If you work for a solar installation company, I hope you’ve had a chance to digest the news about the new tariff on imported solar modules — and recover from your hangover.
Once the headache subsides, I’m sure you’ll see that while it would have been better to have no tariff at all, the rate that the White House approved is not so bad and could have been much worse. And if your business is solid, you’ll probably get back on your feet pretty quickly if you make a few adjustments.
But there’s a much bigger threat to solar installation companies than this tariff — solar marketplaces or aggregators that pit installers against each other to drive down prices of installations.
And unlike the tariff, whose impact is reduced by exceptions and lower rates over time, solar marketplaces including EnergySage and PickMySolar probably won’t be going away anytime soon. Instead, they’ll just continue to grow and get between you and your customers.
Tariff Could’ve Been Worse
Overall, the tariff of up to 30% on imported PV modules will translate into about 10-15 cents a watt. That should raise the price of an average home solar installation by about $1,000, which will come down to about $700 after the federal tax credit.
The Solar Energy Industries Association warned that the tariffs will delay or kill billions of dollars of solar investments and could destroy 23,000 jobs in an industry that employs 260,000.
Yet, most experts seem to agree that the impact will be limited. Hoarding of modules and price increases up to 40% in the months leading up to the decision means that much of the price increase expected from the tariff has already been pre-baked into module prices by now, leaving those prices less room to increase further.
And the top 30% rate will only be charged for the first year of the tariff. In subsequent years, the rate will ramp down to 15%. And every year the first 2.5 GW of imports are exempt from the duty. Overall, less bad than it could have been.
As Bloomberg reported:
“This is not a goodbye for renewable energy in the U.S.,” Fatih Birol, executive director of the International Energy Agency, said at the World Economic Forum in Davos, Switzerland. “I don’t believe this decision will reverse the solar expansion in the U.S. The global solar industry will adjust. The penetration of solar in the U.S. will continue.”
While even a small increase in equipment costs could push some marginal solar installers out of business, the sky is probably not going to fall for the average solar installer because of these somewhat wimpy tariffs.
You Should Worry about Solar Marketplaces
Solar installers have a love-hate relationship with solar aggregators like EnergySage and PickMySolar. On the one hand, these companies are a source of sales leads. On the other, the marketplaces are relentlessly driving down prices for solar installations, running a race to the bottom that threatens to squeeze profit margins for solar installers ever lower.
And while marketplaces know they need solar installers, they’re also out for blood. For solar installers, marketplaces are the best frenemies they have in the industry.
As if to highlight just how much they can squeeze solar installers at the very moment right after the tariff decision when many installers feel vulnerable, EnergySage has started a marketing campaign that should scare the hell out of any individual installation company.
Just see how one liberal political news site, ThinkProgress, is gushing about solar marketplaces like EnergySage as a way for solar customers to get back at Trump for imposing tariffs on the industry:
The good news is there are now online price quote aggregators — think Hotels.com or Expedia or Lendingtree, but for solar — that can lower the cost of a new system by much more than Trump’s new tariff raises it.
I wouldn’t be surprised if ThinkProgress and other sites are getting this angle straight from EnergySage’s public relations department.
My evidence? The handy chart below, put together by EnergySage, and displayed in the article, about how solar buyers can beat the tariff by using EnergySage instead of going directly to solar installers for quotes:
Meanwhile, the ThinkProgress article goes on to explain how solar marketplaces are basically Obama’s revenge in advance against Trump’s tariff:
Fortunately, back during the Obama administration, the Department of Energy began supporting efforts to help consumers lower the price of residential solar photovoltaic (PV) systems through online price quote aggregators, like EnergySage and PickMySolar. Aggregators let consumers quickly compare bids from multiple solar contractors.
The piece goes on to cite research from the National Renewable Energy Laboratory that solar installers give lower quotes when they know they’re competing against other installers.
As a result, according to NREL, consumers can save 8%, or $1,900 on an average home solar system by using a solar marketplace that aggregates quotes instead of going directly to solar installers for quotes.
That’s great news for EnergySage and their like. But it’s terrible news for individual solar installers.
Either Surrender to Marketplaces or Start Building Your Own Audience
Can you see where this is trending?
If you work for a local or regional solar installer, EnergySage, PickMySolar and other solar aggregators are trying to peel off your customers and force you to rely more and more on their service for leads. And solar marketplaces are good at what they do.
Pretty soon, if things keep going in this direction, your phones will go silent and the Free Quote forms on your websites will go unvisited as solar buyers rely entirely on solar marketplaces to get all their solar bids.
If you don’t mind becoming 100% reliant on EnergySage and PickMySolar, then you can just kick back and relax and keep doing what you’re already doing to market your own business — which, I’m guessing, is basically nothing.
Oh, you say you’re buying Facebook ads? And you have a referral program?
As I said, marketing-wise, you’re doing basically nothing. You should just call EnergySage right now and offer to send them the keys to your warehouse.
You want to remain independent?
OK, I’m glad to hear it.
Here’s how to do it. If you want to maintain some leverage over your prices and protect your margins, then you’ll also need to keep a direct line open to new customers. A line that’s not filtered through a solar marketplace.
The way to do that is through marketing. Reach out to potential customers and build a relationship with them so that when they’re ready to buy, they’ll contact you directly.
The bad news is that EnergySage and PickMySolar spend more money on marketing and do a better job of it than any local or regional solar installer can ever hope to do. And it’s more convenient for solar buyers to go to the aggregator sites and get multiple quotes all in one place than it is to ask for quotes from several solar installers individually.
Make It Worthwhile for Solar Buyers to Go Directly to You
So, if you want solar buyers to ask you for a quote directly, then you have to make it worth the extra trouble it will take to seek you out instead of just going to a solar aggregator:
- Build a relationship with potential customers over time, at least six months before they’re ready to buy.
- Establish yourself with solar curious homeowners as a trusted authority who’s giving them good advice and not just trying to sell them solar panels.
- Be patient! Nothing kills a relationship with a potential solar buyer than high-pressure, hard-sell, buy-now-or-else sales tactics.
Our free e-book Stop Buying Solar Leads and Start Making Your Own Better Ones will give you the formula for success. You can do it all yourself — or you can hire a marketing agency like the Curren Group to do it for you.
Download your free copy of Stop Buying Solar Leads now.
— Erik Curren, Curren Media Group