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The latest community solar lotteries in Illinois and New Jersey are clear evidence that solar development is a very competitive business. With a non-residential solar PV segment that was “on track for a down year” at the end of 2019, community solar comes at the right time to push the industry forward with future growth.
Overall, this is great news for solar adoption and climate change mitigation. The downside is that community solar project development is more of a commodity than ever. Policymakers are agnostic to projects that meet their criteria (i.e. brownfield, low to moderate income subscribers, etc.) and will be able to easily fill their capacity for the foreseeable future.
While solar project development becomes more of a commodity, the innovation and differentiation are occurring on the subscriber side. Once developers get through a state lottery, it becomes time to actually sell the electricity to households and businesses that want to buy it.
Solar in (over) Supply: In September, New Jersey’s Community Solar Energy Pilot Program received applications for more than 650 megawatts (MW) of capacity – nearly three times the potential capacity for the program of 225 MW over three years. Last April, the Illinois community solar program received over 900 project applications and awarded only 112.
After a few years of evolution, we can now see what it takes to stand above the crowd and attract customers at a large scale. Buyers are more educated than before and won’t settle for unreasonable terms, especially when the status quo of staying with their existing utility provider is so easy.
Let’s take a look at the subscription offers that currently exist across the market. After reviewing offers across leading developer and subscriber organization websites, a few trends developed.
Subscription Offer Categories
|Term||Poor Offer||Standard Offer||Best Offer|
|Savings||$/kWh Rate with No Guaranteed Savings.||5-10% Discount to Utility Bill Credit||10%+ Discount to Utility Bill Credit|
|Term||Multi-year Contract||Annual or Less||Month-to-Month|
|Credit Check||Hard Credit Check||Soft Credit Check||No Credit Check|
|Billing Type||Two Bills||Two Bills||Consolidated Bill with Utility|
The Poor Offers: Getting a household to join a community solar project with these terms will be tough. Long terms and cancelation fees might work for large corporate customers with big budgets, but it won’t work for a household looking to save ten dollars per month and have peace of mind by supporting solar. The longest contracts for individuals are mortgages (30 years), student loans (20-30 years), and cars (4-6 years). Why would someone want to add community solar to this list of long contracts?
The Standard Offers: In 2020, this is the middle of the road offer and a good choice for a household or business. It offers flexibility, the chance to do right by supporting renewable energy, and there is a guarantee to save money (relative to a bill credit). These offers are especially good for early adopters, but they may struggle to scale to the masses.
The Best Offers: Subscription offers in this category will become the standard ones in the near future because they are now disrupting the marketplace. Households are engaged and even becoming evangelists on social media. Terms are flexible and customer experience is very positive. This is where it all comes together across product and brand.
Think Beyond Product Details
The ability to sell a subscription product goes beyond the terms outlined in the table above. The most successful companies will also consider the following when approaching the market for community solar subscriptions.
Engage your customers with an easy and friendly onboarding process, surprise them with updates and news about their solar project, and get feedback from them through surveys to continuously improve. Research shows that 25 percent of customers will jump ship after just one bad experience. Due to the nature of long-term power purchase agreements (PPAs), solar companies have a tendency to leave customers behind after a sale. Households with month-to-month flexibility will need a more engaging experience to stay put.
Build a Respected Brand
By default, solar companies are in a pretty good place with respect to values. We are all advancing the adoption of renewable energy, right? Even if that’s the case, customers will gravitate to brands that speak their language and reflect their values. Think about your target audience and what matters to them. If you have a local presence, that can also be a way to differentiate your brand from a competitor.
Add Sales Promotions
You can use sales promotions to push customers along in their buyer’s journey. Whether it’s a gift card, referral bonus, or a donation to a related non-profit, set a timeframe on the promotion and use it to create a reason for a customer to act today rather than tomorrow. The lack of sales promotions in the solar industry also happens to be one of our Solar Marketing Mistakes That You Can Fix.
It’s estimated that about a third of non-residential solar PV capacity will come from community solar by 2023, representing over two gigawatts of capacity. It’s going to take a lot of households to fill those projects. From the look of the Illinois and New Jersey lotteries, developers have approached the market as a “build it and they will come” mentality.
Unfortunately, it’s not a simple field of dreams for residential customers. The subscriber side needs more work than originally expected and households won’t settle for poor terms. For mass adoption of community solar, developers and subscriber organizations will need to provide customers with digestible project terms and clear benefits.
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