C&I, Solar

How Will New Solar Companies Fare in the Next Five Years?

One of the studies we might like to see is the turnover rate for new solar installation companies. Exactly how well can new solar contractors expect to do in today’s solar marketplace?

When I first entered the solar market in 2008, there were two commercial solar projects in San Antonio and less than a dozen residential projects. After CPS Energy started their solar rebate program (then paying $3 per AC watt), the solar market began to grow. The cost of buying a solar PV system for the consumer at that time ranged from $6-$9 per DC watt, compared with pricing today in the $2.50-$3.50 per DC watt range. Over that same period, there has been a corresponding drop in the solar rebates available to around $0.70 per AC watt.

In 2012, my local utility company, CPS Energy, had 26 approved solar contractors registered with them. Today, there are 60 companies on the approved list, with very few I recognize from that original roster. Some, I’m sure, have done the same thing I have over the years by adapting as the market matured. In the case of my company, we have evolved, changing names and restructuring three times into its current business model. This is how we have been able to adapt to the ever-changing solar marketplace. However, most of those original 26 haven’t done as well. Of the companies approved by CPS in 2012, only four of the original ones (counting my company) are still active (except possibly for a few others that may have changed their names).

In those early years, consumers assumed the risks of getting marginally qualified solar installers to build their systems. We saw a lot of projects that couldn’t pass code and contractors who were not properly licensed. Then there were the more publicized cases of solar companies who took advances for projects then vanished. Certainly with so many contractors gone after only four short years, any owner with a warranty issue must look for help elsewhere.

All of the growing pains in the industry have led to a tightening of requirements for solar installation companies. And with all of the stricter rules, fewer companies can meet the minimum requirements to enter the market. Here in Texas, a solar company must be a state licensed electrical contractor employing a master electrician, plus all of the installers must be licensed electricians and physically supervised by a journeyman or master electrician. Other requirements to be on a utility company’s approved rebate contractor list include a NABCEP PV installation professional certification, a local presence with a physical meeting facility, a state electrical contractor’s license, and a local municipal electrical contractor’s registration (not to mention a sterling established track record).

So how will the outlook shape up for new installers as we again approach the possible end of the federal income tax incentive? I believe we will see the survival of the fittest, with fewer startup solar companies and a majority of those now in business either closed or absorbed by other companies by 2021.

For those of us who have grown and endured, the future looks very promising. But this is my personal opinion based on my local market experience. I would encourage other solar installation companies to share their insight. Will your company survive the next five years? How well are your competitors doing in today’s solar marketplace?

Image credit: James A. “Hoss” Boyd