When assessing the future of the solar industry there are many factors that foretell a bright future. But at the same time there are significant signs that would make someone think long and hard about staying in the industry. For those considering a career in solar, it may be enough to keep them away. At least for now. We’ll look at the positive and negative news and trends in solar and discuss how a new solar dealer, REACH Solar, has addressed those issues.
The Big News in Solar
Two of the top solar companies, Titan Solar and Sunpower, closed their doors and filed bankruptcy in one month (July 2024). This would give any sensible person in the solar industry reason to pause and question their career choice. But when we look at the long list of smaller companies that have ceased operations in 2023 and 2024, it should cause everyone of us that want to stay in solar to assess our own solar company. Are they in financial trouble also? Have they figured out how to navigate these tough financial times? Will they be another example of a failed solar company?
To Learn More About REACH Solar, visit Solar Sales From Home
Solar Companies Out of Business in 2023 and 2024
American Solar Advantage (ASA)
Infinity Energy
Kuubix Energy
Pink Energy
Suntuity Renewables
Vision Solar
But this list is not the full story. There more than 50 other smaller regional and local solar companies that have closed their doors in 2023 and 2024.
Why Have So Many Solar Companies Gone Out of Business?
When trying to figure out why so many companies have gone out of business, the easiest conclusion to come to is that the market for residential solar is not strong. Maybe sales of residential solar have slowed and companies can’t find new business. In this market and economy, it is true that if a solar company isn’t nimble and adapts to changing conditions, it may create a situation where the company is no longer financially sound. There are specific challenges that solar companies are dealing with that only those with great leadership will overcome.
The Impact of Rising Interest Rates
If you are or have been a Solar Sales Rep for any length of time, you know that today’s higher interest rates have hampered financing of residential solar systems. Where you might have been able to sell solar on a ‘payment swap’ basis a few years ago (saving a homeowner money right away), you must now, in most cases, sell solar on the features and benefits of going solar. And emphasize to a homeowner the future savings based on escalating utility rates. Have sales slowed because of these higher interest rates on unsecured home improvement loans? Yes. That is why offering a lease or PPA option to homeowners has become more popular. This is not a factor specific to the solar industry. Any industry that sells a product that typically is financed has seen a slowdown in sales to some degree.
Interest rates have hurt solar companies in another way. Solar companies, especially those that are trying to grow, are feeling the hurt from higher interest rates when procuring funding to purchase equipment, pay labor, and procure permits for solar installations. Some of the companies that tried to grow too quickly to gain market share are on the list above.
Financiers are Holding Funds Longer
To compound the financial pinch for solar installation companies, they are having to wait longer to get paid from financiers. While it was customary for solar installers to receive funds at M1 and get paid in full upon installation (M2), some lenders are holding funds until Permission to Operate (PTO). This obviously creates more of a challenge for the installers trying to pay their bills and get Sales Reps paid.
The Changing Landscape of Residential Solar
Another player in the residential solar market are the utility companies. They too, are feeling the effects of the higher cost of money. As a result, they are waking up to the fact that existing policies regarding reimburse rates, system size allowed and more, could be changed to help them offset their own higher costs.
The best example of this is in California with the change from NEM 2.0 to 3.0. With NEM 2.0 the big 3 utility companies (SDG&E, SCE, and PG&E) had no restrictions on the size of a solar system that a homeowner could have installed. And they reimbursed the homeowner at a retail rate for excess energy that they pushed back to the grid. The change was made in 2023 to no longer pay retail for excess energy. The new average reimbursement rate is estimated at 7.5 cents/kWh.
This change in California makes sense. It isn’t very smart for a utility company to pay a homeowner a retail rate for energy when they can buy that energy wholesale just as easily. It also alleviates traffic on the electrical grid especially considering consumption batteries that will give homeowners the ability to store energy during the day to run their home at night. In this way, the homeowner is buying very little, if any, energy from the utility.
These policy changes have not and will not stop with California. Many public utility commissions and utilities around the country will adopt similar policies moving forward. Just as in California, after a ‘grandfather period’, the market in that area will slow until Sales Reps change their sales approach, and consumers lose sight of previous policies.
What is the Future of the Solar Industry for Solar Sales Reps?
To answer that question, I will simply tell you what REACH Solar has done to mitigate some of repercussions of the current solar market. Quite simply, REACH Solar has pivoted to working with smaller, regional installation companies that provide homeowners with excellent service and communicate well with REACH Sales Reps and REACH Project Management personnel. In this way, we are not putting all our projects into the hands of a large national company that may go out of business or have difficulty installing on a national scale. Each of the current 15 EPCs or solar installation companies that help us cover 39 states and growing, has been vetted by REACH for install times, customer satisfaction based on reviews, and response time.
Based on this strategy will it prevent us from dealing with the fallout of any of these 15 companies closing its doors? No. But because of their current ability to install quicker and their emphasis on communication, REACH feels that they are more likely to get though these tough economic times. If one or more of these companies struggles to fulfill their obligations, REACH Solar can pivot to an alternate installer in that region quicker.
Why Not Just Work with a Local Installer?
How is what REACH Solar is doing any different than a Sales Rep working directly with a local or regional solar installation company? We firmly believe that our business model is the future of the solar industry. We can negotiate a better baseline PPW than you can on your own. Why? Because in every area of the company we are bringing a lot more potential sales to these installers than any one individual Sales Rep or even a team can. We currently have over 5,000 Setters and Sales Reps around the United States and that number is growing daily. It gives REACH Solar more leverage to negotiate a better deal for our company and our Sales Reps.
Additionally, the technology and support infrastructure that we can provide a Solar Sales Rep, or a team of Solar Sales Reps is extremely robust. Our project tracking system is the best in the solar industry. As mentioned above, we provide a Project Manager that will assist you in getting that project to PTO. If you want to build a team or expand an existing team, we can help you do that while you concentrate on making sales. Our solar sales training is done daily. We have some of the best people in the solar industry associated with our company that you and your team can learn from.
Sell Solar Virtually
You can sell solar in the home. If you do that now, you don’t have to stop if you join REACH Solar. But the industry is changing, and you may want to change with it. We sell virtually via Zoom. It allows our Sales Reps to sell in multiple states from the comfort of their home office. In addition to expanding your market, it also allows you to make more solar sales presentations and not spend a lot of time and money getting to and from those appointments. In fact, your cost is zero. This is part of the future of the solar industry. It lowers the cost of the sale and we can pass that savings onto the homeowner.
Build a Solar Sales Team
Mentioned above was the concept of building a team. It isn’t required for you to do so. If you just want to sell solar, you can. But we do give you the opportunity to build a team as large as you want and get paid overrides on the sales that your team does, whether you sell yourself or not.
Factors that Make the Future of the Solar Industry Bright
There are 4 factors that will continue to make the solar industry a viable career option.
- There is a strong and growing environmental consciousness in our country
- Technology will continue to advance making solar even more efficient and thus more cost-effective
- Government incentives are not going away anytime soon. In fact, there is growing pressure on states that don’t currently offer incentives for solar to do so.
- The cost of a kWh of electricity is less with solar than it is when buying it from a utility company. Utility rates will continue to rise while the cost of solar will decrease.
To learn more about REACH Solar, visit Solar Sales From Home
After watching a detailed business overview on that page, you’ll be able to schedule a Zoom meeting with me to discuss it further, get your questions answered, and determine if our company if the right fit for you.
You May Be Interested in These Topics
