Community solar is a fast-growing segment of the solar industry in certain states. A panel at Solar Power International 2019 focused on the customer acquisition improvements that could help it grow even faster.
During the panel discussion called “Customer Acquisition: The Hidden Key to Community Solar,” MJ Shiao, director of corporate strategy and business development for community solar software company Arcadia Power, said many developers go through the same process with community solar projects as they would with single-off-taker projects — which is problematic because they are extremely different. He said developers often think they can just build the project and subscribers will come.
Instead, Shiao said developers should carefully look at the demographics of the area where they plan to install a community solar project and think about customer acquisition from the start to avoid issues later. Shiao said it’s important to ensure that when initial subscribers leave, which many inevitably will due to moving or other reasons, there will be new subscribers to take their place. Considering the long-term supply and demand of a community solar project is critical.
Laura Pagliarulo, senior VP of community solar at CleanChoice Energy, said before her company agrees to work on any community solar project, it does a deep dive into the location’s demographics and regulations and looks at whether those support C&I off-takers in addition to residential. If a developer is exclusively looking for residential subscribers, it is necessary to make sure the area has the customer base for initial acquisition as well as the ongoing replacing of customers, she said. Subscribers come and go, and companies must make sure their sales processes are solid so people want to stay.
FICO score dilemma
Arcadia Power is a unique company because it does not require a FICO credit score for customer qualification. Shiao said community solar companies narrow their customer bases by requiring credit scores. He doesn’t think that step is necessary since subscribing to community solar should be as simple as replacing a utility bill.
Pagliarulo said most investors that CleanChoice works with still want a FICO score to qualify customers. She thinks removing that requirement would only minimally reduce acquisition costs, but has a different idea for a bigger impact: Fixing contract terms. Most people want short or no-term contracts for flexibility.
Bryan Birsic, co-founder and CEO of commercial solar financing company Wunder, said banks want to see high credit with locked-in, guaranteed revenue — as close to a mortgage as possible — for community solar subscribers. He said that desire just doesn’t jive with the nature of community solar.
Kyle Marchesseault, VP of marketing at Nexamp, agreed. He said expecting a really high credit score to qualify for something that’s supposed to be very simple just doesn’t make sense.
Pushing consolidated billing
CleanChoice’s customer acquisition costs are also high because the company has to bill customers separate from their utility bills, Pagliarulo said. Collecting payments is a big undertaking and increases company costs.
“The solution here, if we want to get acquisition costs on par with retail [energy], you need to have consolidated billing. That’s how we really bring it to a place where we can scale,” she said.
Shiao said Arcadia is also in favor of consolidated billing through the utility because requiring customers to enter their billing information is a huge hurdle. Expecting customers to trust a third party to handle their sensitive personal information is a lot to ask.
Handling billing internally is also a burden on Arcadia itself. Shiao said that operationally, a major piece of Arcadia’s business is focused on billing when it could be better spent on customer experience.
Building an emotional connection
Once customers are acquired, Marchesseault said it’s important to keep them engaged through regular communication — both on the status of their community solar bill and on the impact of the community solar project they’re subscribed to. He said since most community solar projects are local, it’s empowering to share posts about them on social media and elsewhere so customers can proudly point to their role in creating a greener future. Nexamp also uses solar sheep for O&M for an extra level of green stewardship and shares posts about them that subscribers can show their friends.
— Nexamp (@Nexamp) August 30, 2019
Acquiring customers is a soft cost that won’t go away for community solar developers, but costs can be lowered with creative solutions like those outlined at this SPI panel.