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The business model of manhy electrical contractors does not involve outside sales, leaving those contractors out of position to approach the residential solar business, according to Bernie Kottlier, director, Green Building Solutions, Los Angeles Labor Management Cooperative Community (LALMCC). Kottlier added that many contractors bid on already specified jobs, while the residential solar business is not bid.
“[If] contractors want that business, they have to change their business model or develop a department or division with a different model. If they want the business, they have to go out and get it.”
One small, San Diego-based company did just that. Ninety percent of Sullivan Electric’s business is residential solar. Dan Sullivan, the owner, who graduated from an apprenticeship program in 2002, started his company in 2004 with little capital and plenty of determination. Today, Sullivan Electric has 10 employees and is setting up a branch of the company in Florida.
“I had to scrape, kick and scream to find my first customer,” Sullivan said. “Solar isn’t for everybody. Oftentimes, depending on who is the prospective customer, you find yourself competing with a new toy, a boat or a new kitchen countertop, simply because those are comparable in purchase amount.
“At this point, solar is for the progressive thinker,” Sullivan said. “That’s the right person to talk to. If you speak to that demographic, they don’t equate the expense of those other items with the expense of a solar system. They are the demographic that realizes that solar power is actually a way to take a recurring debt and turn it into an asset.”
To target that demographic, Sullivan runs radio advertisements on specific Southern California stations and pay-per-click advertising on Web sites that appeal to the demographic. Once he attracts a prospective customer, he presents his case.
“We make a very good case that buying a solar power system is a much more viable investment than spending money on the utility for every single month in the foreseeable future,” Sullivan said. “We explain that, by purchasing a solar system and financing the purchase as you would your home or car, that the monthly payment is equal to or less than the present utility bill.”
Yet Sullivan’s sales pitch wouldn’t go far if not for the incentives and rebates offered by states’ and federal government. It’s the meat of his or anyone’s pitch.
“If it weren’t for the rebates and incentives, it wouldn’t pencil out,” he said.
But some customers don’t care about rebates and incentives.
According to Todd Stafford, senior director of instrumentation, Alternative Energy and International Training Center Operations for National Joint Apprenticeship Training Commitee (NJATC), “We’re in Tennessee, and we don’t have any active grants or rebate programs. But there are a few systems installed here. One-and-a-half percent of the population will install a solar system because it’s environmentally friendly. Another 1.5 percent will buy one because they can. Residential is more about selling the system based on what value that the customer determines they have to have from it. It’s not a bid market. The residential markets are lagging because of a lack of knowledge by the contractors in how to sell the systems.”
Entering the residential solar market calls for sales skills. Is getting up to speed worth it? What about meeting with prospective customers? That calls for homework. First assignment: Know about photovoltaics (PV) systems. The industry is changing rapidly, especially in terms of products and availability and reliability of solar modules. A resource to help learn the market is the recently published book “Photovoltaic Systems,” by Jim Dunlop, a leading renewable energy expert, with Stafford serving as technical editor. It is the first comprehensive guide to the installation of commercial and residential solar energy systems, and it is available from American Technical Publishers at 800.323.3471 (www.Go2ATP.com). An accompanying CD-ROM provides interactive worksheets, quizzes, calculators, video clips and animated graphics depicting PV principles and operation and links to additional resources. A section of the book covers marketing.
“The marketing side of solar is one of the things we identified as necessary for our contractors to know,” Stafford said.
Due to the explosive growth of solar nationwide, training opportunities are being offered around the country. In late March, Dunlop delivered a two-day contractor workshop on PV systems, hosted by Sharp Electronics and the company’s Sharp Solar division. Marketing is part of the training. Additional workshops are being planned in other areas of the country.
You also can go to ElectricTV.net, an online video magazine featuring streaming video segments on various issues affecting the industry. The segment titled “Spotlight on Skills,” about solar systems installation, could be used as part of a sales pitch for residential solar.
So, are you ready for the sales pitch to the interested customer? Not so fast.
“One thing others think is that I sell a residential customer a system, install it, pass inspection and I’m done,” Sullivan said. “It’s not that way. I have to seek out the right customer. Then I submit a proposal. Thirty days later, if I’m lucky, they buy it. Then I do all the paperwork to reserve their rebate. Then I have to coordinate with the utility and then get a permit.”
Sullivan’s marketing campaign is specific to each customer.
“If someone calls us up and says they want a solar power system, we have to find out their address, their utility and the rebate program of that specific utility to determine if we are doing everything in compliance. And every utility has different net-metering requirements,” Sullivan said. “We handle everything. If you are doing solar all day every day, you’re much more qualified to handle all the paperwork than the customer,” he said.
Sullivan explains to prospective customers both the value and precariousness of federal solar tax credits and state incentives. The Energy Policy Act of 2005 granted a 30 percent solar energy investment tax credit for homeowners and businesses (maximum incentive: $2,000 for solar-electric systems and solar water-heating systems; and $500 per ½ kW for fuel cells), which will expire at the end of 2008 unless renewed, an unlikely outcome under the current administration. (See related story on page 74.) The credit then would revert to a permanent 10-percent level.
“What’s important to point out,” Sullivan said, “is that while the federal tax credit helps, it’s not crucial. In itself, it does not make solar power financially feasible. Rebates, especially in California, do. Other states offer them as well, but California is the leading state when it comes to solar power.”
For information on rebate programs by state, contractors can consult the Database of State Incentives for Renewables and Efficiency (DSIRE) Web site, a comprehensive source of information on state, local, utility and federal incentives that promote renewable energy and energy efficiency (www.dsireusa.org). While the Web site is an invaluable resource, staying on top of the rebate situation involves more than just checking that site.
“Anyone that’s seriously considering being in the residential market needs to be in contact directly with the rebate authority for a given territory. Online databases can be out of date, and rebate money can go very fast. So you have to check directly,” Sullivan said. To find out the rebate authority in their areas, contractors can go to the page related to the solar program for a particular state on the DSIRE Web site and scroll to the bottom of the page for the listed authority.
Contractors also must be knowledgeable about net metering, a method of measuring a PV system’s electricity production, for any sales pitch. In states that allow net metering, homeowners with PV systems can offset their electric bill with any excess electricity they produce.
“If a state doesn’t have net metering, there won’t be any solar business,” Kottlier said. While net metering is available in 42 states and in D.C., it is not available in Tennessee, Mississippi, Alabama, South Carolina and Alaska and is offered by some but not all utilities in Idaho, Arizona, Michigan and Florida. For questions related to net-metering availability in individual states, contractors can go to a Web site maintained by the U.S. Department of Energy: www.eere.energy.gov.
Knowledge of all the above topics with specific reference to which apply to a specific customer is the basis of any residential solar marketing campaign sales pitch.
“Doing the installation is the easy part. It’s all the coordination prior to and after the completion of the job that makes solar challenging,” Sullivan said.
In addition, since solar power systems carry 10-year warranties, service to residential solar customers doesn’t stop with installation.
“Our business model is probably different than others because we monitor the system performance of our installed systems every day. We have an Internet-capable system that is always uploading data to us. We find out if a system is not performing. If it doesn’t, then the customer won’t realize the energy savings we promised. If a system is underperforming, we catch it the first month and fix it,” Sullivan said.
Whichever way you approach it, contractors wishing to market their services in the residential solar market have some strategizing and research to do. Is it worth it? Dan Sullivan thinks so. And his advice to those who agree?
“Go after the market, and stick to proven products. Make sure you do a lot of homework before you start because you can get in trouble if you’re not thoroughly familiar with rebates,” he said. “The customer is depending on you.”
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 protected] or www.susancaseybooks.com.