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In the stage version of The Sound of Music, there is a song about the perils of romance among the affluent titled, “How Can Love Survive” – sadly it was cut for the movie. But I’ve always liked that song and I was reminded of it while reading a piece over at greentechsolar that debated the question: Will smaller solar installers survive? Lest you have any doubt where we come out in this debate, the answer is simple: heck yeah! But let’s see why…
The debate was held last week at the U.S. Solar Market Insight event in San Diego and was reported on by the always interesting Herman Trabish in a piece titled, “GTM Debate: Will Smaller Installers Survive in Tomorrow’s Solar Market?” (H/T solarwakeup.com) The debate featured Vivint Solar’s VP Thomas Plagemann squaring off against SunPower’s Residential Solar VP/General Manager Martin DeBono.
Plagemann’s comments reflect all of the arrogance and self-importance we have come to expect from such major players:
“In this business, we have to take three essential steps,” Plagemann said. “Find and acquire customers, design and install systems, and finance the systems.”
Financing has to come first, he explained. “A typical equity finance fund of $50 million, at $2.50 per watt and 5 kilowatts per system, means 4,000 systems. Using small installers to get that scale cedes control.”
Vivint has installed home security systems nationally for twenty years and keeps that control. “We acquire customers. That’s what we do. We took that customer acquisition engine and applied it to solar. Our success in the last twelve months is the answer to this debate.”
We note that Vivint has mostly done its work outside of the California market, so that $2.50/Watt number is not reflective of their presence in our fair state. Indeed, when we last looked at CSI data for the first half of 2013, Vivint did not even crack our list of the top 16 installers. Here’s that graph:
But even if they aren’t (yet) big in CA, is there any doubt that you could have gotten the same response from someone at SolarCity? Their goal is to make solar a commodity with a standard set of offerings - if your roof fits into that model (and your FICO score is high enough) - you are golden. Just don’t look for any real care and attention to detail.
Speaking for the little guy was DeBono from SunPower (with just a little irony given the size of SunPower). He noted that:
“Small business is the second most popular institution in the U.S., after the military,” he said. People want to buy from small businesses.” In the home building industry, 40 percent of new homes are built by large national builders, but 60 percent are built by small local builders. Solar installation will break out the same way, he said.
“Large solar installers can leverage the advantage of scale as long as everything is uniform,” he argued, “but variance is the rule in solar, and variance is anathema to scale. For customers that don’t fit into a box, local installers are the answer. Variance will cap the rise of national installers.”
DeBono went on to note that forming a partnership with SunPower provides installers with leverage and a national brand.
We agree that establishing partnerships is essential, though we might question the degree to which SunPower is a national brand in the way that matters most - consumer consciousness. Toward that end, we believe that partnering with a company like LG Electronics - which truly is a national brand and has the ad budget to prove it - makes more sense for small installers. But how do you get access to the other essentials of the business?
Run on Sun has been exceptionally fortunate to have partnered with Focused Energy, who is much more than a premier distributor. They have not only been our primary supplier since we first connected a few years ago, but they have offered us support, flexibility and insight that has made them an essential part of our success. If you run a small solar business and you haven’t connected with them yet, we would encourage you to check them out.
As we have said many times, solar has to be more than just another business. We have to be better. At the end of the day, that is why the small installers will survive: because we care more, and that translates into greater value for our clients.
Bonus for sticking around to the end: