Q3 2020: a new dawn for solar

One area that has gained further momentum in 2020 is the rapidly evolving solar-plus-storage market. Here, the potential for battery technology to increase the usefulness of a solar system has become a real “head turner”, a former SVP at Sunnova Energy Corp told Third Bridge Forum. Batteries help to manage the balance between electricity generation and demand by storing unused energy for when the sun isn’t shining. We’re told consumers are snapping them up because they want reliability — and they are willing to pay for it. 

“We’re going to continue to see that trend, as well as derivatives of it, as the country, the US, and I’m assuming other regions, push towards electrification,” the expert continued. Although this shift pre-dates the pandemic, appetite for self-supply has been amplified by restrictions forcing people to spend more time at home, including for work and study. The lingering uncertainty and upheaval has impacted people’s emotions about the “basic things that you thought of as stable,” according to a former director at Baker Electric Inc. 

In addition to this focus on self-sufficiency, we heard the pandemic could also be a boon to solar in the long term because it’s exposing the need for greater sales efficiency. Marketing is a key pillar of the residential solar supply chain, with workers rumoured to rake in USD 700,000-800,000 a year selling panels door-to-door. These expensive in-person interactions present an opportunity to modernise the sales process, particularly as social distancing continues. 

“The evolution here is that people figure out how to market remotely and more efficiently, and that’s going to lower the total cost of ownership and improve competitiveness in the long term,” the former Sunnova SVP said. This was echoed by the former Baker Electric director, who noted that sales and marketing are the lowest-hanging fruit for cost reductions. “Overall, industry-wise, I’d expect by, let’s just say 2025, there are much fewer salespeople in the process for solar.”

In another interview, Tesla Energy was held up as an example of how to sell solar online as a lifestyle. Tesla achieves this by showcasing how much money a solar energy system can save, as well as how it can integrate seamlessly with home appliances and personal devices in a “sleek” format. The company also offers a subscription model with a money-back guarantee rather than subjecting people to lengthy contracts. This all feeds into the customer experience, which we’re told is now becoming a key differentiator among solar players. “Part of the cost is the consumer experience, and so the lowest-cost provider of financing and panels should win — if it has the best customer experience.”  

The challenges of this year have reinforced existing trends and highlighted additional opportunities for the solar industry. But it’s not all good news. We also heard there are some potentially disruptive headwinds gathering on the horizon. For example, the competitive environment has been stirred in recent years by the hotly debated impact of solar tariffs on imported crystal and silicon cells and modules. Tariffs were introduced in 2018 to encourage US manufacturing of solar panels but were a short-lived windfall for domestic producers, a former VP at First Solar explained. Although some players benefitted at first, the tariffs galvanised foreign players who have since “figured out how to play in a very tough field”. 

Another issue is the potential expiry of the solar investment tax credit (ITC), which has had a transformative impact on clean energy growth in the US. Since the ITC was enacted in 2006, the US solar industry has grown by over 10,000%.¹ https://www.seia.org/initiatives/solar-investment-tax-credit-itc However, having already been extended once, the incentive could be abolished next year, with its fate largely down to the outcome of the presidential election. With the above-mentioned tariffs scheduled to be phased out in February 2022 and the ITC expiry looming, this is “an uphill battle that’s about to get very intense,” the specialist said.

Meanwhile, the commodification of solar panels and their continuously declining market price could be seen as a double-edged sword for the industry, as producers increasingly vie for business on the basis of their technological prowess. Further consolidation is expected in the manufacturing space, with the continued growth of the industry dependent on value-added products such as energy storage and sophisticated micro-inverters. 

What happens next with the ITC and tariffs remains to be seen, but with climate change awareness intensifying across the world, and a cultural shift towards self-sufficiency underway, today’s consensus is that the solar industry has yet to reach its highest point.

* According to the SEIA