Discover more from Climate Drift
A guide to Residential Solar
How to put solar on every roof
Discover Climate Drift! Dive into a world where we explain climate solutions and help you find your role in the race to net zero.
Haven't subscribed yet? Join the vanguard and be one of our pioneering 1,000 readers. Sign up here:
Hey reader 👋
Today, we're diving into the world of residential solar. Here's a fun fact: the surge in residential installations is fueled by decreasing system costs and soaring electricity prices.
Want to know how solar became so affordable? Dive into our detailed breakdown here.
In 2022, the U.S. residential sector grew by 40% in a year. To put that into perspective, that's 700,000 American households harnessing the sun's power in just twelve months! Yet, the horizon still holds immense potential. Of the 77 million households that could benefit from solar, a mere 6% have taken the plunge. Across the pond in Europe, the narrative is strikingly similar, with a vast majority of buildings—over 90%—still untouched by solar energy.
Today in our Guide to Residential Solar we are covering four topics:
The Solar Buyer's Journey:
From contemplation to purchase, we break down the steps.
Behind the Solar Panels:
Ever wondered what goes on behind the scenes?
Gazing into the crystal ball to predict market shifts.
Challenges in the Solar Realm:
It's not all sunshine; we delve into the industry's pain points.
Also stay tuned for our next installment, where we'll leverage this foundation to spotlight six frontrunners in the U.S. residential solar scene.
Let’s dive in 🌊
PS: A quick heads-up: In the world of residential solar, “Residential Solar” is often abbreviate it to "resi." So, you'll see me using this shorthand moving forward.
A guide to Residential Solar
The Solar Buyer’s Journey
Residential Solar, resi from now on, is experiencing a boom. But why is it gaining traction, and what's in it for homeowners?
1. Decarbonization and Electrification:
At the heart of the global energy transition is the shift from fossil fuels to cleaner, renewable sources. By adopting solar, homeowners directly contribute to reducing carbon footprints and accelerating the move towards electrification.
2. Resiliency and Back-up Power:
The modern world is unpredictable. From natural disasters to grid failures, the unexpected can leave us in the dark. resi, paired with storage solutions, offers a buffer. It ensures that homes remain powered, even when the grid falters.
3. Saving Money:
The economics of energy are changing. Traditional electricity prices are on an upward trajectory, and the costs associated with solar installations have plummeted in recent years. The result? Over time, solar becomes not just an environmentally conscious choice, but a financially savvy one.
4. The Timing Element:
Governments and institutions are recognizing the value of solar, and in many regions, subsidies and incentives are available. These financial boosts make the transition to solar even more compelling. If there ever was a 'golden hour' to invest in resi, it might just be now.
Transitioning to solar is not a mere purchase; it's a series of deliberate decisions and actions. Let's delve deeper into each phase of this intricate process.
The journey begins with understanding. What are the available solar options & vendors?
Armed with knowledge, the next step is selection. Which solar installer resonates most with your criteria, taking into account factors like the installer's reputation, feedback from previous customers, warranty provisions, and your budget?
This is the commitment stage. Here, the decision to go solar translates into a tangible transaction. Financing also needs to be decided upon.
4. Final Design:
It's not just about placing panels anywhere. This phase involves strategizing the optimal placement of solar panels on your property, considering both efficiency and aesthetics.
The physical implementation phase. Panels are mounted, cables are laid.
Once installed, the system is connected to the grid, marking the beginning of solar energy production for your property.
Solar energy isn't limited to panels. This phase explores further enhancements, like integrating batteries or considering an electric vehicle to maximize the benefits.
With the system in place, continuous monitoring of the PV system is crucial to ensure it operates efficiently.
Sustaining the system's efficiency requires regular checks, potential repairs, and occasional replacements.
Each phase presents opportunities. Specialized vendors can cater to specific steps, or for those seeking simplicity, a single vendor can orchestrate the entire symphony. The DIY spirit that once dominated the solar realm is gradually giving way to end-to-end service providers. Why? Because there's an allure in simplicity. A single point of contact, a unified vision, and a streamlined process.
As we'll explore further, the trend is clear: solar vendors are evolving, aiming to offer a holistic, full-stack experience.
Behind the Solar Panels
At its core, every resi provider operates around three fundamental business functions.
1. Sales and Marketing: The Frontline Warriors
At the forefront of any solar provider's operations is the Sales and Marketing team. Their role? To communicate the value proposition, resonate with potential customers, and drive the narrative of sustainable energy solutions. This team is the bridge between the company's offerings and the homeowner's aspirations.
Direct Salesforce: This is the in-house team, trained and equipped with deep product knowledge. They're the ones who engage directly with customers, understanding their needs, and offering tailored solutions.
Dealer Network: Beyond the direct team, a solar provider often collaborates with a network of dealers. These dealers, while external, are integral in expanding the provider's reach, tapping into local markets, and offering a personalized touch.
2. Installation: Where Vision Meets Reality
Once a homeowner is on board, the next crucial phase is installation. This is where the abstract concept of solar energy transforms into a tangible entity on one's rooftop.
Direct Install: Some providers prefer to keep this process in-house. A dedicated team of experts handles the installation, ensuring quality, consistency, and adherence to brand standards.
Dealer Network: Just as with sales, installation too can be outsourced to a trusted network of dealers. These local experts, familiar with regional nuances, can offer a seamless installation experience.
3. Financial Solutions: Making Solar Accessible
Solar energy is an investment, and like any investment, it requires capital. Recognizing this, solar providers have crafted financial solutions to make this transition smoother and more accessible.
Power Purchase Agreements (PPA): This is a unique model where homeowners can host solar panels without the upfront cost. Instead, they agree to purchase the power generated by these panels, often at rates lower than traditional utilities.
Loans: For those looking to own the system outright, solar providers often collaborate with financial institutions to offer tailored loan solutions. This allows homeowners to spread out the cost over time, making the investment more manageable.
Having delved into the anatomy of resi providers, it's clear that each segment, from proactive sales teams to the essential finance departments, plays a significant role in steering the solar industry's direction.
But here's something to consider: not every company encompasses all these facets. Some choose to specialize in particular areas, honing their expertise and delivering unparalleled value in that domain. Specialization can often lead to mastery, setting a company apart in a crowded market.
Outlook: Gazing into the crystal ball to predict market shifts.
3 major factors are currently changing resi companies:
The Rise of the Full Stack Approach
The solar industry is undergoing a transformative phase. As we've observed, there's a distinct trend emerging. More and more companies are leaning towards a 'full stack' model, aiming to offer a comprehensive suite of services all under one banner. As we journey further, we'll spotlight some of the leading 'Resi' giants in the U.S., delving into how they seamlessly weave together these core functions.
The Power of Customer Relationships
Shifting gears, there's an increasing emphasis on the value of customer relationships. In an industry that's becoming more fragmented, owning and nurturing these relationships is paramount. This fragmentation, while presenting challenges, also offers a silver lining for consumers: a move towards quality and trustworthiness.
From Single Transactions to Lifelong Partnerships
There's also a palpable shift in the business ethos. Gone are the days when solar companies would simply sell panels and then step back. The modern solar enterprise is looking at the bigger picture, focusing on long-term engagement. From introducing homeowners to the world of solar, designing bespoke setups, and installing systems, to upselling complementary products like batteries and software, and then ensuring years of reliable maintenance - it's all about enhancing the Customer Lifetime Value (CLV). This holistic approach not only benefits businesses but also ensures homeowners receive consistent value and support throughout their solar journey.
Challenges in the Solar Realm
It's not always bright skies; we're diving into 3 of the industry's challenges.
The Complexity Conundrum
The solar industry, while promising, often presents itself as a complex puzzle to the end customer. What most homeowners seek is simplicity, reliability, and top-notch service. However, the intricacies involved in adopting solar can be overwhelming. It's essential to remember that the end users, the homeowners, are the ultimate decision-makers when it comes to resi adoption. Their struggle with understanding and navigating this complexity can deter many from making the switch.
Furthermore, this complexity isn't just a challenge for consumers. For providers, intricate processes, from delivery to manual operations and tailored solutions, can significantly reduce profit margins.
Supply Chain Hurdles:
The solar industry isn't immune to the global challenges of supply chain disruptions. These interruptions can delay projects, increase costs, and affect the overall efficiency of solar adoption.
A significant challenge in the solar journey is the installation phase. The demand for skilled PV panel installers currently outpaces the supply. The processes involved in installation are multifaceted and can be cumbersome to manage. Moreover, many installers find themselves overwhelmed by the administrative and sales aspects of their roles, which can detract from the actual installation work. This situation is further exacerbated by a shortage of skilled workers in the field and the challenges associated with training new contractors effectively.
Thank you for joining us on this breakdown of resi. Our aim was to shed light on the world of residential solar, and we hope you now have a clearer picture of its workings. The story doesn't end here; gear up for our next edition where we'll pivot from the basics to spotlighting six of the U.S. residential solar trailblazers.
Until our next deep dive, keep shining and stay curious. 🌞
PS: If you found this guide enlightening (okay, I stop now), consider sharing it with a friend or two. The more we spread knowledge, the brighter (last one, really) our future becomes.