The solar industry is hot on the public’s radar thanks to recent announcements from Apple and Tesla confirming they have some major solar projects in the works. If solar wants to stay at the forefront of public consciousness, it’s crucial to understand what the major players are doing (and why) and what it means for the future of the industry.
Apple and Tesla
Apple recently announced it would be spending $850 million to purchase 130 megawatts of capacity from First Solar California Flats Solar to build a massive power plant in California. The company intends to use this to power many of its stores in the state, and possibly other similar operations such as data centers or its Cupertino, California (US) headquarters. This isn’t Apple’s first foray into solar, the company has been slowly implementing the projects needed to operate on 100% renewable energy and just recently announced they had accomplished said goal in the US and are at about 87% abroad. This deal with First Solar, however, is by far the largest and most ambitious move to date.
Tesla has also begun making waves in the solar industry with an announcement recently to partner with Solar City to put Tesla batteries to use in homes and micro grids in the coming months. This plan has the potential to open up the solar market to new types of users and expanded system sizes. This is an opportunity for Tesla to finally get in front of consumers and solar developers that it hasn’t been able to target through its vehicles.
Impact on the rest of the solar industry
Any time a major company like Apple or Tesla makes a move to shake up an industry, it presents the opportunity for a ripple effect of innovation within it. Solar startups specifically, have the potential to truly benefit from big companies giving investors a reason to pay attention. The Solar Energy Industries Association (SEIA) estimates that residential solar alone will represent 45% of the solar market from 2017 to 2020. Combined with small scale non-residential solar, that number is closer to 75%. Many startups have already begun to jump on these trends and have the potential to impact everything from how solar is sold to consumers, to putting big data into play to improve and advance the sector.
Startups like Y-combinator backed Bright, have already begun tackling difficult to reach, but potentially highly profitable markets, like Mexico. Mexico has a very volatile utilities market and by leveraging solar, some control could possibly be put in the hands of the people. Other startups like Helioscope are using technology to streamline and standardize the solar design and engineering process. Their product makes it easier for installers to be more precise, earlier in the sales cycle and decreases the likelihood of errors making project owners more comfortable.
The solar industry won’t be easily disrupted
Companies like Apple and Tesla are obviously the most likely to have the resources needed to make a dent in a traditionally difficult market, which is why innovation needs to start with them. For upstarts just getting into the game, challenges such as diverse local economies (at home and abroad), lack of industry standards and changing policies (expiring tax credits) are just some of the issues that need to be addressed. That being said, the size and interest in the market are driving innovation.
On the sales and installation side, companies are becoming more professional and accurate in their cost and savings analysis, which will bring more certainty to the industry. Software has played a huge role with both major players building their own tools and start-ups offering solutions to longstanding challenges like the cost and complexity of design and engineering for solar. New financing companies are also introducing creative solutions to open new markets – both by geography and user type. Combined, these solutions can help combat the long-term challenges that have plagued the solar industry due to outdated policies or limited tax credits.
By leading the way, companies like Apple and Tesla will make it easier for the rest of the industry, including those in the solar marketplace and businesses that want to move toward more sustainable practices. By making these purchases or priorities, these major players are setting the standard that the marketplace desperately needs.
Written by Nathan Homan, Managing Partner, Wiser Capital