In a panel discussion at Solar Power International 2017 in Las Vegas, managing editor Kathie Zipp moderated a panel of commercial and residential solar contractors. The panel included Kent Harle, CEO of Stellar Solar; Scott Wiater, president and CEO of Standard Solar; and Scott Howe, SVP at Solect Energy.
Here are some experts from the panel discussion on the contractors’ greatest challenges, their relationships with utilities and more.
Watch the full interview here.
Kathie Zipp: What some of your greatest challenges for your businesses right now, and what are you doing to address them?
Scott Howe: We do a lot of our business in Massachusetts, and in the Northeastern markets like Rhode Island and Connecticut. Probably the biggest challenge we’ve seen is the changing of the incentive programs. It seems like every year we have another change. Last year in Massachusetts we took significant hits on net metering. We’ve also had the SREC program reduced in value twice. So a lot of starts and stops and uncertainty when you’re talking to business owners about when to jump in.
Kent Harle: We’re in San Diego so our market’s a little more advanced but we’ve gone through all that too. The rebates are gone. The tax credit has kind of settled in nicely. Net metering 1.0 expired last year so we’ve survived that. We’ve kind of survived all that stuff. Now we’re waiting for the time-of-use rate structure.But other than that, our market’s been pretty stable. I think our biggest issue, and I think the biggest issue for everybody in my market, is cost of acquisition. We don’t have unlimited funds for marketing anymore. We don’t know exactly what marketing venues work consistently. Last year, when net metering 1.0 expired we had the chance to realize that twice as much money in marketing doesn’t bring twice as many leads if the people aren’t interested. I think just figuring out the lowest cost of acquisition and getting good high quality leads is definitely the thing we spend most our time trying to figure out.
Scott Wiater: We were just acquired and our new charter is to go put as many projects on our balance sheet as we can. In this market, for us, sorting through the good projects from the bad projects has always been a challenge. Then you layer on what was said with ever-changing incentives, and that’s always a challenge for us. Another thing which I think’s interesting for this forum is you’ve got the non-utility scale developers kind of at odds with some of the utility scale. We’re all in the same industry, but we’re kind of bucking against each other in some of the SREC states, and I find that interesting. We’re historically doing small projects, now we’re doing larger projects. We’re for all projects, but I think as an industry we should try to figure out how all of the segments of industry, whether it’s residential, non-utility or utility, can all play together nicely.
KZ: Have you seen any Suniva effect on your immediate business?
SW: Absolutely. First off, we’re very opposed to the whole Suniva case, and we’ve been pretty vocal and active in our voice on that subject, but the biggest impact right now that we’re seeing is two fold. One is obviously in the supply chain where we’re seeing a shortage of panels, or people that do have panels asking a premium for those panels. And we see some crazy behavior with people buying at capacity for what is available out there at a premium. We’ve taken the stance that we’re not going to do that, and we’ll see it through. We were just acquired by a big balance sheet company, so we’re fortunate enough to be able to weather the ups and downs of whatever’s going to come of it. The second thing we’ve seen is projects being delayed, whether they’re channel projects for us where a developer has a project and they’re waiting to see what’s going to happen before they want to finalize the deal and close the deal with us. And if it’s a green field project, especially if there’s a consultant involved, we see the ultimate end customer, the host of the solar system, waiting to see the outcome before they award an RFP, for example. I think it’s definitely slowed down the industry and we’re in a weird wait-and-see mode.
KH: I’m in 100% agreement. People put off making decisions because we can’t quote them until we know really what’s going on. On the residential side it’s just never good when the industry has turmoil, and this is more turmoil that we don’t need. I think it’s a real shame we spent the last 15 years with incentives and tax credits trying to drive the price of solar down now to have something like this where it’s only going to raise the price of solar. To me it seems totally counterproductive. If they can’t be competitive, then they need to get out of the market.
KZ: Have you run into interconnection issues with utilities, and how is that relationship evolving?
KH: Honestly, in the San Diego area it isn’t an issue. We’re in some tight markets that have been around for a long time.
SW: I want to move to San Diego. We have a love/hate relationship with the utilities. I think the biggest challenge for us is the secret black box. No one can know what’s happening in that box. Having a great engineering staff, I think, is important to at least have a chance at the interconnection, but the ever changing, unknown black box that we call interconnection with the utilities is our biggest challenge.
SH: What we’ve seen in the last few years is a significant increase in interconnection costs. You know, we’re seeing more and more studies in the markets we serve. Usually if you’re a half a megawatt system or below, you wouldn’t see any additional studies. You wouldn’t see any additional interconnection cost. I had a system the other day that was 80 kWac that went to a study. I mean, it seems kind of silly, truthfully. The length of the process could be four to five months. And that’s if everything happens efficiently inside the process, which it tends not to do. A lot of the engineering work gets outsourced by our utilities. I would say certainly in the Northeast markets it needs work. We don’t have a great partnership with our utilities in the states, especially in Massachusetts. It’s starting to change, but it’s been probably one of the biggest challenges we have. And as time goes on, and circuits get fuller and fuller, it becomes a bigger and bigger issue. We really have to work together to solve that. It can’t be us and them. It’s gotta come together, or it’s just gonna hurt the industry.
KZ: How can installers work better together with the realty and home-building industries?
SW: This is new to me this year, first time I’ve really seen it. We’ve talked to a lot of property management companies and it’s never really been the plethora we always thought it would be because the leases within their buildings never lined with the long-term PPA. What we’re seeing now are people hiring those property managers who have stood up energy divisions within that property management as a new form of revenue. We are seeing some national accounts going through those property managers looking for solar solutions. That’s something new for us that I think will be a trend that you’ll see a lot more of.
SH: We deal with quite a few folks who have large real-estate portfolios, and one says, “It’s the tenant that doesn’t talk back. It puts solar on my roof. It generates a revenue stream for me. It’s a long-term revenue stream.” Now, the challenge is a lot of those guys flip properties pretty often, so they’ve got to hold it at least through the recapture period with the ITC at a minimum, so you’re not going to be doing entire portfolios. But I think there is an opportunity there once they understand what the tax benefits are and what the cash flow scenario is. On the commercial side, we’ve had pretty good luck with real estate companies.
KH: I think it’s been every installer’s dream to work with a big national chain home builder. Look at all that solar, all those houses. It’s kind of a niche. I know SunPower has a group of installers that just do that, and the kind of contractors come in and rope 100 houses over the week. It’s a very low margin, high productive kind of long-term planning. What we’ve seen is that it’s better for the manufacturers to be involved with the home builder. We have never been able to be very successful in it. I’ve got a group of custom home builders that we work with, but that’s a dozen a year at most.
KZ: Is workforce diversity a focus at your company?
KH: We don’t have any formal goals. I’m in San Diego, so it’s kind of a melting pot. I don’t even see it anymore, honestly. It was just through hiring the right people that came in the door. I’m kind of proud of that, but yet it was just probably just because of the market place I’m in. I tend to like good people; I don’t care where they’re from, or what their beliefs are, or color.
SH: I think the most important thing for us from a hiring practice standpoint is finding people with the right qualifications. This is such a new industry that that’s not always easy to do when you’re out looking for people who’s got some experience to fulfill a job. And the on-boarding process as you’re a small, growing company is very challenging, so I’m not sure we’re as much concerned about diversity right now as we are concerned about the quality of the people and their knowledge and expertise. If we get diversity along with it, that’s fantastic. Culture is another thing. You have a certain culture in your organization, and you want to hire people that fit in and are comfortable.
SW: We would love to see more diversity within our ranks, but again we hire the best qualified candidate for the job. I think as an industry if we want to see more diversity, which I think would be healthy, we need to attract those different diversities into the industry as a whole, get them qualified and then we’ll see that natural progression. But we’re very active in supporting those industry-type groups that support more diversity within the workforce.