The solar-power industry faces many challenges, and not all of them are of the financial variety. For many of your customers, entering this unfamiliar territory can seem daunting and risky, which may be a burden on them. If you assume the role as their guide, you will find your business excelling in this growing industry.
Through the Energy Policy Act of 2005, the federal government offers a 30-percent tax credit to all residential customers nationwide who install solar-power systems, and there are many utility, city, state, regional and local rebate and incentive programs. Finding the programs and learning how to take advantage of them will require some legwork, but therein lies the valuable service to your customers.
Taking the reins
As a contractor in the solar-power industry, you can be more than just an installer. You can be a facilitator, attending to all of your customers’ needs and helping them throughout the process of installing a solar-power system. For example, filling out paperwork for your customers can greatly relieve their stress, especially if they are facing their first solar installation.
“Where it is appropriate and legal, the successful contractors who are doing solar are making it easier for the customer by handling the incentive and rebate paperwork,” said Bernie Kottlier, director of Sustainable Energy Solutions for the California Labor Management Cooperation Committee.
As you gain more experience with incentives and rebates, you gain a familiarity and comfort with the process that many of your customers will desire.
“It is a value-added thing the contractor can do,” said Jim Dunlop, owner, Jim Dunlop Solar, Cocoa, Fla., and author of “Photovoltaic Systems, 2007,” offered by the National Joint Apprenticeship and Training Committee and American Technical Publishers. “The main way [electrical contractors] can assist people with the rebate program is to know what the rebate program requirements are all about, and you find that out by reading the rebate application documents.”
Unfortunately, learning about ever-changing solar rebates and incentives is daunting for a reason.
“The market and rules are different everywhere,” said Peter Hamilton, director of Energy Services, California Center for Sustainable Energy. “I don’t know of any one-stop shop. Unfortunately, it gets fairly complicated, so there’s a bit of a learning curve for contractors.”
To help navigate that curve, maintain direct contact with the rebate authority for your territory. In turn, the knowledge you gain will make you an authority, and customers will seek you out because you have the knowledge they need. At that point, it simply makes sense for you, as the contractor, to offer to handle the paperwork.
“Our company is doing solar every day, so we’re much more qualified to handle the rebate paperwork than the customer,” said Dan Sullivan, owner, Sullivan Solar Power, San Diego.
Of course, as with anything, repetition, dedication and practice can make following rebates and incentives easier. However, it’s hard to commit time to doing so while running a business, so some contractors have established departments dedicated solely to keeping on top of their customers’ rebate and incentive opportunities. This can be part of an effort to optimize these solar-power system deals.
While rules and practices vary state-to-state, contractors in states that encourage solar projects, such as California, can benefit. In one example, Southern Contracting Co., San Marcos, Calif., proposed and got a solar project for the city of Chula Vista, Calif.
“In that case,” said Jim Filanc, director of marketing, Southern Contracting Co., “we sized the system, got the reservations from the California Solar Initiative, designed the system, pulled the permits, built it, had it inspected, had the system commissioned and then we assisted the city in receiving the rebates. When you do it that way, you’re not just the installer. You’re acting as a developer and as a design/builder.”
By assuming the facilitator and guide role, you will ascend from simply an installer to being a middleman between your customer and the rebate and incentive authorities. Your customers will appreciate the help.
“Not all contractors will do that,” he said, “but those that don’t may just get the electrical or installation only and won’t have the opportunity to run the whole project and act both as a electrical contractor and a general contractor. From our perspective, being the general contractor allows us to earn greater profits.”
Being the middleman grants contractors a great opportunity to offer an upfront price reduction. If the rebate and incentive authorities allow it, contractors can offer to accept the rebate in their customer’s place, a process that is akin to a no-interest loan. Contractors can reduce the startup cost to the customer by the amount of the rebate and take that money when it becomes available. Your customers will appreciate the simplicity, and for you, it balances out in the end.
“We subtract the rebate value from the gross number, leaving the customers with a balance minus the rebate. That’s what they pay,” said Matt Stoutenburg, president, CEO, Stout & Burg Electric Inc., Tustin, Calif.
That service seals the deal for many customers, as they see the benefit of the rebate upfront. Since cost is a primary concern when installing solar-power systems, dealing with that at the beginning will help your customers feel more at ease.
However, before you decide to follow Stout & Burg’s lead, check with your local or state rebate authority. Based on local program rules, reassigning rebates may not always be allowed, and in the case of federal incentives, the only way a contractor or developer can be eligible for the federal incentives is to own the system and sell energy to the customer through a power purchase agreement (PPA). This is another common method of making solar power more convenient for the customer, but it also is subject to local regulations and may not be allowed.
The contractor’s source
Depending on the contract or project arrangement, contractors can be the recipients of the services rather than the provider. When working with another company that specializes in solar but requires the services of an electrical contractor, the solar power company may offer the information and financial services to the electrical contractor.
“We help our customers, solar installation contractors, understand how the programs work and what realistically to expect,” said Chris Phipps, vice president of marketing, Solar Depot and DC Power Systems, Rohnert Park, Calif. “We have a person in-house who understands the rebate programs in the primary markets and spends time on the phone with customers, helping them understand the information about rebates, linking them with the paperwork and helping them fill it in, and alerting them about possible pitfalls.”
In many cases, the solar-specialized company may offer you the same rebate deal you might offer to your customer.
“We arrange with the homeowner or commercial business to assign the rebate to us, and we carry the value of that rebate in the case when utility companies allow their rebates for residential or commercial to be assigned to a third party,” Phipps said. “If that happens, we will charge the contractor the value of the equipment they order from us less the assigned rebate amount. If total materials are going to cost $30,000 and the rebate is worth $10,000, we will give them $30,000 in materials but only accept $20,000 in cash. We get the money back later. It’s effectively an interest-free loan. We’ve also gained approval from the Treasury Department to accept assignment of the Treasury Grant. That allows us to carry the value of the grant for a commercial sale, since the grant only applies to commercial sales.”
In some cases, solar manufacturers and distributors partner with electrical contractors to create an effective sales team.
“We can go with an electrical contractor to talk to the customer, help them fill out a grant report, or help them apply for funding. We can keep track of the state and sometimes the utility-level changes for the contractors,” said Bob Eaton, global vice president, Lifeline Energy.
For electrical contractors, partnering with a company such as Lifeline Energy can be a practical relationship. Many contractors work on solar projects infrequently, so it may be more of a burden than it’s worth for those companies to keep abreast of incentives and rebates.
Getting Up to Speed
The methods of handling rebates and incentives may vary, but staying abreast of them is crucial to contractors who want to enter or stay in the solar field. Here are some valuable online resources:
The Database of State Incentives for Renewable Energy (www.dsireusa.org), established in 1995 and funded by the U.S. Department of Energy, is a comprehensive source of information on state, local, utility and federal incentives and policies that promote renewable energy and energy efficiency. It is an ongoing project of the N.C. Solar Center and the Interstate Renewable Energy Council.
On the website of the National Renewable Energy Laboratory (www.nrel.gov), the only federal laboratory dedicated to the research, development, commercialization and deployment of renewable energy and energy-efficiency technologies, is a sophisticated financial analysis tool, the System Advisor Model (SAM). SAM is a performance and economic model that, according to the website, is used worldwide for planning and evaluating research and development programs, developing project cost and performance estimates, and academic research.
OnGrid Solar (www.ongrid.net) is a commercial website that offers The OnGrid Tool, an Excel-based application that, according to its website, “allows you to gather your customer’s utility and site information ... calculates optimum system size, electric bill savings, system incentives, and system net cost.” It also includes reference articles, including “Economics of Solar Electric Systems: Payback and other Financial Tests” by Andy Black, developer of the OnGrid Tool.
Finally, Solarprofessional.com is a great resource for new products, trends, codes and standards, and financial aspects of these installations. —S.C.
On commercial projects, some electrical contractors are providing rebate and incentive assistance, but others are not. The decision to do so varies with the size and type of commercial project.
“When we work with the military, they have their own guru that will apply for the rebates. We don’t have experience with it. In other situations, it’s the electrical engineer or the customer who does it,” said Bob Riel, vice president, division manager, Dynalectric, San Diego.
Rosendin Electric, a company with headquarters in San Jose, Calif., and offices in four states, has an active commercial solar unit.
“In the past, we’ve helped out the client when we were the direct entity to the host,” said Mark Leow, business development associate, Rosendin Electric. “There was no developer, and it was a cash purchase of the solar system. We procured the equipment, designed it and installed it. In that case, we assisted the host in going through the rebate-application process.”
However, now that some incentives for smaller projects are ending, Rosendin Electric is focusing on larger projects, which don’t qualify for statewide rebates, only federal incentives that go to the developer or finance entity, depending on the contract.
Making opportunity knock
In the solar-power industry, if you advertise that you will help your customers through the process of acquiring rebates and incentives, you can prove to be a great asset and help establish your company as the middleman your customers need.
Sullivan Solar Power, has many residential, commercial and municipal clients, which include the cities of San Diego, Santee and Highland; San Diego Gas and Electric; San Diego State University; and the California Department of Forestry. The company has grown by attracting customers using radio and Internet ads and offering rebate assistance and more to customers who agree to the company’s proposal for a solar-power system.
Once a customer signs up, Sullivan Solar reserves the rebate, gets a permit, installs the system and monitors it for 10 years during the warranty period. These are services above and beyond the call of a regular installer, and while the potential profit is higher, opportunities can still be tough to find. Make customers aware how much simpler and affordable a facilitator and guide can make the process of installing a solar-power system.
“Jobs don’t come out on the Dodge Report because clients don’t start these jobs unless they have a compelling reason,” Filanc said. “It’s generally the contractor acting as solar integrator that helps them understand by making a strong economic case. If you help the client find their financing, that’s what makes these projects fly. It’s a sales strategy.”
CASEY, author of “Kids Inventing! A Handbook for Young Inventors” and “Women Invent! Two Centuries of Discoveries that have Changed Our World,” can be reached at email@example.com and www.susancaseybooks.com.