Original Post at Heatspring Magazine by Brian Hayden
This week I flew to Chicago for the Illinois Solar Energy Association fund raiser. Jigar Shah delivered the keynote to 70 registrants, packed into Emmett’s Place in Palatine. I left at 9:30pm with an excited sense that Solar PV in Illinois is going to take off.
Worried you can't compete with
big, national solar companies?
"Nothing could be further
from the truth."
This was my second Jigar Shah presentation, (here is my first) and I’m on the verge of becoming a groupie – the guy spews useful information at a prolific rate. He delivered great Illinois-specific policy insights, but my favorite topic he covered was, “When explosive growth happens here in Illinois, and all of the big, national, solar installation companies begin flooding the market, and installed prices drop to $2.75/watt, how can you possibly compete?”
When Jigar asked this question, the room got quiet, because it’s a very real concern for the small businesses that have been pushing a big rock up a hill for a long time. They’ve built a market, invested in lobbying on the state level, and it would be bittersweet to watch the industry take off if they couldn’t reap the benefits. Here was Jigar’s encouraging message:
- Worried you can’t compete with bigger solar companies? Nothing could be further from the truth. Some of you might get bought, as the bigger players don’t know your market. And some of you will grow to be the biggest players in this market because you know and care about your communities. That does still matter.
- You guys have a lower cost structure than the big guys. Once you can get to 1 container/month, you’ll have the same materials cost structure, and you don’t have layers of management and overhead that the big guys do. The most profitable solar contractors in the U.S. are 1 office, usually a husband and wife team, with 2 crews.
- The only thing big companies have that you lack, is confidence. You charge more because you plan to do one job per month and you need that job to cover salaries and overhead for that whole month. Build a model to find out what sort of volume you need to do to install for $2.75/watt and start working toward that. You have to believe it’s possible for it to work.
- The biggest impediment to you making money in the solar business is the fact that you love solar so much, so you forget about the basic principles of business: you have to have more money coming in than going out.
- Everyone here needs to understand third party financing. It’s not as complicated as you think it is, and it’s a fundamentally easier sell, so it’s opening up bigger and bigger markets. (Note: HeatSpring has a free online Solar Lease Training.)
- It’s critical that you understand how the SRECs are going to be valued here in Illinois. Springfield is far, but you’ve got to go. You think you’re above lobbying and getting involved with government, but they need to see your face, and they need to hear where you’ve installed solar, and who your customers are. They care about that stuff and it makes a big difference. (Note: HeatSpring has a free online Understanding SRECs training.)
Events like this are a great reason to join ISEA, or whatever your local organization is. There’s no substitute for live networking, getting involved, and getting the inside scoop on what’s coming.
The Illinois market feels like Massachusetts in 2008. With the Renewable Energy World analysis of the Solar PV Market in Massachusetts in the back of my mind, I felt like I could provide useful lessons for how to win as the industry grows. I truly think we’re going to see something great happen in Illinois in the coming years.