The following article is based on the Solar Power World webinar, “How to better your solar business.” The webinar is available for on-demand review here. The webinar, which first streamed March 30, 2016, featured representatives enACT Systems, Pacefunding and Run on Sun.
The solar business is ripe with challenges, including reducing soft costs, securing financing and using high-quality marketing practices. These topics and more were covered in the webinar “How to better your solar business.” Here are a few highlights:
Reduce soft costs with automation
Soft costs can add up to 60% of the total cost of a typical residential solar project. Commercial projects see similar costs. Soft costs include customer acquisition, installation and O&M. These are labor-intensive aspects of the business.
“It’s really a lot of human effort to make these things work,” said Deep Chakrabotry, CEO of enACT Systems, a cloud platform for the distributed energy industry. “That’s a challenge [that] enACT has been focusing on for the last three years.”
enACT’s solution is to automate the numerous steps—up to 50, according to Chakrabotry —involved in completing a solar project. The enACT software helps manage leads, design projects, complete financial analysis and manage construction—all in one platform housed on the cloud.
“They can design workflows for outsourced construction teams, versus in-house, and create very simple handoffs, where all the company team members know exactly who is working on which project,” Chakrabotry said.
He added the platform enables easy communication among team members, letting them share notes and transfer ownership of projects. It also has an alerts and notifications function.
“We strongly believe in the need for software,” Chakrabotry said. “We believe software can help scale companies, and [by having] all these different steps of the process on one platform, talking to all the stakeholders, we can get operational savings.”
Use PACE financing
PACE is a form of loan developed to finance energy efficiency upgrades and renewable energy projects. PACE, or property-accessed clean energy, programs work through local governments who arrange for financing repaid with a property-tax-like assessment. In order to qualify for PACE financing, a project is required to reduce energy costs. Solar is easy to qualify, said Bob Giles, CEO of PACEfunding.
“The big differentiator versus other financing products available for solar is the repayment is tied to property taxes,” he said. “There is an actual assessment or a lien that is placed on the property.”
PACE financing requires municipal approval. In order for it to work, cities and counties with the authority to levy property taxes must approve of the program. But, Giles said, many areas are already familiar with PACE.
“PACE is an old form of assessment bond financing. It’s been around for decades, with many billions of dollars of assessment bond financing have been issued,” Giles said.
Giles said 32 states have passed some form of PACE-enabling legislation. Today, more than $1.5 billion in residential PACE has been done in California, representing 75,000 homes. Other states are now planning toward PACE based on the success of California, where there have been very few defaults to date, Giles.
Giles said homeowners and solar dealers like Pace for multiple reasons. Users don’t need to put any money down, and competitive interest rates are available for certain segments of the market, even within the low FICO segment that doesn’t have a lot of options.
And for solar contractors:
“The short of it is, PACE provides fast payment,” Giles said.
Denounce deceptive marketing practices
Jim Jenal, founder and CEO of Run on Sun, said the solar industry is approaching a crisis of confidence with its clients.
“Whether it’s some questionable financing schemes or shoddy work or outright fraud, frankly, in some cases, we are eroding confidence in the industry,” Jenal said.
Jenal said news reports are published regularly detailing faulty installations or bad business practices, and they give ammunition to enemies of the solar industry.
Among recent controversies, Jenal noted a settlement agreement involving Arizona-based Epcon Solar, which was ordered to pay $40,000 in restitution. Fines against the company exceeded $150,000, which ultimately put it out of business. In Louisiana, a class-action lawsuit seeks $5 million in damages from three solar companies that engaged in deceptive practices.
“The bottom line out of all of this is it’s simply not a sustainable environment we are creating for ourselves,” Jenal said. “The self-policing we have done to date, such as it is, doesn’t seem to be working.”
Jenal suggested a change of thinking about solar customers—that the industry should instead think of them as “clients.” He said building solar should not be a transactional relationship, like ordering fast or pumping gas.
“We need to have clients, and a client is a trust-based relationship,” he said.
To develop a client focus, Jenal said companies should start by building trust.
“Amongst other things, that implies the duty of candor, which means tell the truth to your clients, even when it adversely affects your ability to close the sale,” he said. “You have a duty of communication. We need to keep clients in the loop. When things change, you need to keep them informed. You have a fiduciary duty as well. You need to look after your client’s financial best interest, and that means providing comprehensive proposals and not a deluge of change orders after the fact.”