Residential Solar Business Software Platforms

Choosing the right business software platform—based on company business model and strengths—could help smaller residential solar installers remain competitive.

The US residential PV market of today is more competitive and cost sensitive than it was 10 years ago. National solar firms currently comprise 50% of the residential PV installer market share and have done so on the back of innovations in technology, business models, financing, marketing programs, software tools and operational effectiveness. Ideally, small and midsize PV installers can learn from the best practices that have helped the nation’s largest solar installation companies establish and expand their market share.

The Solar Foundation’s National Solar Jobs Census 2013 (see Resources) indicates that of the estimated “10,392 [independent and regional business offices] deriving at least some of their revenue from [solar] installation services and related goods, the vast majority of these—approximately 8,000—are quite small, employing only one or two solar workers.” The revised 2014 data, released in January, indicate that the solar installation sector still primarily comprises small firms, more than half of which have 10 or fewer employees. These small companies make up the “long tail” of the solar industry and rely the most on manufacturing, distribution and finance partners—the solar services sector—for products and services to help them run their businesses successfully, win new customers and gain or maintain market share. As the long tail of the industry has grown, the solar services sector has become more robust.

In this article, I explore how an industry-wide focus on soft-cost reductions is changing residential solar business models. I look at how software tools have changed the industry landscape and how smaller solar companies can take advantage of opportunities to streamline and optimize their business practices—advantages that used to be available only to larger national firms. I conclude with an overview of several solar business software platforms that can help residential installation companies automate routine business processes and focus their resources on providing quality customer service and installing quality PV systems. For the purposes of this article, I define a solar business platform as a stand-alone or cloud-based software tool that not only automates core sales activities, such as proposal generation and system design, but also tracks and streamlines some combination of pre- and post-sales activities, such as lead generation and management, business administration and project management.

Residential Solar Growth

Of all the solar market sectors, residential solar has experienced the steadiest growth since 2008. This rising tide may not float all boats equally. According to US PV Leaderboard data published by GTM Research in October 2014 (see Resources), SolarCity and Vivint Solar accounted for 51% of the residential market share in Q2 2014. From Q1 to Q2 2014, SolarCity increased its US residential market share from 28% to 36%, while Vivint Solar nearly doubled its market share to 15%. However, other data indicate that the overall residential market continues to grow, even as the largest installation companies post larger and larger numbers.

Nevertheless, the residential sector is clearly undergoing meaningful changes. According to the “US Solar Market Insight Report 2014 Q3” (see Resources), published by the Solar Energy Industries Association (SEIA) and GTM Research, “For the first time ever, more than 300 MWdc of residential PV came on line in a single quarter and more than 50% [of] residential PV came on line without any state incentive” (emphasis added). The report notes that while third-party ownership rates are still on the rise in markets such as New York and New Jersey, they are flattening out and even decreasing in other important markets, including Arizona and California.

According to the report, there are two main reasons for decreasing third-party ownership rates. First, more and more installers are able to offer loans to their customers. Second, customers are increasingly able to make cash purchases due to steadily declining PV system prices. This latter trend is particularly notable, as PV module prices were generally flat in 2014 and have actually increased since late 2013. Instead, nonhardware BOS cost reductions largely drove the recent PV system price declines, in part due to increases in operational efficiency.

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