The solar industry should be grateful to every government that has given it subsidies. However, almost every industry should be grateful to the governments that helped them get going with subsidies, and the industries that have been well established that still get incentives should be grateful as well. In most cases however, incentives do not last forever, and they will decline in the near future. With an imminent decline and end of incentives provided by the California Solar Initiative (CSI), many businesses and consumers who are currently installing or interested in solar installations may be wondering what the end of CSI will mean for them. The key to an incentive is to get your foot into the door, set up your business, and become viable post-incentive.
This does mean that we cannot do business as usual. The solar industry is sustainable, and we should find a way to make our business sustainable. With great incentives, it is very tempting to make the quick buck, but this does not set your business up for the post-incentive world. The key is a conservative growth model. Always think about five or ten years down the line. We think that ecoSolargy is a case in point. We have now expanded into commercial and utility markets.
ecoSolargy began in 2009. This was not a good time to start a business, but we are still around today! We started manufacturing solar modules and selling them wholesale. We built strong relationships with the producers and were able to get top quality modules that consistently performed better than expected. Over that time, we began developing relationships with other companies within the supply chain. By waiting two years, we were able to learn the industry and develop our own strategy. We partnered with a number of companies so we could cut costs and guarantee quality.
For a more specific example, we will use the Los Angeles Department of Water and Power (LADWP). We are located just south of Los Angeles, California (US), and when the new LADWP incentives came out, it was a golden egg for us. This incentive made it a no-brainer to go solar for most businesses and homes. The conventional way to tackle this improved market would be to significantly increase your sales team and focus on Los Angeles. However, once the incentive leaves, we would have to fire that sales team, or relocate to the next city with great incentives. We approached this improved market conservatively however. We began with pilot projects. We tested out different industries, business sizes, and financing options. Six months ago, we began expanding our sales team. By waiting, we have a business model that is versatile and scaleable. When the incentive decreases, we can tweak the model as well as bring the model to any other region that has similarities to Los Angeles and its incentive.
An incentive allows you to experiment with reduced risk. By improving the payback and viability of solar, we can innovate with flexibility. There are more customers to play with as well. Do not let the absence of incentives force you to redesign your business strategy.
Written by Alan H. Lee, Chief Executive Officer of ecoSolargy, based in Irvine, California (US)