A 2016 NREL study estimated the total rooftop solar PV potential in the US at 1.1 Terawatts. Enough to produce 39% of the nation’s electric energy needs. Every time I’ve flown in a plane for the last 15 years (since joining the industry), all I see is that potential. Drilling down to the subject at hand, GTM notes the national run rate for all Commercial and Industrial solar installations is about 2GW per year. Of this, 27% or 540MW, are projects below 250kW.
I see this potential every time I drive between the airport and my neighborhood in Austin, Texas. Capps Rental facility – 30kW. That veterinarian office – 25kW. My kid’s daycare – 20kW. The Shell gas station – 15kW. Bank of America - 35kW. The rock-climbing gym – 80kW. Etc. The main route between my neighborhood and our airport (~10miles) probably contains 2MW of small to medium commercial opportunities. But this small to medium commercial segment remains largely untapped. Why you ask? Let’s think about it…
Big national residential solar firms run sophisticated sales machines that pay college kids to door knock on their summer breaks. They don’t have the patience to bog down their well-oiled machine with sales that don’t close at the dinner table by the second meeting.
And national/regional commercial solar firms tend to focus on Fortune 500s, government RFPs and real estate portfolios of MWs of projects. Their well-organized highly technical teams are geared to manage long term sales cycles associated with selling to entities such as Walmart, Best Buy, Home Depot, Apple, Toyota, and the US Government.
And then there’s financing. Consider that transaction costs for financing a 50kW project can be similar to a 5MW project. Which has created a veritable dearth of financing options in the small commercial space. Another barrier to entry for larger, fast-moving and highly competitive firms.
Therein lies the opportunity. While big firms focus on the constant turn of door-to-door campaigns or Press Release worthy Fortune 500 portfolios with clear-cut financing options, there is a growing number of local and regional installers who are absorbing the “burden” of those 540MW of projects below 250kW. And there are some great reasons to pursue small and medium commercial…
Lower customer cost of acquisition – You might meet a business owner/customer at your kid’s soccer game or at church or you might have just installed a system on their home (we see this one all the time). This means nothing spent on lead acquisition and less travel expenses to visit corporate HQ.
Lower lead to close times – With fewer decision-makers and no review by the board of directors or finance committee, you should be able to get to a, “yes”, “no” or “another time” pretty quickly.
Higher margins – Developing your own leads in an underserved market with fewer competitors should allow better price control.
Resource efficiency – Selling and installing small commercial is not all that different from residential. In many cases, with limited external support, smaller installers can utilize existing residential sales, design and installation resources. Which adds to better operational margins.
The list goes on. I can’t tell you all the benefits or exactly what you need to do to unlock this potential in one blog. I can tell you that you won’t know either until you try.
Now for the shameless self-promotion section… With over 10,000 commercial sites mostly between 20kW and 250kW, Enphase would love to be your partner on small commercial projects. Please contact your account manager or distributor or join us for our next webinar – Jumping into Commercial – How to design small commercial systems with Enphase Microinverters.
By Jeff Wolfe, C&I Sales Manager at Enphase Energy