*Estimated 5-minute read
As a solar contractor, you’re already a “disrupter” by nature. But there are several trends happening or coming our way that could disrupt you and your business if you’re not prepared. Unfortunately, these disruptive trends can easily go unnoticed by busy professionals and business owners for a few key reasons:
Fortunately, Pearl is here to help! We work with our network partners, government agencies, manufacturers, and others to identify and share critical trends that may otherwise go overlooked and threaten your business. Below we share our top five disruptions to look out for in the solar industry, why they’re so important, and what they mean for the future of your business.
Solar shingles are currently niche products. Production costs are relatively high, shingle efficiencies are relatively low, and companies have not established efficient installation processes. Sound familiar? These same barriers existed for the solar panel industry. Despite being early on the cost and learning curve, solar shingles are cost-competitive today with some higher-end roofing types when the roof is being replaced. As the technology matures and contractors establish efficient business and installation practices, solar shingles will go from niche to mainstream, especially if consumers favor the aesthetics of solar shingles over traditional solar panels.
New construction may be the first market segment that sees widespread adoption. For example, California has “net-zero” building codes and mandates solar for most new homes. As builders integrate solar into their core design and construction process, the adoption of shingles will grow rapidly. And it’s not just California. The largest national builders adopt new technologies in California for reasons of compliance, but then leverage that knowledge to gain a competitive edge throughout the country. As adoption grows nationally — and because solar shingles are on an earlier and steeper part of the learning curve — solar shingles production and installation costs will drop more rapidly and become more competitive with traditional solar panels.
And who installs them? Solar companies? Maybe. But traditional roofing companies may have a more aligned skill set than traditional “solar” companies. And solar shingles are not just Tesla products. Traditional roofing manufacturers like CertainTeed offer solutions and may be more inclined to go to market using their existing supply chain partners. If you think the solar market is competitive now, just wait — new competition will be flooding the market over the next 12 to 48 months.
Certainly, solar panels will not become obsolete, but the market will become increasingly cutthroat. Companies that specialize in solar panels may have to ask themselves a tough question: Should (or can) we expand into solar shingles, a product that can competently be installed by a well-established roofing industry?
Solar has made a substantial impact on how energy is generated — especially in some markets like California and Arizona. So much so that the price of energy is negative at certain times of the year. That has led to an increased push for utilities to adopt time-of-use pricing that is more closely tied to the wholesale price. We saw an unintended and unfortunate consequence of that trend in Texas. Why did homeowners get energy bills of $9 per kWh that exceeded $10,000? Because they were on plans that tied their bill to the wholesale price.
Despite “outlier” examples/instances like this, tying retail prices to more closely reflect real-time wholesale prices is not inherently bad. In fact, it’s necessary to move to a cleaner energy economy. The recent problems in the Texas market will not slow down the move away from the single fee retail pricing. The lessons from the failure of Texas will just be learnings that Texas — and other utilities across the nation — will incorporate into the move to variable pricing structures that more closely align with the real-time, wholesale cost of electricity.
Given these evolving pricing models, how do you pitch solar now? How does your “standard escalator,” annual kWh projection, and payback period work when net metering agreements have variable pricing? Will you be able to sell the value of a solar system if the peak solar production period (e.g., in the early afternoon) coincides with the low, off-peak utility rates?
For some solar companies, fighting against the change for variable rates to more closely match wholesale prices will be an existential threat. For others, fighting for it may be the biggest growth opportunity they have seen, depending on whether they offer other services to their customers, such as battery storage.
Understanding how batteries fit into your business model is another key factor that will impact the future of solar companies’ success. Consider the following:
For example, APS’s Cool Rewards program uses smart thermostats to pre-cool homes by up to 3 degrees below set points when energy prices are low and then allows the homes to float up to 3 degrees above the set point when energy prices spike.
Solar companies that already offer energy-efficiency services can add even more value when incorporating demand-side management solutions, such as those offered by APS and other utilities across the country.
As a solar (or HVAC) business, you will soon see considerable cost savings by migrating your commercial fleet to EV. In the next few years, the price of batteries will drop below $100, which many in the auto industry consider the tipping point for EVs to create mass disruption. The tipping point has already occurred in commercial fleets like Amazon, FedEx, and many others.
But the real opportunity will occur in your customers’ homes, leveraging your customers' vehicles. A number of analysts predict EV market share will take off in 2022. GM has stated that 40% of models sold in 2025 will be EV. Ford pledged that all vehicles sold in Europe will be EV by 2030.
So what does this mean for solar companies?
We’ve been in the wild west of smart home devices for close to a decade. Solar companies already install smart thermostats, smart lighting, and energy consumption monitoring devices. A prime area of growth will be in smart load management. Homes will become microcosms of the grid. They will be capable of being (relatively) self-sustaining: creating energy through solar, storing energy thermally and through stationary and mobile batteries, fueling the family’s cars, and being able to trade with the larger grid based on the variable, real-time cost of energy.
Smart electrical panels will be one important hub to monitor, manage, and distribute energy. Established names like Schneider Electric and startups like Lumin and Span are developing whole-home solutions to manage the home microgrid.
A key challenge in the adoption of these technologies is customer engagement and buy-in. The good news? Solar companies are incredibly well-positioned to have these conversations with consumers because they’re already engaging customers at specific points in the decision-making process, they have access to financing programs, and they have the design, electrical, and permitting chops to handle the project.
Now that you’re aware of these five critical disruptive trends in the solar industry, it’s time to take action to ensure you’re ready for them.
More importantly, you need to ask yourself what business you’re in. How closely is your business tied to installing 3-by-5-foot rectangles and connecting them to a building’s electrical system? Is it helping them reduce their energy bills, but only providing a single solution of generating electricity through solar? Is that your business’s core value to your customers?
For many solar companies, your existing business model will be obsolete within 10 years if you don’t pay attention to these issues, so, are you in control of the disruption revolution or are your competitors poised to take over, leaving you in the dust?
Are you ready to rise above and beyond the competition and stake your place in the solar market from now on? Contact us today to learn how being an elite Pearl Contractor can help your business thrive today and for years to come!
*This cost analysis is simplistic and does not consider how load would be managed to ensure the battery can be fully charged and discharged daily, nor does it consider the battery health implications of a Lithium-Ion battery being used in that manner.
Only Pearl Network Contractors are authorized to offer Pearl Certification — and only contractors who have demonstrated exceptional quality and service are accepted into the network. Call 1.844.PEARLØØ or complete the form to learn how joining the Pearl Network can drive leads, close more opportunities, and set you apart from the competition.
Pearl Certification is transforming the housing market. We’re making a visible difference nationwide for homeowners and the businesses that serve them.
