Having just moved into a Habitat for Humanity home in Mashpee, Massachusetts, Latoya G. was looking for a way to reduce her utilities bill. After all, the state ranks third highest in electricity rates. Fortunately, Latoya qualified for economic assistance through the state’s Low Income Challenge initiative and had her new home installed with 27 solar panels.
As Latoya’s case shows, demand for solar panels is expanding, ranging from low-income homes to mega-sized solar projects. And the entrepreneurial opportunities it presents are far-reaching. Before Latoya’s story could become a reality, solar advocacy groups had to lay the groundwork for initiatives like the Low Income Challenge. The program from the Massachusetts Clean Energy Council helps state residents benefit from clean energy technologies.
Solar Industry’s Bright Outlook
Such advocacy programs are just one of several areas of entrepreneurial growth being fueled by a bright outlook for solar. Despite the global drop for VC solar funding in the first half of 2020, expect growth on the ground to continue at impressive rates. From 2021-25, the U.S. will install nearly 100 GWdc of solar, a whopping 42 percent gain from just the previous five-year period. Solar will probably set new records for deployment every year after 2022 and is the “new king of the world’s electricity markets,” according to Fatih Birol, executive director of the International Energy Association.
And as of September 2020, the U.S. Bureau of Labor Statistics projects solar installers to be the third-fastest growing occupation over the next decade.
Chris Couture, vice president of customer financing and asset management with SunPower in San Jose, California, thinks that expectations for solar industry growth will ultimately lead to more entrepreneurial opportunities for those who can innovate and add value for customers. The company is one of the largest providers of commercial and residential solar energy and storage solutions in U.S. In recent years, Couture has seen a growing demand for specialty companies that can serve the niche needs of growing solar firms. He says it’s a logical extension of growth and a promising time for jobs and entrepreneurs.
“As solar companies are changing their business models, there’s more opportunity to build tools that can help them adjust to where we are in today’s market,” says Couture.
As solar companies are changing their business models, there’s more opportunity to build tools that can help them adjust to where we are in today’s market.
Opportunities Beyond Installing Roof Panels
For entrepreneurs interested in the solar industry, opportunities go way beyond installation of roof panels. Today’s solar energy includes community installations where more than one building can benefit from a solar “farm.” The industry needs entrepreneurs to help figure out how to store solar energy efficiently as produced, how to route that stored power when needed, and how to avoid grid saturation, when too many units direct power to the grid.
One of the biggest tech-based opportunities Couture sees is digital sales enablement. The industry as a whole is forecast to grow at a compounded annual rate of 20% over the next five years. Couture expects solar to ride this wave as digital sales enablement platforms democratize the playing field for solar installers of all sizes. This movement pre-dates 2020, but the pandemic has accelerated the shift.
“People who are entrepreneurial, who can develop these tools for others in the industry will find a big opportunity,” Couture says.
Solar Companies Recalibrate During the Pandemic
Traditionally, the sales and procurement model for solar companies involves a lot of in-person contact with residential and commercial clients. The process involves designers having to compute shading analysis, tree lines, and other variables to determine what the solar layout will look like. But in the immediate aftermath of the pandemic, solar companies had to quickly recalibrate what their sales and design process would look like.
“We have to address: How do you do a remote design consultation without being at the customer’s home? How do you do lead generation, which traditionally might have been through door-to-door knockers?” Couture says.
The solution is digital sales enablement technology. While SunPower and other large solar companies might have the resources to develop their own digital tools for these processes, others may not have the in-house resources to build proprietary software.
“There are companies now developing remote sales tools for other solar and energy efficiency companies to use,” Couture says.
Case in point: Enact Systems, a cloud-based software as a service (SaaS) helps solar and clean energy businesses automate workflows without paperwork or gaps in service. It helps sales, design, and operations teams to work together incorporating panel layout specifications, financing arrangements, and more in one unified way.
Growing Demand Drives Diversification
Reaping the fruits of an expansion of the solar ecosystem is not limited to B2B vendors. As consumer demand for solar power grows, contractors are sitting up and paying attention.
HVAC contractors are finding that adding solar to their portfolios allows them a new revenue stream and a better way to service their customers. And it’s not just HVAC contractors who stand to benefit. Roofers, lighting contractors, and other related services also cater to residential and commercial solar demand.
“Such diversification allows mom-and-pops to be entrepreneurial and expand their business model into renewables,” Couture says.
Halco Energy in New York capitalized from just such an expansion. Hal Smith, president of Halco, says customers were looking for energy efficiencies and asking about solar. He started offering solar consultancy services and installation as part of his portfolio in 2014 and has not looked back. Similarly, West Coast Heating, Air Conditioning and Solar now includes solar in its suite of HVAC services in the greater San Diego area.
The Policy Landscape Remains a Challenge
Despite the solar industry’s positive outlook, entrepreneurs should be sober-minded about the challenge of myriad state and local regulations that exist to implement solar successfully. However, advocacy groups who can become well-versed in laws and regulations are gaining in strength and actually form another area ripe for entrepreneurial opportunities.
Most solar-related public policies are a smorgasbord of varied regulations. The laws are confusing because each state offers different mechanisms for solar implementation: Florida, for example, forbids any entity, including homeowner associations, from prohibiting the installation of solar panels or other renewables on all buildings in the state. These laws might govern residences or commercial establishments or both.
Even in California, a leader in government support for renewables and a sustainable future, the solar landscape can be opaque.
“In California, commercial real estate developers building multifamily properties are being told they need to install solar,” Couture says. “That brings up many questions: do you use that solar to power the shared energy resources of the complex? Do you distribute it directly to the individual apartment complexes? Then you’re deemed a utility because you’re selling electricity. How does that work with local policies?”
The demand for more advocacy groups stem from the need for specialists to answer these nuanced questions in every state, county, and city where solar policies exist.
The pandemic-fueled recession, changes in work and home-life dynamics, the movement for social justice, and the growing urgency around the climate crisis have converged to create unique entrepreneurial opportunities in solar.
2020 VC Funding Dip Belies the Golden Opportunity
2020 has been a challenging year on so many levels. Indeed, VC funding globally for solar dropped in the first half of 2020. However, for the solar industry, the situation on the ground is changing. The pandemic-fueled recession, changes in work and home life dynamics, the movement for social justice, and the growing urgency around the climate crisis have converged to create these unique entrepreneurial opportunities in solar.
The pandemic’s brutal impact also provides a chance to rethink what the future of energy will look like. While it’s impossible to accurately forecast what the future will look like, there is plenty of room for innovation, growth and success in the solar industry today—and in the post-pandemic landscape.
“There are many environments that are causing businesses to try something different,” Couture says. “Today we have many people working from home worrying about energy bills. At the same time there’s momentum toward social and environmental justice. These three factors will give entrepreneurs opportunities to find new ways of doing things better.”