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1 | SPECIAL REPORT Photo credit: Roof Tech How to Make Money in the Midwest SPECIAL REPORT SPONSORED BY
1 | SPECIAL REPORTPhoto credit: Roof Tech
How to Make Money in the Midwest
S P E C I A L R E P O R T
SPONSORED BY
Make Midwest Solar Work for You
Spoiler alert: You make money installing solar in the Midwest the same way you do anywhere else. Bummer, huh? So why did we put together this 22 page report? Well, identify-ing those opportunities and executing them in a less mature market requires a differ-ent approach. And to help our friends in the Midwest catch up to those jerks on the coasts (no offense), we thought corralling some best practices from around the region would help give a boost to those looking to make things happen in the Heartland.
In this special report, sponsored by Solar FlexRack, we talk to a few solar compa-nies that have done this already. We look at just how they’ve found that success and how you could replicate it. We look at the political and economic factors that are both helping and holding back the solar industry at this current moment — and how you might use any scenario to your advantage. We also look at general sales strategies that will hopefully drive more business, while lowering your costs.
Bottom line, the fact that the Midwest isn’t quite as primed for the same volumes of business as say the Northeast, to us, means that now is the time to establish yourself. Be the big fish in the small pond, and then watch as that pond swells to lake levels.
Thanks for downloading.Chris Crowell, Managing [email protected]
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editor’s note
3. Winning the Midwest A new solar market is starting to form in the Midwest. How is it taking shape?
6. All Politics Is Solar How one solar developer grew its business and the political power of the solar industry in the Midwest.
9. On the Case There are opportunities for solar projects in the Midwest — the key is knowing where and how to look.
12. Four Steps for More Solar Sales Advice for finding more customers and lowering customer acquisition costs.
16. A Community Solar Success Story Minnesota is near the top of the country for community solar projects. Here is how one such project got done.
20. Financing Advice Wunder Capital explains what it looks for in Midwest commercial deals.
contents
2 | SPECIAL REPORT
A new solar market is starting to form in the Midwest. How is it taking shape?
By Chris Crowell
WINNING THE MIDWEST
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You’ve probably heard, but more solar is being installed than ever before. As the cost of solar dropped the last decade, the economic case in areas of the country with high electricity prices was simple. This isn’t the case in the Midwest, where energy costs are lower, which keeps everyone mellower about the fossil fuels being mined
and fracked in their backyards (we say this lovingly as Ohioans). So, sure, most of the action is on the coasts, but even the Midwest is now starting to emerge from its cave, rub the
soot from its eyes and see (and harness) the light. Here’s what solar industry onlookers are buzzing about in the Heartland.
Midwest means MW-scaleCheaper electricity and a less demanding public means the case
for solar in the Midwest mostly starts with policy incentives, and with little public demand for action, the balance of
political influence over the shape of those incentives is tipped a bit more to utilities and any other
interested stake holders (legacy fossil fuel com-panies?).
Utility-scale projects represent a little over half of the installations to date in those
Midwestern states and about three quarters of the 2016 installations, according to data sent our way by GTM Research. The distributed generation markets in each state are all quite small still — sub 10 MW per state in each of the resi-dential and non-residential markets for all of 2016.
The latest legislative triumphs in the region all seem to support this trend too with renewable energy portfolio standards (RPS) being raised in Illinois and Michigan and unfrozen in Ohio (for now). The Illinois bill in particular was two
years in the making and has solar developers excited.
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“It creates an adjustable block schedule similar to the successful California Solar Initiative model,” says Owen Goldstrom from Alta Energy, an analytics and procure-ment company that identifies and executes opportunities for renewable energy. “It’s an opportunity that we are closely tracking, and communi-cating to our customers with proper-ty in Illinois.”
Emerging opportunities
RPS standards don’t necessarily directly translate to DG solar proj-ects unless there is a way for a small-er scale distributed system to benefit from the renewable energy credits (RECs), Goldstrom says. So, it is worth noting that these RPS bills did come with DG benefits too. The legislation in Michigan helped pre-serve net metering rules going for-ward, and GTM Research’s Allison Mond says they are classifying Illinois as an “emerging residential market.”
“The Future Energy Jobs Bill passed in the state mandates that a quarter of the 675 MW of DG required for the new RPS standard consists of sub-10-kW systems,” she says. “Though the market is still quite small, we expect residential installations in the state to double in 2017 over 2016 capacity and then continue to grow by between 100 and 200 percent each year through 2021.”
Illinois also allows for third-party ownership (leases or PPAs) of sys-tems.
Implementation of Illinois’ RPS
bill is the top issue of SEIA’s Midwest Committee, which has been working with the Illinois Power Authority to “get the regulatory lan-guage that allows the intent of the bill to move forward,” says Sean Gallagher, VP of state affairs for SEIA.
Perhaps the biggest exception to all of our Midwest generalizing so far is in Minnesota, where community solar has grown to become the third largest community solar market in the country after California and Massachusetts.
“It went from a cute idea to big business in two years, and now com-munity solar is really picking up,” says Jake Rozmaryn, CEO of Eco Branding, the agency that represents the Midwest Solar Expo, now in its fifth year. “Large-scale development in Minnesota was over 300 MW in 2016 and is expected to be over a 1 GW in five years. Traction is there.”
Lingering problemsWe start in Indiana, which is
ground zero for problematic energy legislation right now. The much-dis-cussed SB 309 would phase out net metering in tiers: Early adopters would be able to keep net metering for 30 years; those who install between July 1 and 2022 can keep it for 15 years. Anyone installing after that date would be under the new rules.
What are the proposed new rules? Essentially it would be a “buy all, sell all” arrangement where solar custom-ers sell their power back to grid for the wholesale rate (~3 cents per kWh), and then buy it back at the
retail rate (11 cents per kWh). The carrot in the bill for the solar
industry is that power purchase agreements (PPAs) would be made legal.
Gallagher also pointed to Iowa, which doesn’t have a huge rooftop market yet, but has an important DG proceeding happening that will set rate terms and compensation structure going forward “and perhaps set some precedent in the Midwest.”
“We’re also paying attention to a bill in Missouri that would be harm-ful to rooftop solar,” he says. “We’re just trying to keep those markets open. It’s not a giant market, but we don’t want to see bills that just squash it.”
Arguably worse than the specific inhibitory policies is the general uncertainty lingering over much of the region. For example, we chatted with a developer based in New York who has been eyeing Ohio as a next great opportunity. Well, with the state passing a bill to freeze its RPS, which the governor vetoed, only to have a new, even more limiting bill be passed — how can anyone get a feel for how to proceed over the long term?
Political will of the Midwest
Getting to this point was definitely not easy, and maturing the market from here will require even more work. Relaxed Trump-era carbon regulations might defibrillate the fos-sil fuel industries. Longer-term envi-ronmental and social arguments in general seem to carry far less weight than short-term costs, politically.
5 | SPECIAL REPORT
State Cumulative Pre-2013 2013 2014 2015 2016
Illinois 42.1 1.5 6.3 11.1 5.0
Indiana - 53.9 58.5 23.6 80.8
Iowa 1.4 3.9 15.2 6.4 11.8
Michigan 6.3 2.1 3.1 5.0 15.9
Minnesota 8.1 6.2 5.9 12.6 339.8
Missouri 10.3 28.2 72.6 20.3 18.9
Ohio 65.3 20.9 14.6 10.2 12.0
Wisconsin 9.1 3.2 2.4 4.7 5.0
Total Midwest Market 142.6 119.9 178.5 93.9 489.2
Note: The Dakotas, Nebraska and Kansas were left out because their solar markets are too small to mention. Courtesy of GTM Research.
Midwest solar installations (residential, C&I, utility)
Plus, Midwestern utilities have had the benefit of seeing net metered res-idential systems deployed on a large scale on the coasts, and some are try-ing to nip it on the bud. For exam-ple, ComEd tried to get a demand charge put into that aforementioned bill in Illinois, even though the net meter market in the state at the time was around 800 total customers. The Public Utilities Commission in Ohio is also considering proposals by sev-eral utilities in the state to double fixed rates for all customers.
But despite it all, the momentum is real. SEIA and the Environmental Law and Policy Center (ELPC) formed a Midwest coalition about two years ago thinking there were opportunities on the horizon for new markets to develop. It was a baby step. SEIA took a larger step this
year and formed a Midwest Solar Committee.
“We recognized that there’s been some activity toward the end of last year that’s starting to bring those potential new markets forward, which provides justification for SEIA and its members to devote more attention to those states,” Gallagher says.
“Utilities in the Midwest have a lot of political clout,” Goldstrom says. “However, solar companies and industry organization have demonstrated a significant capac-ity to drive change and work with legislators on policy relating to both utility scale and distributed scale generation. I have been pleasantly surprised by the suc-cess of a lot of these lobbying efforts.”
By the way, ComEd’s demand charge request didn’t make it into the final version of the bill.
“I think the biggest success solar has had in the Midwest is becom-ing a competitive form of genera-tion, and as solar prices continue to come down, the cost for electricity in general continues to go up, even in the Midwest,” says TJ Kanczuzewski, president of Inovateus Solar, based in South Bend, Ind. “Even in places that have some cheaper electricity from coal or hydro or even nuclear, elec-tricity prices continue to rise by an average of 5 percent annually while solar continues to become more cost competitive.”
Chris Crowell is managing editor of Solar Builder.
6 | SPECIAL REPORT
ALL POLITICS IS SOLAR
How one solar developer grew its business and the political power of the solar industry in the Midwest
By Chris Crowell
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Maturing a market isn’t much different than maturing a person — it requires some
thought, attention, love and patience. Lots of patience. This has been the experience of every growing solar company in the Midwest. They’ve had to work with the public and pol-icy makers constantly to grow busi-ness and evolve the market.
TJ Kanczuzewski with Inovateus Solar is one of those Midwesterners that’s slowly pushed the ball up the hill. He literally wrote the book on it (Building a Brilliant Tomorrow), and one chapter in particular is all about how his company has worked with the Indiana state government and utilities over the last decade.
“It’s been a slow process, but they’ve come around in many cases,” Kanczuzewski tells us.
PreachThis process starts with evange-
lism — going out and just spread-ing the good word of solar with businesses, communities and gov-ernment officials.
“At the very beginning, we start-ed with simple conversations with the state legislature in Indiana,” Kanczuzewski says. “A number of times we testified and gave presen-tations on solar. We intervened in an Indiana Michigan Power rate case in 2012, which provided a platform for us to share up-to-date market data. They said solar energy was still very expensive, but they were using data over five years old.”
Inovateus Solar LLC became a company in 2008 but started doing work in solar energy as a part of Inovateus Development since 2004. Over that time, slowly but surely, the repeated exposure to updated information gets more conversa-tions going. In Indiana, those con-versations started to pay off to the point, in the last few years, where solar project ribbon cutting events involved representatives from the governor’s office. And again, those
photo ops are yet another chance to share ideas and enthusiasm.
“One company we worked with, the Indiana Power Association, provides power to 60 member utili-ties throughout the country and is providing solar power at an average of 7 cents a kWh. This was two years ago,” Kanczuzewski says. “At one ribbon cutting we were able to share that story with the governor and the energy director at the time. They were blown away.”
ChallengesKanczuzewski reminds us that all
of this enthusiasm and these con-versations need to be sustained. Again: Patience is a must. Inovateus has baked patience into its business plan. Companies and utilities that Inovateus started to talk to 10 years ago are just now starting to get into solar. But while that’s great when it pays off, 10 years
is like 100 years while keeping a business afloat.
“We have to keep our business run-ning and operating, so we go after opportunities with ready customers but we also have an effort where we are continuing to educate and inform future customers,” he says.
The struggle is real. Even on the slam dunk projects, one small tweak from one party could bog down the process or ruin a deal. You could call it the burden of being first. Example: Inovateus just broke ground on a 13-MW project for Michigan State University that consists of five projects around campus. Inovateus is an investor that will be selling power to MSU under a PPA. To get to this point, several huge obstacles needed to be cleared that mostly stem from that lack of understanding.
“Michigan State hadn’t signed a PPA like we’ve had. Also, MSU wanted carports and wanted to do the solar installation in their park-ing lots, which means we have to bundle in these structures that do not produce electricity into this PPA price, he says. For MSU, the price was more expensive than expected. We had to explain to the board of directors at Michigan State that it’s because they wanted carports, and it’s not just electricity they are paying for in that PPA.”
Next challenge: The city of East Lansing wanted Inovateus to pay property taxes on the system at the highest level. Michigan is not property tax exempt, but the university is a property tax exempt entity. The carports are being installed on their parking lots, so being charged 100 percent taxes on that didn’t seem reason-able.
Oh, also, to make this all more maddening, Michigan used to be a tax exempt state until 2013 and is likely going to be property tax exempt again within the next year or two.
8 | RESIDENTIAL ROOFTOP
“We were told by many people we’d get no tax abatement, but we were relentless,” Kanczuzewski says. “We had to go before the City Council — probably six months of negotiations with the City Council — and had to go to a public hearing at least three times and finally got them to agree to 100 percent tax abatement for three of the five systems for 10 years.
“The confidence and trust in what we do goes a long way when we sit down with our partners and clients. We are starting to see a lot of great opportunities here in the Midwest, and it is exciting to watch our efforts finally converted into functional clean energy solutions.”
Being agnosticA key for Inovateus throughout this political process is staying
nimble. “One important thing for us is to not ever get too caught up in
any specific legislation or things that are happening in the Midwest,” he says.
Case in point: Indiana’s controversial SB 309 was just signed by the governor. This bill:
■ Ends net metering for new customers after 2022.
■ Ends net metering for existing customers who replace or expand their solar system after 2017.
■ Empowers utilities, with the approval of the regulatory commission, to charge rooftop solar owners an additional fee for “energy delivery costs.”
So, residential rooftop solar is not exactly going to start booming in Indiana any time soon. For companies only looking to do resi-dential work in Indiana, this is not “How to Make Money in the Midwest.” But, within that bill is also the approval of PPA deals in the state, which is another path to solar project development.
Inovateus was not in favor of SB 309, but it also did not put all of its eggs in one basket. Ove the years, Inovateus has evolved with the solar landscape. It has scaled up to meet the growing utility-scale solar segment, and it has tacked on EPC and advisory services for smaller installers doing residential work and starting to tackle small commer-cial work.
“It’s important for us to get involved and to help support the industry, but at the same time, we’re never going to let any legisla-tion stop us from being able to do our business. Where [SB 309] is a negative, we’re already looking at what the opportunities can be. Storage, for example. We’re keeping our finger on the pulse of what’s happening in the storage market to have a plan in place to do more storage in Indiana.”
The Inovateus blueprint might not be for everyone, but we don’t think their success in the Midwest is an exception to any rule by any means. To get there, you just might need to talk with rule makers to do a little rewriting first.
Chris Crowell is managing editor of Solar Builder.
For this report, we chatted with Jake Rozmaryn, CEO and Founder of Eco Branding, which hosts the Midwest So-lar Expo every year. We really liked this perspective on partnering with suppliers:
“We need to break through the echo chamber. Moderates on both sides are willing to work together. It may appear we have the biggest di-vide we’ve ever had, but I don’t think that’s the case. We’ve spent too long talking to ourselves. Sustainability groups that are trying to promote policies, as soon as you come from the perspective of the NRDC, the opposition immediately shuts down. We need the business leaders. We need a collaborative group of busi-ness leaders that are creating jobs that are becoming economic forces to speak up, and we need to do a better job of that.
“In the Midwest, show the collec-tive buying power, not just jobs you create. Look at the steel companies cranking in the Midwest where 40 percent of their business comes from solar. Get them to be more vocal. Empower your supply chain to be an active participant and voice in the market. The business case speaks. If I’m a CEO of a solar company and want to strike a deal with a steel manufacturer, I’m going to say ‘we’ll keep doing business with you, but we need you to speak up. Champion us. Engage with architects, builders, manufacturers. Get on the same page and force them to be active partici-pants in our growth.’”
Tip: Involve your suppliers
9 | SPECIAL REPORT
There are opportunities for solar projects in the Midwest — the key is knowing where
and how to look
By Chris Crowell
ON THE
CASE
As mentioned, cost of elec-tricity is probably the big-gest barrier for solar adop-
tion in the Midwest. According to data from EnergySage, the pay-back period for a home in the Midwest in 2016 was about 10 years. In terms of net 20-year sav-ings, in 2016, Midwest consumers could expect to save over $23,300, while national consumers are north of $40,000.
For example, electricity prices for Southern California Edison are 16 cents per kWh, while for Ohio Edison they can be less than half this amount.
This story won’t stay that way forever, and you can already see the shift starting. From February 2016 to February 2017, according to data from the U.S. Energy Information Administration (EIA), Illinois’ average price of electricity rose
from 11.94 cents per kWh to 12.21. Michigan from 14.88 cents per kWh to 15.41. Wisconsin from 14.07 to 14.34 kWh. So, it’s no West or East Coast, but the Midwest is getting interesting for those paying attention.
Sunrun enters WisconsinSunrun is one of those paying
attention. The national solar installer just opened up for busi-
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Location avg cost per wattavg payback
peAriod in years (ROI)
avg system size (kW) avg % offset avg net cost avg net 20-year
savings
2015
Illinois $3.63 10.77 6.70 85.53 $14,924.16 $17,343.35
Michigan $3.54 9.96 7.00 81.89 $17,156.13 $30,482.81
Minnesota $3.84 8.57 6.60 62.5 $14,755.21 $23,645.82
Ohio $3.35 10.92 7.60 73.43 $17,709.48 $23,392.98
Wisconsin $3.29 7.9 8.20 94.29 $13,360.06 $35,817.80
Midwest $3.50 10.42 7.10 79.07 $16,268.80 $22,941.47
2016
Illinois $3.34 8.74 7.40 82.08 $12,374.40 $21,244.31
Michigan $3.28 9.67 7.60 84.24 $17,379.00 $31,690.89
Minnesota $3.77 10.64 7.10 68.56 $14,701.39 $19,729.18
Ohio $3.06 10.42 7.90 68.71 $16,831.56 $23,460.38
Wisconsin $3.05 8.49 7.50 75.66 $13,163.56 $27,007.94
Midwest $3.26 9.75 7.60 75.08 $15,046.58 $23,330.69
National $3.41 7.41 7.50 91.36 $16,783.46 $40,381.93
ness in Wisconsin, becoming the first national company to venture into the Midwest. We followed up with the Sunrun team on why Wisconsin, why now?
“It’s about creating a framework for allowing a solar market to develop,” says Amy Heart, director of public policy for Sunrun. “Back in ‘90s, in Wisconsin, solar advo-cates partnered with Republicans and helped develop a leading energy policy. Its Focus on Energy program was created — one of the first renewable energy programs in the country. There is net metering. It was one of the first intercon-nection standards in country. That stable policy framework remains in place.”
From there, it was just waiting for the math to work out.
“We saw the opportunity; noth-ing new, just waiting for econom-ics on the solar end to make sense for their electricity prices,” she says.
In Wisconsin, Sunrun will be offering a cash product and loan product to start. The leasing prod-uct may follow after some clarity on state rules. The company is also partnering with local installers, which is one way it’s able to invest in an area while mitigating its large-scale investment and inves-tor risk.
“We not only hire our own crews, but also, in a lot of instanc-es, we partner with a build partner
on the ground who can work with us and adjust or scale up,” Heart says. “We can take our time and get the right crews and partners that know the market, permitting process and allow us to offer installs from day one.
“We hope to pioneer rooftop solar in the region,” she continues. “We are looking at how we can build the market and keep stable policy throughout the region.”
Dig into the dataIdentifying a good opportunity
for solar starts with finding the blended cost of energy, which isn’t done by just looking at the 30,000-ft view provided in EIA data. Back to Illinois’ 12.21 cents
*info courtesy of EnergySage
11 | SPECIAL REPORT
per kWh average price of electric-ity for residential — it is rising, but still not that enticing. So, move on? Nothing to see here?
Adam Gerza with Energy Toolbase, one of the best solar projection software companies out there, says you don’t know any-thing until you are digging into utility rate schedules. That’s for sure something Sunrun is doing. They are a big company that has its own proprietary analytics to identify these areas and make smart, swift decisions when the math works.
For a small regional installer, which is the majority of business in the Midwest, a platform like Energy Toolbase levels that ana-lytics playing field. Installers can zoom in to a utility territory and rate schedule level and start mod-eling the true economics of indi-vidual projects.
Granular data can vary greatly. In California, there’s a lot of vari-ance in tariffs. EIA lists the aver-age price of electricity for com-mercial buildings at 17.5 cents per kWh, but depending on the terri-tory, that could be anywhere from 11 cents to the mid-20s.
Next comes matching that rate schedule up with the most profit-
able load profiles. Within software like Energy Toolbase, you can set a reference load profile — say, a super market — and define the cri-teria you look for, and then scour the regions you are targeting.
“One use case that’s happening a lot right now, a ton of users are finding good energy storage use cases,” Gerza said. “It’s a unique profile; a specific set of circum-stances that make a great energy storage project. They are looking for rate schedules that have high demand charges and also looking for spikey, short cycles to try and shave that peak because there are high demand charges.”
Other big factors are obviously net metering laws and intercon-nection, which goes back to Heart’s point about framework and stability.
“If you have bad net metering language, it doesn’t matter how high the cost of electricity is because you can’t extract the value,” Gerza says.
Making the numbers workSo, yes, higher electricity prices
would drive more demand, but there are cases to be made throughout the Midwest right now. You just might have to get creative
with your own expenses, pricing and sales and marketing plan.
Lowering prices to drive greater solar sales is a theme uncovered in EnergySage’s 2016 Solar Installer Survey. Fifty-eight percent of the installers surveyed stated that gain-ing market share by growing their total installation volume was more important than increasing their gross margins per installation. When asked to rank their top strategies for gaining market share, reducing prices to attract more business came in at number four.
“If their current electricity prices are already on the low end, solar installers will need to price more competitively to drive greater sales, as well as educate consumers about the non-financial benefits of solar panels during the sales pro-cess — such as achieving energy independence and reducing carbon emissions,” advises Vikram Aggarwal, CEO and founder of EnergySage. “As the top five responses from installers indicate, being smarter and more efficient around sales and marketing is one way for Midwest installers to cope with lower prices.”
Chris Crowell is managing editor of Solar Builder.
+217% Illinois +190% Michigan
+616% Minnesota +270% Ohio
2015-'16 SOLAR BUSINESS
GROWTH Stats from EnergySage’s database of residential solar shoppers in the Midwest.
12 | RESIDENTIAL ROOFTOP
for More Solar Sales By Chris Crowell
Watch as your customers, Jane and Randy, go through an online solar
shopping process. After some Googling, the young couple found the
online marketplace on the right (EnergySage) and entered their
property.
STEP 1: Cast a wide net.
Having a website and handing out flyers is great, but you will miss a ton of customers
outside these boxes. With solar power moving from a niche com-modity to mainstream purchase, potential customers are everywhere, Googling for information. Being connected to the sites they end up on will cast that net wider.
“We are seeing solar consumers are increasingly behaving like shoppers,” says Vikram Aggarwal. founder and CEO of EnergySage, an online marketplace for the solar industry. “As an industry starts to become more mass market and appeals to a broader reach, con-
sumers are saying I like to shop and want to make sure I am paying a fair price for a quality product. If I’m buying a Mercedes, I want to know what I should pay for it.”
EnergySage says that almost a quarter of the consumers who sign up through its system already have a quote in hand from a big solar install company. These people saw a deal, became intrigued, but were motivated to research for them-selves rather than just buy the first thing they saw.
After creating a more multi-fac-eted customer acquisition approach, be sure to pay attention to the behavior of each customer channel.
“It’s a combination of factors that affect customer acquisition,” says Kathir Kuppan, founder and CEO of SolyMoly, an online solar shopping site and installer sales tool. “Today, installers have to still use a combination of tools for bet-ter qualifying leads, which includes shade analysis, credit analysis, address verification, ser-vice territory restrictions and state laws. Tracking the inbound part-ner channel also makes a differ-ence in assessing the customer’s interest. For example, a customer on an outbound call campaign may be better suited than a web-sourced customer.”
FOUR STEPS
13 | RESIDENTIAL ROOFTOP
STEP 2: Present options.
Within the EnergySage marketplace, they
compared options in their area by rating,
prices and more.
The 2016 Solar Installer Survey produced by EnergySage captured insight
of local and regional solar installers in both residential and commercial markets. One top challenge cited by installers is the sheer number of competitors, with most respondents stating they face between 15 to 20 competitors in their territories alone.
And while this could present an issue, these options are actually a good thing according to buying habits EnergySage has noticed within its marketplace. Interested shoppers create a profile of their property, identify it on a Google map, upload their electric bill and note any deal preferences they might have. This lead is then sent to
all of the nearby prescreened install-ers in the EnergySage network. From there, any of these installers are free to offer a quote or not.
“Typically, we see three to five installers providing a quote,” Aggarwal says. “This is essentially helping them compare, like Kayak.com does for travel.”
EnergySage has discovered that a customer is more likely to buy a system if presented with at least four or five installer quotes (about 35 to 40 percent conversion) ver-sus just one (about 6 percent con-version). And don’t be worried about keeping your prices secret because transparency, EnergySage says, is a good thing.
“We find a lot of consumers have a lot of skepticism because
of sales practices,” Aggarwal says. “From one perspective, installers are protective of prices because they don’t want them out in the open more readily, but they’ll have to, to compete.”
EnergySage arms the customer with a ton of information as well — ratings for installers, ratings and explanations of various solar equipment brands, the warranties available, the possible financing options and more.
“In a typical shopping environ-ment, you get one quote and then want to shop,” Aggarwal says. “You do some homework on who to call next. Get that quote. May take a week. Then another. Maybe weeks go by. We are shortening this and shortening turnaround times.”
STEP 3: Improve your efficiency.
Financing can get confusing, but
presenting data as EnergySage does here,
makes things easier.
Customers have what Aggarwal calls a moment of receptivity. This is that slice
of time when they are most inter-ested in doing a deal. Responding quickly and with the right informa-tion in that moment greatly increas-es your chances of getting a deal done.
“The quicker you get them the quote, the more responsive you can be and close the sale,” he says.
According to Conlan O’Leary, co-founder of Sighten Inc., install-ers are running into efficiency issues related to the explosion of financing options.
“There is more choice and differ-ent products for different home-owners, which enables installers to close more customers, but it’s a
logistical challenge,” he says. “Installers need to figure out how to offer 10 different financing prod-ucts from 10 companies who all have slightly different software and different ways of doing things.”
Sighten is a third-party software platform that bridges the gap between financiers and installers. Essentially, it is a sales tool for installers, in which installers can generate custom proposals and deliver actual quotes from inter-ested lenders and investors that have integrated their financial products with the system. The tool comes in a basic model for installers doing as few as five deals a month, to a more robust, cus-tomized system for installers doing thousands a month.
The Sighten platform houses the credit criteria, pricing logic and operational and documentation requirements for all of the financial products available in its market-place, which removes a lot of leg-work and questions from the pro-cess. Installers no longer need five different systems to look at five dif-ferent options. There may even be options you didn’t know about. Proposals can also be made on the fly if the financial provider you pre-fer isn’t in the system.
“We see point solution fatigue in the market,” O’Leary says. “There’s been a lot of innovation to bring disparate solutions together, and here is a holistic solution to run your business on. People sell much more effectively when you do that.”
14 | RESIDENTIAL ROOFTOP
15 | SPECIAL REPORT
An ancillary benefit to a sys-tem like Sighten is using the data it generates to
improve your sales process. You can see that getting an actual util-ity bill from the homeowner is a real bottleneck and increases install time by seven days on average. Knowing this helps you adjust and move the utility bill to the start of the process to avoid that delay.
“Those next level analytics are sometimes as important as the pure blocking and tackling and generating proposals and con-tracts every day,” O’Leary says.
Another pain point is putting a proposal together, making a sale and then finding out after the contract signing that the deal won’t support the PV modules you signed off on. Good bye sale and the last week of your life. With the right integrated soft-ware, these red flags will pop up earlier or be avoided altogether.
“Financing products will have underwritten criteria, ranging from a FICO score cut off all the way to productivity — kWh per kW rules by market — to ensure
they aren’t getting an underpro-ducing system,” O’Leary says. “We can implement all of that. From the moment they enter the address, we are telling them in real time ‘hey, there are 10 prod-ucts available, but you now have seven in Arizona because three don’t fund systems there.’”
Or turn that data into a filter that can sift through a pile of deals in a snap, prioritizing the best ones. For example, SolyMoly’s multi-channel service enables customers to improve on conversions by eliminating noise and filtering leads based on the following criteria:
■ Tree coverage (roof shade) ■ Credit-worthiness ■�����Single family residential
homes ■� Free standing■ Roof area ■ Interest level “Installers are dealing with 50
percent leads that are not suitable for solar,” Kuppan, says. His goal is for SolyMoly is to save install-ers time and money by focusing
on leads that have a high chance of conversion rather than chasing bad deals. “Installers have a chance of improving their opera-tion efficiency and deal conver-sion ratios by 30 to 40 percent.”
The EnergySage dashboard, as another example, provides insight into how responsive an installer is to a lead, how quickly questions were answered, how submitted quotes compared to best practices or the best performing installers and more.
So, to sum up: “Sell more, faster and more effectively and then do that incremental volume in a more efficient manner and there-by reduce your attrition rate,” O’Leary says. “It is challenging. Selling is only part of the process. If you sell someone, and then don’t talk to them for three weeks, and then schedule an install six weeks later, you will have a high attrition. You need to continue to engage with customers, and con-tinuing through the project man-agement phase is key.”
Chris Crowell is the managing editor of Solar Builder.
The utility bill is a pain point and halts deals, so SolyMoly asked Jill and
Randy for it upfront.
STEP 4: Use data to avoid bad deals.
16 | SPECIAL REPORT
Minnesota is near the top of the country for community solar projects.
Here is how one such project got done.
A COMMUNITY SOLAR SUCCESS STORY
On the west side of the small town of Cold Spring, Minn., lies a 4.04 MW community solar garden.
The garden is fully subscribed, meaning consumers have contracted to purchase solar electricity for
the life of the garden. Subscribers are residences and businesses who choose clean renewable electric-
ity. This is the story of how the WakeSun Community Solar Garden was sown and grown.
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In 2013, Minnesota enacted a bill designed to promote the growth of solar energy. The legis-lature expanded the opportunity for people to participate in solar. Where every rooftop may not be suitable for solar for a variety of reasons (from renters, mobile home owners, condos to tree-shaded residences and leased business buildings), community solar projects make solar power accessible to a far greater market share. In fact, Greentech Media Research says that nationally the addressable market is around 100 million households. *
In 2014, Minnesota had 14 MW of solar installed and ranked 39th in solar states. In December of that year, Xcel Energy, a Minnesota-based utility energy provider, launched its Solar Rewards Community for
Minnesota. Today, Xcel has more than 300 MW of solar gardens at 80+ locations across the country, and their national program is on track to become the largest com-munity solar program in the United States.
However, it would take hard work, collaboration and time to become the extensive service it is today. It would also call for solar developers to evolve their service models along side the electric util-ities to flesh out the necessary processes that would result in today’s successful program.
SunShare is one of those pio-neers that has played a major role in advancing community solar. The company had a unique begin-ning as a dedicated community solar developer. They created the first competitive community solar program in the country. Today
SunShare is based in Denver and has almost 100 MWs of solar projects in its pipeline.
SunShare understands that com-munity solar is a different animal. The ground-mounted solar gar-dens are located on land with good solar exposure and near existing power distribution lines that provide electricity to Xcel Energy’s power grid. SunShare has a 25-year promise to its subscrip-tion customers for energy produc-tion and they take that commit-ment seriously. Quality is fore-most. That explains why they selected their partners from design engineering, through construction, and operations and maintenance very carefully.
The community solar garden is owned by WakeSun, and managed by Real Capital Solutions, an investment firm based out of
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Colorado. Real Capital Solutions is a nationally focused investor of work-out and value-add proper-ties. The community solar garden administered by SunShare Management LLC was commis-sioned in January 2017 and fin-ished in March 2017. Subscribers will receive credits on their Xcel Energy statements, lowering their electricity bills. The pipeline of community solar gardens will enable thousands of people, busi-nesses and organizations to make a choice and play a part in creat-ing a cleaner and healthier envi-ronment.
The WakeSun Community Solar Project is sited on unused agricul-tural fields. The fallow land is now leased for the solar project generat-ing an income stream for the prop-erty owner and creating a win-win situation for the community.
With a viable parcel of land solidified, SunShare’s project development and engineering teams started the initial design and permitting process. Each solar project’s design and construction is unique.
Construction on the WakeSun project would take 14 weeks. The project was on a strict time line and construction was scheduled for early winter in one of the cold-est states in the U.S. Climatic conditions were a concern, as the engineering, procurement and construction (EPC) team selected project components and finalized project plans. Their extensive experience and meticulous plan-ning resulted in a well-executed solar installation. Here’s what happened.
Inside System Installation
The construction team selected high-powered Trina Solar mod-ules, pre-assembled Solar FlexRack G3P solar racking and Solectria Solar 500-kW central inverters. The land site was a clean site with no environmental issues. However, geology tests revealed several boulders ranging from 3 to 4 ft buried below the surface. These needed to be removed before trenching and pile driving could be completed.
Solar FlexRack was selected not only for their racking products, but for their services. They have a
proven track record of experience installing in cold country. They worked closely with the installa-tion team to provide a driven pile racking solution that would sig-nificantly reduce labor time in the field. The pre-assembled G3P allowed the solar garden project to meet the tight construction sched-ule. The racking’s proprietary design not only accelerated the installation process, but also safe-guards the project owner’s invest-ment. With a special feature to automatically square the system, Solar FlexRacking allows for easy module alignment during installa-tion without prying or applying
The construction team selected high-powered Trina Solar modules, pre-assembled Solar FlexRack G3P solar racking and Solectria Solar 500-kW central inverters.
19 | SPECIAL REPORT
pressure on the solar modules that could lead to damage such as frame breakage, microcracking or discon-nection of cell string ribbons. The unique design also ensures that all loads flow from the modules down through the racking system and into the ground — without placing sec-ondary stresses into the modules or depending on the modules to brace the system, hence safeguarding the solar project’s power generation components.
The installation was self-per-formed by an expert division of the EPC organization, including the electrical work. The site’s rocky soil created some additional concerns
for underground cables. The crew devised a cable protection process. To shield the medium voltage cable from the rocky soil, earthmovers prepared the trenches, laid down a thick layer of sand, the industrial cable, and then another layer of sand, before completely backfilling the trench.
Another time-saving component was incorporated in the project. Above-ground CAB solar cable management for all DC collection was installed to minimize risk. This external support for wiring is more reliable and durable than conventional products. By utilizing the tray wiring system, they
reduced trenching by 50 percent and shaved significant costs off the project.
The community solar garden was commissioned in January 2017. Customers receive credits on their Xcel Energy statements lowering their electricity bills. The pipeline of community solar gardens will enable thousands of people, busi-nesses and organizations to make a choice and play a part in creating a cleaner and healthier environment.
Community solar is paving the way to the next generation of solar energy by extending the accessibil-ity of clean, affordable solar elec-tricity.
20 | SPECIAL REPORT
Wunder Capital explains what it looks for in Midwest commercial deals
FINANCING ADVICE
We’ve seen that especially in the commercial space, solar financing options
tend to be pretty geographically isolated. It’s easier for financiers to choose a specific region to become familiar with from a regulatory and pricing expectations stand-point.
This tends to result in a favoring of the coastal states, not only because that is where most finan-cial institutions are based, but also because that is where, on average,
energy prices are highest and solar-friendly regulations have been implemented the longest. The maturity of a solar market or particular regulation is an import-ant consideration for a lender because the financial stability of most solar projects are dependent on net-metering regulations and incentives like SRECs or rebates, and if a program has only been around for a year or two, there is an argument to be made that it is not yet entrenched in the utility or
general market framework and so would be easier to roll back.
Wunder is one of the few com-mercial financiers that can lend across the U.S. and as such, we have seen a number of projects from states like Wisconsin, Minnesota, Colorado and Iowa. While we’re certaintly using expected incentives in our produc-tion modeling, we also like to think about the value proposition of the system in the complete absence of a utility. For example, a
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slightly undersized system (we like to see it at 90 percent of annual consumption) can reduce depen-dence on net-metering.
We also like to work with busi-nesses that are attracted to solar for more than just the cost savings. If electricity is a key component of their operating expenses, they are gaining increased reliability as well as price certainty over the next 20 years.
Wunder Thoughts (Efficiency)
A need to reduce soft costs across the entire industry has been the message reigning supreme in the solar space over the last few years. Estimated to represent about 30 percent of a project’s overall cost, this bucket includes things like time spent on the sales process, contracting and legal ser-vices, financial diligence and gen-eral office operations.
We would argue that solar com-panies in the states where margins are thinnest have the best opportu-nity to become leaders in this effort.
Panel pricing is out of your control, labor costs generally are as well, but most sales processes have a lot of room for efficiency gains and should be ruthlessly streamlined.
At Wunder, we aim to bring the type of standardization and auto-mated efficiency to the small- to mid-sized commercial space as we have seen develop in the residen-tial space over the last few years. These types of deals have long been treated like larger commer-cial or utility-scale projects, with bespoke financial diligence, super high-touch white glove sales pro-cesses and legal costs that simply can’t be supported by the relatively thinner margins.
Especially in markets like the Midwest where every penny reduction on the cost-per-watt counts, don’t waste too much time trying to make projects work that aren’t looking promising. A quick “no” is more valuable than a nev-er-ending “maybe.”
Try to establish a relationship with a financier and make sure you understand exactly what they are
looking for. With that, you can establish a niche project-type for yourself that allows you to reuse collateral and system designs with minimal overhead. For example, we’ve financed a few projects in Minnesota with an organization that has found an offering niche. They have a certain amount of cor-porate tax equity that allows them to offer PPAs for 40-kW rooftop systems on local schools. Their design and proposal process is straightforward and consistent and, on our end, financing approval can be more efficient because the deal size and structure is familiar.
Another project type that we have seen installers in the Midwest focus on is agricultural solar. While we don’t finance these types of projects ourselves, we have seen a number of them move forward using REAP grants. On top of that, farmers tend to be comfortable with the concept of depreciating assets, which can sometimes make the value propo-sition easier to explain and the sales process simpler.
83% DID YOU KNOW?
of Midwest buyers chose to own their system via cash purchase in 2016.
Do You have an idea for our next
Special Report?
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