2012-01-26

Co.Exist

4 Market Niches In The Solar Boom

After a summer hearing about the death of Solyndra, you couldn’t be blamed for not knowing that the solar industry is exploding in this country. And it’s not just selling panels—an entire industry is springing up around people getting energy from the sun.

When you talk to people about solar you often find their thoughts are loaded with preconceptions, assuming solar is expensive, impractical, and just for treehuggers. The failure of Solyndra reinforces these ideas for many, leading them to think, "You see?" As it happens, these preconceptions are for the most part no longer true—if they ever were.

People are often surprised to learn that solar installation is a booming industry in the U.S., growing 67% in 2010. When the final numbers are in for 2011, the numbers should double the amount of solar installed in 2010, according to the Solar Energy Industries Association. Solar is growing because it makes sense on many levels, helped by a 30% drop in the price of photovoltaic panels last year alone. At the same time that this drop in price contributed to the demise of solar manufacturers like Solyndra, it also helped to drive the rapid growth of solar installation and businesses specializing in innovative solar niches.

This rapid growth can be seen at SolarCity, based in San Mateo, California, which designs, sells, and installs solar-power systems for homes and businesses. SolarCity has hired 500 employees in the past year, expanding operations to 11 states. The company recently announced a $280 million investment from Google and a contract to install solar on 60 Walmart stores. They are moving forward with a $1 billion project called SolarStrong to put solar on 120,000 military homes. With less than 1% of electricity in the world coming from solar today, the company sees lots of room for growth. "We believe electricity costs are going to continue to climb," said Lyndon Rive, SolarCity’s CEO. "We believe this will help solar scale to become a mainstream source of U.S. electricity in this decade."

Another preconception is that only solar installers can be a part of this growth. The growth of solar creates opportunities for a variety of innovative entrepreneurs though, not just those working on rooftops. Every solar project involves marketing, finding leads, sales, financing, and a variety of sales and services in addition to installation, and each of these steps is an opportunity for people from many fields to carve out a niche to join the solar boom while keeping their boots planted firmly on the ground.

1. Finding Clients

For solar installers, performing the installation is usually the easy part of the job. Finding new clients is the real challenge, and not just any leads but leads that actually translate into sales. Clean Energy Experts, founded in 2009 in Manhattan Beach, California, uses web marketing tools to educate consumers and identify likely clients for installers. Providing high-quality leads, they’ve seen their business grow steadily, averaging 15% to 20% monthly revenue growth as the price of solar has fallen. Starting with two employees in early 2010, they’ve already tripled in size.

"Our business is growing because solar is gaining traction for all the right reasons: Costs are dropping, the payback period is shrinking, and consumers are realizing that they can save a substantial amount of money on their electric bills without a large upfront investment," says Reggie Norris, executive vice president at Clean Energy Experts.

2. Sales

Another opportunity is for sales pros to carve out the sales niche in the solar transaction, leaving installation to installers. Prime Solar Network, based in New Jersey, helps entrepreneurs start a solar sales business, providing them with training, marketing support, financing, websites, and just about anything else they need to get started. With installers under contract nationwide, Prime Solar offers licensees the ability to subcontract installations, to serve as a sales broker, or to work toward becoming installers themselves if desired. They are expanding into offering a full line of complementary energy conservation products.

"When starting a solar business, building your sales organization should be your priority," says Tim Cassidy, CEO of Prime Solar Network. "When strong cash flow is established, you can reconsider bringing installs in-house. With the support we provide to licensees, they can start a solar sales business for as little as $7,500 to $15,000, versus $50,000 or more that can be needed otherwise."

3. Financing

Cash is tight for many homes and businesses these days, and while a growing number of people like the idea of solar, they worry about how they can pay for it. BrightGrid, based in New York, offers financial services, including solar leases that require no money down from homeowners. Founded in the summer of 2009, BrightGrid has recently grown from 5 to 14 people and is seeking to expand still further in the near future. Investors provide the funds required to buy panels, attracted by the tax credits and strong rate of return, and are likely to continue this trend as long as these conditions continue. Innovative financial models have helped solar grow through the recession even as traditional financing routes have dried up.

"The solar industry is one of the fastest-growing industries in the country," says Michael Ruelhman, co-founder of BrightGrid and director of business development. "It is primed for innovative ideas and disruptive business models that help accelerate deployment."

4. Accessories

Solar panels are only one aspect of solar power. Installation of solar involves a host of related products and services, including monitoring, maintenance, backup systems, mobile power, energy efficiency services, solar hot water, solar pool heating and more.

One niche is providing and storing solar power during blackouts. Power outages from strained grids, storms, fires, and human error are increasingly common, and is one situation where solar can provide backup power when paired with batteries for energy storage, a niche in which the startup Data Industrial Battery is specializing.

Another niche is providing energy monitoring systems that tell consumers how they are generating and using power, helping them to get more from solar. EcoDog in San Diego was founded in 2005 and spent five years developing the FIDO Home Energy Watchdog system, launched in 2010. As the company grows, EcoDog’s solar dealer network has already grown to include 30 dealers in nine states.

"EcoDog’s sophisticated solar monitoring capabilities are increasingly sought after as consumers demand greater understanding of complex utility rate tariffs, easy calculations of their savings, monitoring of their electrical consumption, and enhanced solar system monitoring to assure maximum value and output from their PV installation," says EcoDog CEO Ron Pitt.

Solar still faces many challenges. A major change in incentives or in the cost of solar would affect all of these businesses, but every industry has its challenges. For now, indications all point toward continued rapid growth as solar becomes an increasingly important part of our energy mix. It’s an attractive proposition from any perspective.

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1 Comments

  • Adam Capital

    Great article Glenn! We agree that the sky's the limit with solar, but it's all about finding the right market niche and solving a real problem for people. With the ITC grant expired, it's harder for rooftop scale solar installers to get the financing they need. This creates an opportunity for financing firms to come up with innovative solutions. Adam Capital is a great example of a company doing just that, and we need more companies like them and the ones you've mentioned in this article to solve the financing challenges. If the numbers pencil out, there is lots of opportunity for these other niches to get involved. And we need them all. Nice work!