The following was sent our way by Graham Smith, CEO, Open Energy
When looking at the commercial solar/storage/energy efficiency sector (commercial solar for short) and believing in its potential as we do, one way to reflect on its potential, and the path forward is to take a look at other asset classes and sectors and see how access to finance has been vital to enable (sales) growth.
When you think of personal finance, and searching for; a credit card, an auto loan, or a mortgage, your first step would likely be to Google for your desired finance type – and then proceed to use one of the ubiquitous finance quote tools available to receive a quote. All in the space of minutes, an end to end process that informs and enables the next big decision – a home, a car purchase or a refinance.
Delving into the commercial finance sector, where products overlap (commercial mortgages, auto loans, credit cards) and go beyond (equipment leasing, construction loans) and the market is similarly big (multi-trillion dollar market size) the search for finance varies, but for the mainstream products the search as described above is similar. Google; select from a variety of platforms for live finance quotes, receive quote, and make decision on sale/finance/next big capex spend. Time is money and businesses need, and expect, the ability to make business spending decisions supported by transparent financing information, and clear finance indications. One exception to this process is resorting to the local bank but for to date this avenue has offered little success.
So, the question becomes why not for commercial solar? Specifically, in a world where solar sales professionals are pitching commercial solar every day to businesses and commercial sector end users, where is the same fluidity and immediacy of finance quotes to facilitate a purchase or finance decision? Without these components, how are we to expect the current solar sales force to sell more solar and sell it faster, to deliver on the expectations we have for the sector’s growth, when the end customer has little to no guide on what finance options are available. Would you offer a purchase bid on the condo or car if you didn’t have, or know of, a finance option available? Probably not. Likewise, commercial end users and adopters, who are currently bereft of transparent finance indications to support major purchase/lease decisions on solar: the result? Lackluster solar adoption through financing opacity.
What is in place to sell commercial solar, how far have we come? We’ve come far. The cost of solar equipment (panels, inverters) declines further (in spite of tariffs), making the product installation in the event of a sale cheaper than ever, or if a PPA, they’re available at a discount in regions with cheaper and cheaper incumbent power; meantime (grey) power prices continue to climb. Commercial solar has site design at its fingertips via sophisticated online platforms, providing customer site analysis from a desktop, allowing solar sales professionals to pitch client-tailored systems compellingly, highlighting physical specificity and relevant electricity cost and savings details.
On the other side what is in place to finance commercial solar? Over the last year we’ve seen the raising of multi-hundred-million-dollar commercial finance facilities, and at Open Energy we’ve seen and worked with multiple lending institutions to hone the lending products to deliver commercial solar financing. More than ever, well-priced capital is available to finance commercial solar projects.
So, the finance is in place, and the sales process is becoming slicker, faster, and more compelling. Yet the sales process still comes crashing to a halt, and with that its potential to be the conduit for the capital built up, when the end customer asks the question: what are my finance options for the solar installation? And the answer is either nothing, or a lack of transparent finance process, products, and finance indications.
Given the leaps forward within the commercial sector and its encouraging tracking of a well-trodden asset maturity path, what more can be done, and soon? The next critical step is being able to offer a finance quote tool, accessibly. It’s an important missing piece in the chain, and it will unlock further growth. Open Energy is the first company to offer an online finance quote tool in the market but hopefully not the last. At Open Energy we believe in the necessity of providing clear finance indications on the range of finance products available to end customers, whose tax appetites vary, across different states, against different energy supply regimes – and is why we’ve created and launched a Quote Tool in OEG Direct (Open Energy’s financing marketplace). When solar sales professionals have the means to provide transparent financing offers to prospective customers, only then will sales cycles start to shorten and become more successful, as customers respond to recognizable sales processes, and the confidence from a sector delivering breadth and depth to solar finance options.