Insight: Rooftop revolution: Coronavirus chill upends solar power industry
09/07/2020 06:30
* Solar panel firms go digital as lockdowns hit sales
* New sales strategies cut costs as firms battle to survive
* Solar power seen as key driver in climate change fight
By Nichola Groom, Isla Binnie and Nina Chestney
LOS ANGELES/MADRID/LONDON, July 9 (Reuters) - The booming
rooftop solar panel industry nosedived overnight when the
coronavirus forced homeowners to rein in spending and keep their
distance from would-be installers.
Now, in their struggle to survive, companies on both sides
of the Atlantic are turning to online marketing rather than
knocking on doors, using drones to inspect roofs, arranging
digital permits and coming up with attractive new financing
plans, according to interviews with 12 executives.
At stake is the future of a key driver of the global
transition from fossil fuels to renewable energy: solar power
was the second-fastest growing renewable source after wind in
2019, according to the International Energy Agency.
And rooftop installations, which generate electricity used
by homes or businesses rather than feeding into the grid, made
up more than 40% of the market before COVID-19 struck.
Energy research firm Wood Mackenzie has slashed its rooftop
solar installation forecasts for Europe and the United States by
a whopping 30% this year, while lifting its forecast by 3% in
Asia, where China provides strong government support.
Joana Palau, 42, a council worker on the Spanish island of
Ibiza, was one of the few in her neighbourhood who pressed ahead
with a plan to install 12 solar panels on her farmhouse in June:
"If I had not been working and did not have the stability of a
salary every month, I definitely wouldn't have done it."
By contrast, large-scale solar installations that power the
grid have fared relatively well. Wood Mackenzie trimmed its
forecast by less than 10% for Europe and barely touched its U.S.
outlook as rock-bottom prices, subsidies and government mandates
helped insulate larger projects from the pandemic.
'RADICAL SHIFT'
In the United States, the third biggest rooftop solar market
after China and Japan, about 80% of the 100,000 job losses in
the solar sector so far have been at rooftop installers, the
Solar Energy Industries Association said.
Many of the staff who were not laid off, however, began to
focus on one of the industry's most persistent challenges: how
to cut the cost of identifying homeowners with suitable roofs,
and then persuading them to buy panels, executives said.
Quickly, companies made sales appointments virtual.
Leading U.S. installers SunPower Corp SPWR.O , Vivint Solar
Inc VSLR.N and Sunrun Inc RUN.O said that reassured
potential clients worried about the virus. It also cut the cost
of acquiring customers, which Wood Mackenzie puts at nearly
$4,000, or 22% of the average $18,000 cost of a U.S. system.
Normally reliant on door-to-door visits, an effective but
expensive sales tactic, Vivint trained hundreds of salespeople
to canvass by phone as its sales slumped 60% following state
lockdowns, Chief Executive David Bywater said.
By early May, sales were down only 30%.
"It was a radical shift," said Bywater, adding that it had
hastened Vivint's plan to diversify sales strategies and cut
costs: "I hope we never lose that and we accelerate that."
In fact, the strategy was so successful that larger rival
Sunrun announced on July 7 that it had agreed to buy Vivint in
an all-stock deal valued at $3.2 billion, saving $90 million a
year and creating a solar player with half a million customers.
Sunrun bought Vivint because of its focus on direct selling,
a model Sunrun Chief Executive Lynn Jurich said had become even
more durable during the COVID-19 pandemic: "Both companies are
delivering above where we expected."
'GAME CHANGING'
Rival SunPower has also seen a massive shift to digital
sales, with about three-quarters of consultations now happening
via video chat, up from a 10th previously.
Chief Executive Tom Werner said he expected half of its
sales would be digital from now on. He said it was harder to
close deals in virtual chats but that was offset by cutting out
travel time between appointments.
"Ideally, you have the day when solar is like Amazon, so you
can buy and be fulfilled in a very efficient process," he said.
Sunrun, meanwhile, had to pull its salespeople out of stores
such as Costco COST.O and Home Depot HD.N during lockdowns,
outlets that had been bringing in nearly a third of its sales.
Within two weeks, Sunrun had moved its field sales team
online and launched a promotion offering six months of home
solar power for $6. While initial online commitments were lower,
the percentage of customers following through was higher.
Sunrun said innovations like virtual sales and automating
permits to avoid physical processing by authorities will trim
about $2,000 off the cost of an array over the next year or so.
EmPower Solar https://www.empower-solar.com, a rooftop
installer based in Long Island, spent New York's lockdown on
"game changing initiatives" such as digitising sales and
paperwork, and using satellite imagery and drones to inspect
roofs, said Chief Executive David Schieren.
He said, however, that it was harder to build rapport with
potential customers without face-to-face contact.
'ROOFTOP REVOLUTION'
In Europe, rooftop solar firms developed more enticing
finance plans as the pandemic made clients wary about spending.
SotySolar https://sotysolar.es in Gijon in northern Spain
accelerated the roll-out of a "Netflix-style" subscription
model. It installs panels and charges a monthly fee though
homeowners can buy them or end their contract when they like,
said co-founder Daniel Fernandez.
"We have been thinking about doing this for a while but we
brought it forward because of this situation," he said, adding
that he expected to triple installations with the offer.
In Barcelona, renewable energy utility Holaluz HLZZ.MC has
accelerated an initiative to install panels free for people with
available roof space - and use them to generate power for all
its customers. It aims to extend the plan to apartment blocks
and commercial buildings.
Holaluz expects to boost clients to one million and carry
out 50,000 rooftop solar installations by 2023. It estimates
fewer than 10,000 Spanish homes currently have panels.
"This is the rooftop revolution," said co-founder Carlota
Pi. "We have spent so much time at home, we have become much
more conscious of the value you can create by transforming your
roof into a source of energy generation."
Nevertheless, despite such innovations, the industry will
take time to bounce back, according to industry groups.
In Italy, one of Europe's biggest rooftop solar markets, one
in five companies fear they may close due to COVID-19, according
to a survey in May by Italian solar trade group Italia Solare.
In Spain, solar association UNEF, for example, has slashed
its forecast for rooftop installations this year by a third.
Nevertheless, European firms are hoping moves by the
European Union and governments in Spain, Germany and elsewhere
to pursue "green" post-pandemic economic recoveries will help.
"The sector looks set to undergo a quick recovery," said
Michael Schmela, head of market intelligence at industry
association SolarPower Europe in Brussels.
In the United States, residential installations are not
expected to return to previously forecast levels until 2025,
according to Wood Mackenzie - and some say going online won't
work for all, especially in some rural communities.
"It's a totally different culture," said Benjamin Mayer,
vice president of marketing for SunBug Solar https://sunbugsolar.com,
which sells in the countryside of western Massachusetts. "If
you are going to get traction in that community, you need to be
there for a decade."
(Additional reporting by Matthew Green in London; Editing by
Richard Valdmanis and David Clarke)
((M.Green@thomsonreuters.com;))