then profitability, especially as we get stared. My goal is to reach a profitability of 20% pre-tax. This seems very “doable” given the general construction industry has a profit margin of around 10%. How does this number impact the scale of the business? I can live well with a business that sells $500k a year in revenue providing me with $100k in profit. That is not a lot. This is a little under $48k revenue per month. That is 2 solar pv or geothermal jobs per month, equally 24 jobs a year. Or 4 to 5 solar thermal jobs per month or a combination of solar pv, geothermal and solar thermal. Very “doable”, especially if you look at the number of jobs that companies are doing and the small profit they’re making. From a marketing perspective, the key will be to understand what really is the cause of these jobs so that we can make sure the revenue will be stable and predictable. Most companies take jobs as they come and think its because of something they’ve done. When revenue decline they’re end up in the dark.

Many people  like to think big, going after larger and larger projects and getting into commercial work. Often times, they do this by suffering through slimmer and slimmer margins while having to deal with more and more headaches. I’m into thinking big, but by big, I think of net profit. Basically, I’d like to focus more on efficiency then growth of absolutely numbers. A company making 20% margin on $500k in revenue makes the same money as a company with a 5% margin and $2 MILLION in revenue. I’d argue it’s easier to increase efficiency then to grow revenue because you have more control over your own operations then the decisions of clients.

I’m a huge believe in the “crawl –> walk –> run” philosophy of business development and that’s why I spent the last two posts discussing my entire marketing strategy, the goals and metrics of each business task. Now I’m going to outline the operational strategy.

In order to run a super efficient service based business (all construction companies are service based) there are two critical components that need to be optimized. First, your marketing and sales and second the design and installation. On the marketing and sales side this mean decreasing the number of leads you’re getting but making sure that more of them close. Again, you’re goal should to be getting 5 to 10 leads month and have a 50% close rate, rather then sifting through and doing site visits on 50 leads, only to have 3% close. Remember this, dealing with leads takes time and is expensive.

Enough about marketing, for this article let’s focus on operation of running the business.

Many people have been looking for a connection between clean energy and technology for some time now and there aren’t many, other then the goal of “world-changing” technology. However, I believe I’ve found a similarity that can be used to increase operational profitability of small clean energy companies. In tech startups, there tends to be two teams of people. One group is focused on the customer and the other on developing the product. Here’s the reason for this. In most new tech companies, not only does the team not know exactly what the product will be, but they don’t know who the exact customer will be either. So, the customer development team is always performing tests with the product to determine who the customer is and what they will pay for the product. While the product development team is tweaking the product to see if a certain customer will pay for it. I’m not a tech guy, so I might have missed a few things. But to my understand these are called Lean Startup principles.

We can apply a similar model to the sales/marketing and operations activities within a small clean energy company. NOT that the sales/marketing team don’t know who the customer is and the operations team doesn’t know what the product should be. In clean energy both of these variables are known. The logic applies to how the teams are organized so that it a has a huge impact on their effectiveness and the profitability of the company. To display this, let’s review how the “traditional” organization structure of most construction companies is focused.


[Photo Guide] How to Install A Solar Thermal System

You’ve held a solar thermal workshop and generated some leads, prepared a solid sales presentation, sold your first job, designed the system and now you’re curious about the installation process.

While the installation process may not take a long time compared to other steps, one day for an experience crew and two or three for a normal crew, it is extremely critical for the profitability of your company in two ways. First, it’s a critical component for generating referrals, how much does the client enjoy your crew. Second for cost implications, is the system installed correctly so do you don’t have any call backs and is the homeowner does not call you back because she doesn’t understand how the system works?

This photo guide will focus on the second implication by making sure the system is installed correctly. Here is the step by step guide of how solar hot water panels are installed.


Designing a “Sellable” Solar (or Geothermal) Company – Part 2

In my last post, I wrote about my marketing plan for starting a renewable energy company that will be an offshoot of an existing construction company in the great state of Maine. Now, I’m going to discuss how we’ll be setting up the marketing and sales engine that will drive the businesses. Some have asked if I’m nervous about posting this information (as if I’m giving away some sort of “trade secrets”). My answer is absolutely not. Not only do I think it can help other solar and geothermal contractors dealing with similar issues but if anything it will help me more. Writing down the plan down forces me to focus the idea and ask myself if it makes sense.

In this article I will discuss how I plan on creating the processes and metrics necessary to optimize the marketing, sales, design and installation process of a new company that will sell geothermal, solar pv, solar thermal products. Read below for the full article and if you have any questions or comments on the article please feel free to leave them in the comment section, email me at or ask a question on HeatSpring’s facebook page: Enjoy!


August 22nd, 2011|Categories: Solar|Tags: , , , , , |

Solar Thermal Is Finally Gaining Traction

For the past 5 years solar photovoltaics (pv) has been capturing more than its fare share of media attention, government attention and, I would argue, market growth. But there seems to be signs that this trend is reversing. It’s not that solar pv growth is slowing down but that solar thermal is gaining the traction […]

August 11th, 2011|Categories: Solar|Tags: , , , |