Are you tired of fighting economic headwinds? Why not try a business opportunity with massive federal, state, and utility tailwinds? Why not add solar to your business mix?
Solar is a natural add-on for HVAC contractors. You’re already well positioned as home energy experts with consumers. You already have relationships with your customers. You know how to sell high ticket items. You know how to use financing. You know how to utilize government and utility incentives. Plus, HVAC contractors tend to be the best marketers in the service trades.
One of the HVAC industry’s top sales trainers, Jim Hinshaw, has done extensive training with solar contractors. “Since 2007, I have been involved in the solar industry,” notes Jim. “I started by training dealers for a major manufacturer of solar panels. We did over 20 sessions a year for several years, over 1000 sales reps were involved in the training.”
“What I noticed,” continued Jim, “was that while most knew the physics of solar, many had questions concerning sales, marketing, advertising, that sort of thing. We addressed those issues and more in the training. What participants gained was a set of tools to use to develop the emotional connections needed to sell systems today. We also shared financial tools, ways to discover the reasons for buying solar, how to handle the common objections found in the marketplace, how to spot the four basic types of personalities and how to sell each one. We helped them build a professional presentation manual, which is used to show how the customer will get the things they wanted out of a solar system.”
That sounds a lot like the basic sales process HVAC sales professionals have mastered for years. Why not apply it to solar? It’s a natural thing according to Jim.
Jim says, “Depending on the region, average tickets for a solar system will range from $30,000-$60,000. The credits and rebates in some cases will bring it down to half that, but it is still a large investment. We deal with those kind of numbers already, and understand how to romance the benefits of a system that costs more than their last car.”
“Adding solar was relatively easy for us,” says Linda Couch of Parrish Services in Northern Virginia. “We were already full mechanical. All we needed to do was send the electrician to class, find an equipment supplier, and find a good subcontractor to do the work on the roof. The stage we’re in now is developing a more packaged offering.”
Linda says Parrish subcontracts the roof work because they “don’t like our guys on roofs, so we’ll find someone to do that part of the job.” In other words, Parrish outsources the riskiest part of the job from a safety perspective to a sub, but maintains control over quality through the system design, component selection, and electrical work.
Solar involves less risk than many other aspects of contracting. According to Hinshaw, “Solar is not weather or new construction dependent, it can be installed year round. The federal government has structured the tax credits for up to Dec 31, 2016. So we have some time to romance the concept of going green and getting the government to help fund it.”
Around 170 thousand households were equipped with solar arrays at the end of 2009, claimed the American Solar Energy Society. Given the number of U.S. homes, that’s just a drop in the bucket. And while the market has been growing at a rate of 35% to 40% over the past few years, the potential is much greater.
Demand for solar will be strong for the foreseeable future, regardless of the prospects for “cap and trade” legislation. Ask yourself if you think energy supply or reliability will improve in the near future given the current regulatory atmosphere. Ask yourself if electricity prices are likely to rise or fall. Based on your answer to these questions, ask yourself where you think demand for solar is headed.
The fact is, the United States is not building sufficient generating capacity to supply the country. When the economy finally heats up and energy demand picks up, expect an increase in brownouts and blackouts. Even now, utilities struggle to keep up with rising temperatures.
“Scattered power outages have affected customers up and down the coast,” reported the Associated Press July 7, 2010, “and usage approached record levels. In the Washington, D.C., area, nearly 1,000 customers were without power Wednesday, while New Jersey's largest utility, Public Service Electric & Gas, reported about 6,500 customers without electricity. Consolidated Edison in New York said it was working to restore power to about 6,300 customers, down from outages to 18,700 customers Tuesday.”
Consumers are motivated to consider solar for pure economic reasons, out of anger at the utility company, to take action as stewards of the environment, and to provide a degree of self-sufficiency when power supplied to the grid fails to keep up with demand.
To make solar feasible, three components are required. First, the incentives need to be in place. Second, electricity rates need to be high. Third, a good financing mechanism needs to be available.
If your service territory is characterized by high electricity rates and has state or utility incentives to supplement the federal incentives, solar is a good candidate for you. Plenty of financing vehicles are already in place for solar and more are on the way.
The New York Times reported on June 30, 2010 that “the Obama administration is devoting $150 million in stimulus money for programs that help homeowners install solar panels and other energy improvements, which they pay for over time on their property tax bills.”
The loans can be paid back through property taxes over a twenty year period. Moreover, the loan/tax bill stays with the property when the home is sold, increasing the likelihood that homeowners who expect to move in a few years will invest in solar arrays.
Unfortunately, Fannie Mae and Freddie Mac are refusing to finance homes with energy liens. This has halted many of these loans, though not for long. Congress and/or the administration is likely to pressure the government sponsored enterprises into going along with the program.
The Times article noted, “Local and state officials say that the energy liens are no different than other types of special property taxes, like those used to finance sidewalks and underground utilities. None of those have raised alarms at Fannie and Freddie.”
In the meantime, you can use local financing, utility programs, and equity financing. If the homeowner doesn’t want to take on the whole investment, build the solar system in stages.
“We can look at a 2 kW system if that will meet their needs (or budget) today,” explains Jim Hinshaw, “and they can add more next year, or five years later. This is one investment that can be done a piece at a time.”
“There has never been a better time to be involved in renewable energy systems than today,” exclaims Jim. “You cannot watch the news without some sort of environmental impact study being shown, we are on the forefront of an energy/environmental tidal wave right now. Be part of that, it will pay dividends.”
So what are you waiting for? The future is bright for solar!
Matt Michel is the CEO of the Service Roundtable, the world’s largest contractor business alliance. In addition to serving HVAC, plumbing, and electrical, the Service Roundtable now serves solar! Jim Hinshaw will head the Service Roundtable’s Solar Roundtable. The fastest way to get started in solar is to join the Solar Roundtable! For more information, visit www.ServiceRoundtable.com or call toll free 877.262.3341.