The solar industry is growing quickly, but it’s a bit like the Wild West. Here’s how to make sure your convoy stays on the trail.
There’s no doubt that the U.S. solar industry is blazing a trail. Companies installed more than 700 MW of photovoltaic capacity in the first quarter of 2013. According to SEIA/GTM’s latest U.S. Solar Market Insight report, that’s a 33% increase over the first quarter of 2012. But the trail is laden with changing incentives and nose-diving prices. Thousands of service providers are ready to duel for their place in the industry, making it a bit like the Wild West. If you don’t pack your wagon with the right supplies, your convoy might not make it to the end. Thankfully, whether you’re building utility, commercial or residential projects, we asked experts to share some advice before you lose your way.
Build A Good Reputation
Working to grow as a utility-scale contractor differs from working in the commercial and residential markets. Utility work, for instance, has a limited customer base relative to other markets.
Working in such an arena means your company’s reputation is paramount. Dan Girard is director of renewable energy and energy storage business development at S&C Electric in Chicago. He says building a good reputation can start with speaking to your customers, understanding their needs and meeting them. Plant developers and operators have specific requirements. Girard and his team found that they could reduce costs and lead times of building interconnection substations. “We saw an opportunity to reduce costs by eliminating the control house and circuit breakers with our switchgear, and reduce lead times with a standard design,” he says.
Utility projects also have tighter margins, which create a lower threshold for error. “Therefore, quality and consistency are of the utmost importance,” says Stephen Gleason, who works on project development for CSI Electric in Santa Fe Springs, Calif. “A company’s reputation can be the difference between being awarded a project or not.”
Have A Smart Team
A strong, knowledgeable team is also crucial in the utility-solar space because of the scale of projects.
“Mobilizing and supporting hundreds of electricians requires an incredibly strong core group of employees,” Gleason says. “Design expertise, engineering and product knowledge are pre-requisites. While some information can be learned on the job, a winning team brings all of these skills to the table.”
Girard also says it’s important to have a dedicated group focused exclusively on solar energy. “This allows you to tailor solutions specifically to meet the requirements of solar projects and offer the best value to customers,” he says.
A strong team can also help projects stay on schedule. Utility customers must meet procurement, utility approval and source connection, often on a tight schedule. Girard explains that problems in any of those processes can mean postponing project deadlines.
“We lean equally on our team’s expertise in renewable integration and sound project management methods to foresee, prevent and adapt to challenges that could affect deadlines,” he says.
In many regions, Girard notes, there are fewer incentives for large-scale solar compared with those for commercial or residential solar.
“Being profitable can be challenging,” he says. “You need to get creative to reduce construction costs.”
The commercial and residential solar segments have their own challenges. Roland Kiser, CEO of Martifer Solar in Los Angeles, says companies need to take credit risks and learn to manage them. Kiser also suggests building strong relationships with Fortune 1000 companies. “It takes a company and leaders who can understand the market and execute each step of its strategy well to come out on top,” he says.
Kiser also finds most businesses’ solar decisions are predominantly economic. Companies, therefore, may find it most effective to focus on solar’s ability to lower the levelized cost of energy (LCOE), which is the price at which electricity must be generated to break even over the lifetime of the project.
Brendon Merkley, COO of Vivint Solar in Provo, Utah, says direct communication with the customer is a key difference with residential solar. “Our live 24-hour customer service enables prompt responses to homeowners directly, providing assurance that the system is running correctly,” he says.
Jim Jenal, founder of Run on Sun in Pasadena, Calif., says it’s also important to reach out to customers through education. “Utilities have guaranteed customers and a guaranteed return,” he says. “We have neither. Attracting customers requires a strategy to reach out to your audience.”
Run On Sun has chosen to do this through a blog, which has proven to be a priceless asset.
“Our blog is our biggest tool,” Jenal says. “Pretty much all of our commercial clients have come to us at least in part because of the blog. It’s greatly expanded our presence and given us visibility.” Jenal says his company is also about to publish a book to educate potential clients.
Also, blogging has proven to be an effective way to educate the public. “The industry as a whole continues to face a public that is often skeptical of what we offer,” Jenal says.
To overcome that, Jenal says his company puts out honest, straight-forward information about going solar. His team also spends time talking to people on the phone or in-person to answer their questions.
“We do so even when they do not represent a potential sale for us,” Jenal says. “We believe that ultimately the entire industry benefits from a better educated public.”
Some advice can help installers across all market segments grow, particularly certification, quality and choosing the right partners.
–Certification Gives You Credibility. Certify your skills so potential clients can be assured of them, rather than just taking your word for it. Jenal says he believed Run On Sun’s skills set it apart from other players. “But to give that claim greater credibility, we sought and achieved North American Board of Certified Energy Practitioners (NABCEP) certification for all three of our owners,” he says.
–Emphasize Your Quality And Efficiency. Downward pressure on price has created a constant struggle to be competitive while maintaining quality. “Some contractors and developers are chasing a falling price point and, unfortunately, no one wins in the race to the bottom,” CSI’s Gleason says.
Gleason also says quality, safety and efficiency are important cornerstones for a company, as well as for aligning with customers and partners that value high-quality, professional work. “With over 80% of our business being with repeat or referred customers, this strategy seems to be working,” he says.
-Show Your Value. There are hundreds of solar projects under consideration and even more service providers. Demonstrating the success of what you’ve done and what you can deliver establishes a company’s value. So does forming the right long-term partnerships with customers and suppliers.
-Think About The Future. Looking to grow as a solar contractor requires a constant look to the future. Jenal of Run on Sun sees the development of intelligent energy storage at a competitive price as key to the growth of the overall industry.
“Some of the companies that will provide those systems are coming online now, and many more will follow,” Jenal says. “In five years, I fully expect to be installing storage technology as standard components of our systems.”
Lastly, Martifer’s Kiser says the industry must work together to bring solar into the mainstream. “Besides the fundamentals of technology, the solar industry must drive down costs far enough to make solar competitive against other energy sources,” he says.
By: Kathie Zipp, SPW Managing Editor
Read more business lessons from solar installers here.