After years of rapid growth, experts are predicting that lack of urgency among homeowners will cause residential solar to slump in 2017.
And that could put weaker solar installers who rely on outdated sales tactics like door-to-door sales on the path to bankruptcy.
At the same time, stronger residential installers, who have updated their sales tactics to match what homeowners in the 21st century demand, may find a new opportunity to thrive.
Long-Term Sun — But Short-Term Clouds
It’s obvious that long-term trends favor more solar power in the US. Today, fewer than one percent of American homes have solar panels installed on site. And while every home is not suitable for solar, many good locations on rooftops and in farm fields are still waiting for their own solar arrays.
But the near future may see a solar slump, analysts are predicting.
From software to cell phones, every emerging industry has its temporary slowdowns and setbacks. Solar is no exception. With the waxing and waning of government incentives, solar has gone through several cycles of boom and bust over the last 30 years.
in 2017, the solar industry may again be facing a slowdown. Even after recent growth, it’s not that the market is saturated. If anything, there’s plenty of demand left to serve. The problem now seems to be, as in the past, incentive-related.
With the extension of the Federal Solar Investment Tax Credit last year, much of the urgency disappeared for homeowners to get solar before the incentive would expire.
Also, cheaper utility power in many areas is making solar less attractive as a way to save money.
As a result, experts are forecasting a solar slowdown beginning next year. “After jumping more than 1,000 percent since 2010, panel installations are projected to grow by only 0.3 percent in 2017,” according to Bloomberg New Energy Finance.
On a chart, that small amount of growth looks almost flat, a troubling prospect for solar installers going into 2017.
Even Market Bulls Are Better Safe than Sorry
Not everybody agrees that next year will see a solar slowdown. In a recent report of its own, Deutsche Bank predicts the exact opposite: that falling module prices will actually bring a new solar gold rush in 2017.
However, given that “soft costs” of solar like permitting and marketing remain steady, module prices are becoming less and less a factor in the overall cost of a solar installation. That’s why I’m skeptical that dropping panel prices will be enough to continue the solar boom in the face of the loss of urgency for consumers from the federal tax credit extension.
Anyway, when it comes to predicting the solar market, it’s better to be safe than sorry.
If you prepare for a slowdown in home solar next year but 2017 turns out to be more boom market, then you’ll be pleasantly surprised — and your business will do just fine. However, if you assume that 2017 will be great for sales but it turns out to be tough, then you might find yourself on the road to bankruptcy.
2017 Solar Slump: Pain for Some, Gain for Others
Assuming the solar slowdown scenario for 2017 predicted by Bloomberg, slowing sales growth brings both challenge and opportunity.
On the downside, a solar slump will create hardship up and down the solar industry, from equipment makers to installers.
On the upside, a period of slowdown will strengthen the industry in the long term by weeding out the weaker players while giving time for demand from homeowners to rise again. That will leave stronger installers with bigger markets and fewer competitors.
A 12- or 18-month slump in solar will transform today’s residential market, bringing gain to some and pain to others.
The first phase will be the weeding out of weaker players. And I predict that the first ones to go will be independent sales reps who sell solar door-to-door and the installers who rely on those door knocking reps.
Solar Buyers Hate Door-to-Door Salesmen More than Ever
Unfortunately for solar reps attracted to door-to-door sales by promises of a six-figure income, this promise often turns out to be a cruel swindle. Once they’re out in the cul-de-sacs, cold walkers find that they may have to knock on 500 or more doors just to make a single sale.
And in hot markets like California, by now, all the good doors have already been hit by somebody else.
These days, when a homeowner in Southern California or the Bay Area sees a solar salesman coming up the street, she’s not getting the coffee and chocolate chunk cookies ready to offer a friendly welcome.
Instead, she’s more likely to draw the curtains and keep quiet until the annoying guy just goes away.
Solar companies should not kid themselves that homeowners ever really welcomed door-to-door salesmen.
It’s just that in the past, homeowners would put up with door knocking. And occasionally, the determined D2D salesman would make a sale.
But with rising competition in many solar markets on the one hand and the rise of the Internet on the other, homeowners have lost their patience for solar companies interrupting them at home, whether in person or with cold calls.
The First Weeds to Be Pulled
If a solar slowdown does come in 2017, how could door knockers not be the first to go out of business?
Given that, it seems likely that solar installers that still rely heavily on cold canvassing will suffer:
- Door-to-door sales will deliver a lower and lower return in the future, eventually leading to negative revenue by costing sales departments more than it brings in
- You’ll experience more turnover in your sales force, since fewer sales guys will be willing to knock on doors given the poor results, especially if they’re on 100% commission
- Competitors who’ve started selling solar in smarter ways will take your marketshare
- Since homeowners hate them, canvassers will damage your brand and hamstring your other sales and marketing efforts; when homeowners see your company’s name in a Facebook ad, they’ll say “Those are the jerks who’ve been knocking on doors around our neighborhood. They’re the LAST people on earth I would ever buy solar panels from.”
How to Survive Until the Sun Returns
If your company can make it through the slump, your market could emerge stronger than ever when solar starts growing again in 2018, according to Bloomberg
“Every other solar market during its period of retooling has faced a collapse of 20 to 90 percent,” says Hugh Bromley, an analyst at Bloomberg New Energy Finance. “So for the US to face a year or two of stagnation before continued growth is an overwhelmingly positive outcome.”
My advice for solar installers to survive the coming downturn and the inevitable solar market shakeout is very simple:
- Get out of the door knocking business.
- Start now — Don’t wait until all your competitors stop knocking on doors.
- Update your sales outreach to match the changing needs of today’s solar customers who hate pushy interruptive selling.
If home solar lags in 2017, some solar companies will go out of business. If you want to be left standing after the shakeout, start to bring your solar sales out of the 1970s and into the 21st century before it’s too late.
My book The Solar Sales Leap is a good place to start. It’s filled with hundreds of ideas to sell solar without knocking on doors.
— Erik Curren, Curren Media Group