The Hard Sell of Free Solar
Everyone is getting phone calls, seeing mailer, seeing TV spot promoting FREE SOLAR. But is this solar really free? Are these solar companies offering the best deal for the homeowner? Companies like Solarcity are leading the way.
When SolarCity released its second-quarter numbers, it expected to install between 70 MW and 77 MW during the third quarter and about 270 MW for all of 2013. On Friday, the company said it actually installed 78 MW last quarter and will install 278 MW this year. To give the rally even more fuel, management predicted 475 MW to 525 MW of installations for 2014, up to 89% growth over this year. (Motley Fool)
These programs of “so-called free solar which are actually solar Leases and PPAs now dominate the solar residential market, – over 75% and large national companies like Solarcity, Verengo, SunRun and Vivint are the main drivers of this wave. These solar financing entities have revolutionized residential solar and given the growth of solar a tremendous boost. Considering these growth numbers, one might argue that any solar installation company that does not offer financing does not have much of a future. And many smaller solar companies are being driven out of business. The companies with financing models increasingly control the market and the future of solar. But where is all the benefits really going? It is not going to the homeowner. Through the PPA financing model these companies stand to realize as much as 80% of the benefits of from the solar electric systems homeowners put on their roofs.
We are entering a new era of solar. A time of incredible growth, but where the lion’s share of financial benefits of going solar will not be recognized by the individual, but by the corporation.
The Solar Hard Sell
As the solar market has expanded from early adopters to the general population, and solar companies have grown in size and in number so has the competitive atmosphere. Adding to this situation is a weak economy with high unemployment. Solar, being one of the few bright spots in the economy has attracted people and money. The result has been a lot of companies – from local contractors; roofers, electricians, builders, to national alarm companies and financial lenders are all streaming into the space. With greater competition, tightening margins, and with panel prices – which have dropped dramatically leveling off in price, companies are looking at any soft money areas they can to gain an edge or pick up some margin. That area is sales.Success in solar as in any sales situation is all about the numbers. How much time and effort and money is needed to close how many deals. The mantra at all the major solar companies is: THE ONE VISIT CLOSE
Unthinkable in the past, this is now the holy grail of the new fast paced solar industry. The challenge for the PPA solar companies is how to get people to accept a new complex technology and sign up for a twenty year lease agreement containing up to 25 pages of legalese – all in just one visit.
“For every one visit close this month – a set of steak knives .”
Salesmen are compensated in large part based on the sales they make, on commission. And with a bloated labor force, and a lot of salesmen moving from other slow areas of the economy, many solar companies are moving to a “commission-only” compensation model. A commission-only model naturally encourages a more aggressive sales approach. (It should be noted that SolarCity for one does pay a base salary and offers benefits to its sales team.)
Lots of pictures and charts
From a marketing standpoint, the best way to sell the solar lease is to make the idea of getting solar sound as simple as possible. So solar companies assert throughout their collateral material that they take care of everything. The best way to say this, to express the concept of simplicity and ease is to use lots of pictures. Old solar proposals which resembled spreadsheets have given way to Madison Avenue designed sales pitches, filled with pages of colorful graphics and pictures, bullet points. happy customers, and lots of assertions that –
“WE TAKE CARE OF EVERYTHING.”
The Selling of Solar
Lets start with the premise that solar is a wonderful thing – great for individuals great for the planet. In the grand scheme of things, the more solar installed the better. One could even argue that an extremely aggressive business approach is exactly what is needed to save the planet, that this is exactly the hope that capitalism offers, a form of enlightened self interest. If the financial incentive is there, then money hungry creative minds will rise to the occasion and the world will be saved. Global warming meets Atlas Shrugged – an Ayn Randian Environmentalism. But one must also consider stories such as Solyndra which has been used by opposition to alternative energy to argue against the growth of the industry. Solar is presently viewed as a positive force. It is still in its infancy, and entrenched forces are targeting solar with campaigns attacking its legitimacy. ( See clouds on the horizon.) Solar is still – (tho getting close to parity,) dependent on subsidies to be competitive. It needs popular support. The industry cannot afford to be tarnished by overzealous businesses that have tunnel vision for the immediate profit, who lose sight of the long term goals. The solar industry cannot let itself degenerate into a used car salesmen approach, even if those cars are pollution free Teslas.
The typical PPA solar pitch and accompanying proposal make going solar sound easy. However, the actual contract the customer must sign is not so simple. It is extremely important that anyone signing a contract have it reviewed by an attorney. There is nothing simple or easy about a 2o year legal obligation. In order for the industry to protect its future it needs to ensure the protection of its customers. It needs to make sure they are aware of all aspects of these 20 year PPA and lease agreements.
Green Bubble part 3 http://powertwo.org/green-bubble-3/