By Boaz Soifer, CEO, BayWa r.e. Solar Systems
Like most economic sectors, clean energy has been significantly impacted by the COVID-19 pandemic. Within the solar industry, distribution businesses have faced some unique challenges. To meet them, we’ve had to learn how to dramatically accelerate our reaction times on a range of issues, responding to public health and economic swings as well as keeping up with urgent changes in our customers’ approach to sales and supply-chain management.
During the early days of the pandemic in March and April, our main focus was to stay abreast of changes in public health, monitoring various state responses, and evaluating the impact a national and global economic shutdown would have on the U.S. solar market, especially in distributed generation. To do this, we disbanded many of our ongoing projects and the cross-functional teams working on them. Then, based on timely guidance from a pair of McKinsey posts, the March 9 COVID-19 briefing note featuring an insightful crisis management roadmap and a subsequent article titled “Adapting Customer Experience in the Time of Coronavirus,” we formed several new workstreams focused on taking care of employees and customers and planning for the future.
Since the BayWa r.e. team was already 70% working remotely, we were able to transition seamlessly into a 100% remote work environment. The biggest factor in taking care of employees was dramatically increasing communication to keep everyone informed about changes in our strategy and tactics. We decided to do this via a daily internal town hall, which was optional for employees to attend. We took a half-hour for this each afternoon. We used the first 10 to 15 minutes to update the team on what we were seeing and doing. The remainder of the time was spent “popcorning” around the meeting to hear about our team members’ individual experiences, both related to work and to their personal lives. In this way we could manage uncertainty and stress collectively and openly, communicate key points, and support one another.
Staying close to our customers had several important elements — none of which were about selling to them. First and foremost, we wanted our customers to feel supported. We called them all to check in, to share any insights we had about the fast-changing environment, and to make sure they knew we were available to help them. The second purpose of these calls was to proactively deal with receivables. We knew it might be challenging for contractors to pay their bills on time in such an uncertain situation, and we discussed this topic openly and collaboratively with them. The third purpose was to get our customers’ on-the-ground assessment of market impact, so we asked them about their lead flow, close rate and pipeline health (cancellation rate and total backlog). This helped us understand which states were most impacted and in what ways, which we used to inform our own scenario planning.
In addition to calling all our customers to extend our support, we created a COVID-19 resources page and launched a weekly online Solar Town Hall attended by our customers, employees, suppliers, and yes, even our competitors. This virtual event featured a different mix each week of solar contractors and industry experts discussing the most pressing issues of the day, including the macroeconomic outlook, how to apply for and manage Federal PPP loans, best practices for managing employee and customer safety on the job site, and how to transition from in-person to online sales, proposals and site assessments.
From this engagement, we learned about how many industry stakeholders were perceiving the situation and changing their strategies, capabilities and processes to adapt. The most important trends we saw were related to sales and site assessment processes, installation and permitting processes, and line card and procurement choices. Due to the positive response to the Solar Town Halls, we are continuing them, albeit on a less-frequent schedule.
We’ve been impressed by how rapidly solar contractors of all sizes and types moved to virtual sales. Many of the tools to enable this, such as meeting platforms and online solar design and proposal tools, were already available, so this was mostly a matter of contractors updating their sales process to incorporate them quickly. Once new processes were in place, it was essential for contractors to closely monitor what worked and what didn’t, since keeping their backlog relatively healthy was paramount in order to weather the downturn.
In states where installation could commence, we saw a variety of innovations in best practices. Some permitting offices were able to move quickly to online processes, and some maverick inspectors began conducting inspections virtually with Facetime or other video apps. We also donated to the SolarAPP effort spearheaded by the National Renewable Energy Lab (NREL) and key industry, municipal and association partners. SolarAPP (“solar automated permit processing”) will help harmonize permitting processes across the U.S., which will enable more permitting offices to streamline and reduce both cost and lead times.
We also saw contractors define safety protocols for their teams, such as driving separately to job sites, keeping hand sanitizer and hand-washing stations on their work vehicles, and implementing daily temperature checks before work.
Contractors also reported a surge in demand for energy storage systems, so we augmented our line card with Generac and Enphase battery systems to complement the solutions we already offered from LG Chem and BYD. End-consumers still interested in installing solar wanted to make sure they could also provide their own power in case of prolonged outages — an unexpected but welcome emerging trend.
Some solar contractors also modified their procurement strategies to reduce inventory weeks on hand and preserve cash. We were able to work with them to improve supply chain planning and also provided a “split-pay” residential solar loan in partnership with Sunlight Financial to facilitate additional credit and keep crews active.
All of these rapid changes in response to the pandemic revealed a heartening resilience and entrepreneurial spirit throughout the industry. As a distributor, our role was primarily to build community, support open discussions and disseminate information up and down the value chain, helping both contractors and manufacturers stay up to date in an unprecedentedly dynamic environment. Today, the solar industry has largely recovered — barring another wave of shelter-in-place orders — and is poised to apply its learnings to healthy growth expectations for 2021.
Boaz Soifer is CEO of BayWa r.e. Solar Systems, a leading U.S. distributor of top-tier solar and energy storage components and systems based in Santa Fe, New Mexico.