RE+ 2023 was the largest solar industry conference to date. What were the key takeaways and important product trends to note for solar installers? On this edition of Power Forward!, Editor Chris Crowell discusses with BayWa r.e. Marketing Relationship Manager Daniela Schwartzman and VP of Product Strategy David Dunlap. Topics include:
- 1:57 – Overall solar installer vibe of RE+ 2023
- 2:32 – Surprising observations from RE+?
- 5:07 – Module supply and pricing outlook into 2024
- 7:49 – Strategies for buying modules in this environment
- 11:04 – Trends in energy storage market now
- 11:45 – There’s 1 million ESS options. What’s an installer to do?
Watch the full 15-min episode right here or read part of the transcript below.
Crowell: Was there a particular comment or observation at RE+ this year that maybe stuck with you?
Schwartzman: There were a couple of surprising observations. The first one being, like we just touched a little bit upon, the challenging market environment. If we want to dive in a little bit deeper, the residential market in particular has become quite challenging. So, those growth opportunities that many installers had hoped for, they just haven’t been there. A reason for that of course is interest rate financing has become challenging.
So installers are starting to look to other opportunities such as small commercial. It’s not that this is a new market, it’s just that installers were so busy installing residential projects that they didn’t have time prior to that to really look into other market segments, but now they do have the time.
But, of course, there are a lot of challenges that need to be figured out. It’s more complex: maybe the permitting process takes longer, maybe the sales cycle is longer, maybe we don’t have the installer doesn’t have the right products available because they’ve missed the opportunity to do the forecasting for those types of projects.
Dunlap: Basically, the industry, where as a collective, we’re no longer in our teenage phase, we’re in our 20s something phase. So, I think Daniela is right. By rethinking the way that we’re going after some of those addressable markets, or if there’s new opportunities to differentiate in those markets, we can open more doors.
Fundamentally, though, the industry also recognizes that we’re still just talking about energy creation and energy management within a building environment. And you can extend that beyond a home or a business building to a community, to a city, a state, the larger picture — but it’s still fundamentally that closed loop cycle of energy management. And for those that have been in this business for a long time, we started with a complete closed loop energy management for a home, but the whole grid tie movement, and the sort of easy retail rate net metering and high REC benefit pushed us towards: all we need to do is install a solar plant and we’re done, right?
But now we get to think about ‘well, now that we’ve created this energy on site, what do we do with it?’ I think people are getting that. I definitely participated in a lot more conversations in that vein than I have in the past, and I think we’re headed in that direction.
Crowell: Good. That’s interesting, and I hope everyone watching this checked out our last conversation, David, where we looked at the post-net metering landscape and some ways that installers can think about revolving their business a little bit more around selling energy storage.
Here’s that episode if you missed it:
Crowell: Let’s dig into the product side a little bit. We’ll start with the backbone here, solar PV. 2023 has been a bit of a buyer’s market with solar modules. But with some Tier 2 modules now being detained by Customs under the UFLPA investigation, that could be changing. There were also some notable new releases from tier one brands at RE+ this year. What are your thoughts on module supply and pricing for the rest of the year and into 2024?
Schwartzman: From the installer perspective in particular, low prices seem to be the theme, especially in the module area. So installers may think that this is the new market price. But what it really points to is distressed inventory. Vendors are trying to desperately clear the backlog and move back to a healthy state of new production.
Dunlap: Basically this time last year there was a massive importation of modules from not only the Tier 1 but Tier 2 companies because the pricing was high and we were coming out of an extreme constraint period in the supply chain. The market was flooded because there weren’t a lot of holds or stops on the available inventory. It all came in, and it just inundated the market.
So, what Danielle is talking about there is all of those companies that are sitting on multi-megawatts, in the estimate is about 1.5 GWs of residential only supply that is already imported in the U.S. just sitting in warehouses waiting to be sold to somebody. All these companies that thought they were going to be able to sell this product right away at a high price are now dumping it at a loss into the market.
The whole time that that’s been going on and that the market has slowed, we haven’t been consuming that distressed inventory. The manufacturers still are running the lines, product is still being made — and this isn’t just a U.S. problem. By some accounts, the amount of inventory sitting shoreside in Europe is something like 80 GWs. This is a massive problem globally for that imbalance.
And so to your point, it does result in what we would think of as a buyer’s market. The installer can sort of name their price, but it also means that you can’t really dictate the product you’re going to get.
Schwartzman: So, installers have to make a choice here. If they play that game, it’s a risky one. They can run on the edge of that kind of business, or they can plan the business looking forward, for steady sustainable business. That may require what David mentioned before: looking into either other customer segments or into broadening their product portfolio and understanding and focusing on the customer’s needs that goes beyond just energy generation. That includes energy storage but also consumption.
Dunlap: I don’t think we exactly answered your question, which is where is the pricing going? I think unfortunately it’s ‘six more months of winter,’ in terms of prices declining or bottoming out before we can start to see them stabilize and come back up.
Crowell: My second question on modules, you already really dove into it, but I’ll just see if there is more advice to impart: What should solar installers be doing? Are you concerned there’s going to be strategic adjustments that need to be made on their part, after you cautioned against playing that spot market? … What’s a better approach to recommend?
Dunlap: My comment about installer strategy is really for the installers to be honest about how they want to run their business. If you believe that the name brand doesn’t matter, and it’s all about price, and you’re not doing your due diligence about the supply chain of that vendor, then there is probably much higher odds that that product is not going to be available for you in the future — unless you’ve aligned to the ones that are actively working to be in compliance with the U.S. trade policy.
Figuring that out, and really knowing and understanding which ones those are, that’s part of our strategy at BayWa r.e., to only work with those brands that we know have an assured supply chain. That’s part of the due diligence we do so the vendors represented on our line card, we feel very strongly that they’ve really made the investments, and they intend to support the U.S. market long term. I just can’t say that’s the same for all the other brands out there.
So it is about how desperately do you think you need that additional profit margin on the module piece of your equipment BOM compared to the stability and predictability of your install crews.
Schwartzman: From a business standpoint, the question is do you want to be reactive and run after what everyone else is running after, and maybe beating on price? There will be a bottom. There are really limits. Or do you want to be proactive about your business and start building the business of tomorrow.
There’s a huge business opportunity, and that’s certainly how we at BayWa r.e. provide support to our installers – by finding answers to these questions and doing more than just providing components. We are not a transactional company in that sense. We are supportive partners and that’s what can be seen here.
Crowell: OK, let’s end on energy storage. What are installers saying about the energy storage side of their business right now?
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