The beginning of 2012 is here and the lookout is bright for renewable energy. There are some roadblocks ahead and some barriers we cannot yet see that will become clear. Overall, the renewable energy industries are becoming a force to be reckoned with.
Here are the 7 trends and areas we’re watching closely in 2012. Each will have an impact on the ability of small companies to make money. Please take time to skim the list, provide feedback and pick out what pertains to your company and your situation. These will be the prevailing topics, trends, and themes that HeatSpring will cover going in to 2012.
1. Increased regulation and credentials.
The rapid growth of the renewable energy industry has increased credentials manufacturers, property owners and local AJHs are looking to minimize risk. Here are the big items we see coming that will impact your businesses.
- Fire Safety Training and Regulation. Local fire AHJ’s are becoming much more meticulous around permitting roof mounted solar PV arrays. Two items are causing AHJ’s to pay more attention to solar permitting and will require more diligence from integrators. First, a few high profile fires caused by solar arrays. Second, roof access requirements in case of a fire. A specific credential has not yet been released, nor have any additional regulations, but local fire departments are becoming more aware and better trained. For this reason, the Solar Energy Business Association of New England is hosting a Solar PV Systems and Fire Safety Event in February for their members and the public.
- A New Commercial Roofing Certification. Expect an increase demand for the RISE Certification on commercial solar RFPs and projects. The certification is specifically for roofing contractors and professionals who will be working on commercial solar projects in order to make sure the existing roofing warranty is not voided. The rapid growth in the solar industry and a number of voided roof warranties due to solar installations, has caught the attention of national roofing manufacturers. Through the National Roofing Contractors Association and the Center for Environmental Innovation in Roofing, the RISE Certification has been created.
- New Solar Thermal Credentials. The quick growth of the solar thermal industry has increased the demand for trained professionals. NABCEP has created a new entry-level solar thermal certification for new comers to the industry. If you’re a job hunter looking to get the certification, here is NABCEP’s list of approved providers.
- As the geothermal industry grows, so do the relevance of two relatively new credentials. The IGSHPA Driller Certification and the Certified GeoExchange Designer certification. The main questions we’ve been answering about the new certification are the difference between the IGSHPA Installer and Driller certification and who should attend the designer certification. Especially with the Certified GeoExchange Designer, be prepared to start seeing requirements for these certifications on public and large private RPFs.
- Is the Solar PV industry still lacking trained electricians?
- Is there too much credentialing happening or will it increase the quality and technical ability of the industry?
2. Can the Geothermal Heat Pump Industry Go Mainstream?
The geothermal heat pump industry had steady growth in 2011, as it has for the past 5 years, but it can do much better. The geothermal industry needs to learn a few lessons from the solar professionals and start focusing on organizing the industry, public outreach and sales.
- What are the best practices for selling geothermal heat pumps? Technical skills is not enough, how do we organize the industry and start focusing on SALES?
- How can we as an industry become loud and visible. Solar is neither cheap nor simple, but everyone thinks it is. Why? Because the solar crowd just says it so often. We need to start doing the same.
- The geothermal tribe needs to get on twitter to coordinate the industry’s influencers. In January, we’ll be hosting a #geochat.
- How can we use local policy to favor geothermal more?
- How can we organize politically? Locally first, then nationally. NEGPA is great, there should be one in every region, under a national chapter, like the solar industry has with SEIA.
- How can we stop focusing on the technical parts of the installation and start talking about customers?
- When will we have geothermal financing?
- Standing Column Wells v. Closed Loop v. Open Loop v. DX – are we really going to keep having this battle?
3. Everything points to growth, can the PV industry handle it?
The pv industry saw record growth in 2011, here are the news stories and trends we’re following:
- Solar PV has reached grid parity in some markets. What does this mean for industry growth? Are there are problems with grid parity?
- Huge increases in U.S. electricity rates mean more demand for solar PV and solar thermal. If you’re in a state where electric rates are rising quickly, be prepared to discuss this with customers.
- Soft costs are a major focus of the solar PV industry. Both the government and private enterprises are looking to drastically decrease the soft costs associated with solar. Make sure you understand what is available to your business so you can make sure to offer the lowest cost solution to your customers.
- Solar customers are shifting from early adopters to mass market clients, make sure you know how to sell mass market clients. Marketing and selling to mass market clients are much different then early adopters.
- Will product innovation keep coming into the solar PV supply chain and from where? There is a lot of hardware (modules, racking, inverters) and software (sales tools, shading, design) that go into an installation. Will the product innovation continue to come from components and software or will business models start to evolve more?
- If hardware becomes a commodity along with solar financing, who will have leverage in the supply chain and how?
- Who is filling the middle market gap in the Northeast? In the past 2 years, a huge gap has opened in the Northeast solar PV market, specifically in Massachusetts. The larger players have moved to megawatt projects, huge residential companies have moved in, and the demand for light commercial projects has skyrocketed with fewer companies to offer solutions.
4. Can Solar Thermal Beat PV?
The solar thermal industry has continued to be the bastard step-child of the solar pv industry but we believe its becoming a large opportunity for contractors. Why? The cost of water heating is getting more expensive in many areas, state governments are beginning to back it, and most importantly, EVERYONE is focusing too much attention on solar PV. There is less competition in the solar thermal industry for companies that get it right.
Here are the trends and stories we’re following:
- 7 ways the Solar Thermal Industry is Laying the Foundation for Growth. How do we know where and when the growth in solar thermal is happening?
- What’s the difference between solar PV and solar thermal customers? How can companies find them cheaply?
- Solar thermal has the same bottlenecks that solar PV industry used to, how are we getting rid of them?
- Can product innovation continue to drive down the costs of solar thermal? Sunnovations has recently came our with a great passive pumping system and Wagner Solar has released a new drawback system that is supposed to have a huge cost advantage.
5. Small Businesses Best Practices.
We’re constantly talking to our alumni who have created successful and profitable companies installing renewable energy projects. We plan on sharing what we’re learning.
- Growth is picking up, are you making sure you’re hiring correctly? How do you know if someone is qualified?
- How to create proper in-house training to create a learning organization that can quickly adapt to changes in policy, customers, or building code? What’s the balance from online to face-to-face learning?
- How do you optimize your sales and marketing channels? What are the 3 most important parts of a small, renewable energy businesses sales channel and how do you optimize them?
- If you’re getting started, how do you know if your market has demand?
- Who are the most profitable customers and how do you find them?
- How do you structure your business to incentive employees to install the high quality and most profitable projects?
6. Policy Trends for Busy Professionals.
Most business owners we talk to are too busy and exhausted to pay close attention to government policy – it feels abstract and out of reach for normal, busy people. We see a trend toward engagement at a local level that can have a tangible ROI for small business.
- Clean energy federalism. Federal government is a waste of time, let’s focus on places where we can win. This is the states and local governments. How can we organize and what do we want? Who is already organizing and how can we help them?
- What new markets and states are becoming opportunities? For which technologies?
- 1603 Grant Extension Program. Will is happen for the whole year? If it does not, is the tax equity market strong enough to support all the solar projects?
- We’re working with John Kelley of GEO to offer a short course on how the geothermal heat pump industry can coordinate better to have an impact at the state and municipal level. Look for that to happen in the spring.
7. The impact of energy costs.
- Natural gas is going lower and lower, who will this impact and how does it change the mix of market demand for renewable technologies?
- Propane, electric, biomass, and oil are all staying high. This is good news for renewable energy.
- Fluctuating energy costs impact commercial, institutional, and municipal clients in a very different way than residential customers. We’re going to be watching how the split between residential and commercial markets changes over the course of the year.
- Energy audits and building efficiency have had a level of government and utility intervention that renewables haven’t quiet experienced – where are the opportunities for small businesses in this space?
These are the seven trends we think will have the biggest impact on the solar, geothermal, and building performance industries in 2012.
What have we missed that is really important?