April 5, 2010

Selling Solar

How to enter, compete and win in the solar business…

April 5, 2010

About Joe Boyce

President of Gaia Worldwide and Solar Visionaries (Cambridge MA)

Lifetime Sales Person – Pragmatic, non-academic

Knowledge of Solar, Finance, Tech, Marketing, Recruiting, Org Dev.

Some experience in residential construction and remodeling – 1 roof

Started in Solar in 2005 at Prometheus Institute

Launched Greentech Media with co-founders in 2007

Here to help you get started on the right foot – reach goals

3

Selling Solar

GROWTH

4

Selling Solar

Global Market Has Turned the Corner…

• Proven as a “Bankable” technology

• Viable alternative to fossil fuels for power generation

• Considered highly scalable, no longer fringe

• Energy policy and energy security being taken more seriously

• Government support is very high mainly due to climate change

• Supply / Demand balance has been a problem. Maybe no more

• Recent price declines putting solar on par with fossil fuels

5

Selling Solar

Unique economic benefits

• Creates good jobs at blue collar, white collar, professional level

• Stimulates economies locally– easy to target hard-hit areas

• Rapid growth during global recession - positive outlier

• Billions in Venture Capital raised each year - #1 cleantech sector

• Stable hedge against energy prices

• Grid parity will create explosive demand and economic growth

• “Distributed Generation” deployable anywhere there’s sunlight

6

Selling Solar

Source: NREL

Global Growth in Cumulative Capacity

Germany Remains #1. Spain surpasses Japan and US in 2007 Due to New Feed-In Tariff

United States ranked #4 in total installed

capacity in 2008 with around 1.2GW

7

Selling Solar

Surprising Growth in 2009 Beat Everyone’s Forecasts

“The global solar photovoltaic electricity (PV) market counted an additional increase in installed capacity of about 7.2 GW in 2009, reaching a total capacity of over 22 GW world-wide.” - EPIA

2009 New Global Capacity: 7.2 GW = approx. 1.5 Million US Homes

Cumulative Global Capacity: 22 GW = approx. 4.6 Million US Homes

Almost 1/3 of existing PV capacity was installed in 2009 – In spite of the Global Financial Crises and recession

“This has been the most important annual capacity increase ever and is particularly impressive in light of the difficult financial and economical circumstances during the past year.” - EPIA

8

Selling Solar

Primary Drivers of U.S. Solar Industry Growth

• Strong policies at the state and federal level (solar investment tax credit, removal of $2,000 residential cap, Treasury Grant Program)

• Declining prices (PV module prices down more than 40 percent)

• Strong interest (92 percent of Americans think it is important for the U.S. to develop and install solar

9

Selling Solar

Business, Government, and Consumers Aligned In Their Support

1. U.S. is depending on solar to create jobs and economic growth

2. Abundant and safe source of domestic energy

3. Energy Security has become a major problem

4. Good for our environment and quality of life

5. Plays to Our Strength - Maintains Global Competitiveness

6. Provides political capital, voters from all backgrounds favor solar

10

Selling Solar

“Widespread Adoption”Government Stepping Up

FY10 $225M

Recovery act $117.6M

FY2009 – $175M

The administration and Congress have demonstrated interest and support in solar over the past several years

11

Selling Solar

USA Solar Market By Connectivity 1997 - 2008

12

Selling Solar

USA Solar Market By Connectivity 2009

+429 MW

+40 MW

200 9

13

Selling Solar

Looking Forward

14

Selling Solar

U.S. Solar Industry Year in Review• Despite the Great Recession of 2009, the U.S. solar industry had its best year

ever

• 2009 U.S. solar industry revenue grew 36% to almost $4 Billion

• The solar industry supported 17,000 new U.S. jobs in 2009

• U.S. Solar manufacturing grew 7% in 2009 despite recessions

• In 2009 Solar Electricity surpassed 2.200 MW in total capacity

• 2009 Annual solar electric installations grew by 37% from 2008

• Solar Hot Water installations rose over 10% from 2008

• Solar Thermal Grew to nearly 24,000 MW

• Only decline was in solar pool heating, down 10% due to housing crisisSource: American Solar Energy Society

15

Selling Solar

What About Our Biggest Competitor?

16

Selling Solar

Coal!

17

Selling Solar

Positive: Coal remains the United States’ #1 source of energy with over 50% market share

18

Selling Solar

Positive: Coal remains the United States’ #1 source of energy with over 50% market share

Negative: Tragic mine collapse kills 25 injures dozens more. Massey Energy being investigated for safety violations.

19

Selling Solar

Positive: Coal remains the United States’ #1 source of energy with over 50% market share

Negative: Tragic mine collapse kills 25 injures dozens more. Massey Energy being investigated for safety violations.

Average Coal Miner Wage: (10 years experience – Kansas City MO)

$23.83 per hour

20

Selling Solar

Positive: Coal remains the United States’ #1 source of energy with over 50% market share

Negative: Tragic mine collapse kills 25 injures dozens more. Massey Energy being investigated for safety violations.

Average Coal Miner Wage: (10 years experience – Kansas City MO)

$23.83 per hour

Average life expectancy:

59 years

21

Selling Solar

Are These Really The Jobs Of The Future?

Can We Really Build A New, More Competitive

America This Way?

22

Selling Solar

ECONOMICS

23

Selling Solar

Solar Economics 101U.S. Electricity prices increase 4% a year on average

PV Prices have declined an average of 5-7% a year for the last 20 years

Last year ASP of solar modules declined between 30 and 40%

Polysilicon, the main raw material used in well over 80% of all solar panels manufactured globally is derived from the most abundant material on earth – sand

PV O&M costs are the lowest of any major energy source

As demand grows for PV manufacturing and logistics costs are reduced

There are tens of billions of dollars invested in R&D aimed directly at reducing cost the U.S. alone

All of the solar deployed in the U.S. to date produces less than 0.5% of our annual energy demand

24

Selling Solar

GRID PARITY

The point at which renewable electricity is equal to or cheaper than grid power.

25

Selling Solar

2009

NREL study of 1000 largest

utilities across the US servicing over 95% of grid

electricity consumption.

Major population centers are

already at or near grid-parity

26

Selling Solar

2/3 of the U.S. is at or below grid costs

20151% annual increase in grid electricity prices

95% of the U.S. is within 5 cents a

kwh

27

Selling Solar

• Margins have shifted in your direction

• Service levels are improving with higher availability of product

• Rapid price declines have not been met with reduced incentives

• Banking crisis led to a host of new, innovative financing vehicles

• Environmental, Geopolitical, and other factors creating higher consumer awareness, stimulating demand in residential and small business markets

• Vertical Integration is the trend - Manufacturers acquiring downstream partners to stabilize sales

Recent Developments For Downstream Players

28

Selling Solar

Consumer perception“Solar is still too expensive”

“Only works if you get a lot of sunlight”

“Payback Period is over 20 years”

“Solar will get much cheaper, so it’s better to wait”

Incentives Are Inconsistent and Constantly ChangingStaying current can be a challenge

Many markets still lack incentives

Budgets can be spent quickly – no more cash available

Growing CompetitionHighly fragmented market could create price wars

Your biggest competitor is the grid, and prices vary widely

Price Instability

Many believe they have stabilized and are starting to increase slightly already

But We Still Face Major Challenges

29

Selling Solar

Federal Investment Tax Credit (ITC)

30%

30

Selling Solar

Federal Investment Tax Credit (ITC)

Solar PVSolar water heating

Most Energy Efficiency Solutions

What Qualifies?

31

Selling Solar

State Programs

www.dsireusa.org

32

Selling Solar

State Programs

33

Selling Solar

Top 10 States for Grid Tied Solar Electric (PV + CSP)

Capacity Installed in 2009

California 220

New Jersey 57

Florida 36

Arizona 23

Colorado 23

Hawaii 14

New York 12

Massachusetts 10

Connecticut 9

North Carolina 8

Other States 29

Total 441 MW

Cumulative Capacity

California 1102

New Jersey 128

Nevada 100

Colorado 59

Arizona 50

Florida 39

New York 34

Hawaii 27

Connecticut 20

Massachusetts 18

Others 78

Total 1,653 MW

34

Selling Solar

Financing

35

Selling Solar

PACE “Property Assessed Clean Energy”Removes a major barrier to wide scale adoption

• 20 year financing via special assessment on homes and businesses

• Eliminates upfront costs to consumers – Biggest deal breaker

• Federal/city/state/utility rebates still apply

• Save money from day 1! Typically Utility+PACE less than original bill.

• No affect city budgets or non-solar tax payers

• Transferrable to new owners after certain period (usually 5 or 10 years)

• Get familiar with them PACE iscatching fire across the country.

36

Selling Solar

PPA’s “Power Purchase Agreements”

• Very common for large commercial and utility-scale installations

• Low (not zero) up front cost

• Usually 15 to 18 year term, transferable to a new owner / tenant

• Negotiate a rate that commonly includes an annual increase

• PPA provides maintenance and repairs + monitors your system

• PPA gets tax benefits or State rebates or Renewable Energy Credits

• Usually has an option to buy or renew PPA at the end of the agreement

• You need to have an excellent credit rating to qualify

• Often complicated with major tax and legal implications

37

Selling Solar

Solar Leasing

• Simpler than a PPA

• No Money Down!

• Usually 15 (or more) year term, transferable to a new owner

• You pay the lease payment plus any extra power you need from utility

• Can include maintenance, repairs, monitoring – not always

• No tax benefits or rebates or Renewable Energy Credits (RECs)

• Usually includes option to buy at the end for a set residual price

• Require good/excellent credit rating depending on the program

• SolarCity fast becoming the 800 lb Gorilla – www.solarcity.com

38

Selling Solar

84% - “Need more sales” was number 1 Priority

99% - Put it in the top 3

<1% - Expect to Reduce Staff in 2010

>50% - Expect to add staff in 2010

Average revenue growth in past 3 years – Flat

Average staffing level down 5-10%

Gaia Worldwide Survey of Small and Mid-Size Solar Integrators/ Installers – November 2009

39

Selling Solar

Conclusions

Everyone who got in recently expects great things

Few are prepared to handle business opportunities

Most are misrepresenting / mismanaging qualified opportunities

Do not or are not accurately measuring results

Gaia Worldwide Survey of Small and Mid-Size Solar Integrators/ Installers – November 2009

40

Selling Solar

Control what you can control

Little or No

Control

Manageable

41

Selling Solar

The Big Question for the startup…Where Are the leads?

821 “Solar” Groups

Professionally Oriented Social NetworkOver 20 Million UsersBackground Info, Location, Work Experience

Fastest Growing Social NetworkOver 300 Million Users#1 website on the web – Bigger than Google

“Real Time” Social NetworkingVery good way to evaluate market potentialCan grow to thousands of followers very fast

Thousands of “Solar” Pages

42

Selling Solar

If You Don’t Believe…Consider These Facts…

Facebook now gets more traffic than Google

1 out of 8 American Married couples met via social media

If Facebook were a country it would be the world’s 3rd largest

100+ hours of video are uploaded to YouTube every 5 minutes

74% of people trust peer recommendations, 14% trust advertisements

43

www.meetup.com

Groups that share a common affinity

organize live events online

FREE

817 Members

904Members

94Members

33Members

44

Selling Solar

Establishing Validity

Even if everything goes great, you are just a stranger until you are validated

Know as much as possible beforehand

Avoid “low value” questions

Offer industry expertise

Answer only the questions they ask

Add “dimensions” to the interaction

45

Selling Solar

What Gives You Validity?

Thought Leadership

Get Recognized as the Industry ExpertShare Market Knowledge with the communityMeet and educate groupsGet active in the communityPartner with local businesses to reach customers

Present at their facilitiesLocal media interviews, topical discussions

Keep your message clear and consistent across all communication

46

Selling Solar

How you know you’re building a brand

People start looking to you for general industry information

Invited to speak at industry, government, or community events

Web traffic increases – time on site increases

Leads come in more complete

Someone says “I’ve heard of you guys”

Employees bring in friends / family as new customers

Media starts calling you

47

Selling Solar

Great Websites Do The Selling For You

48

Selling Solar

Great Web Presence: Sungevity

• Leads with Solution

• Highlights Customers

• Interactive, fun

• Easy to pass on to friends

• Sign-Up for communication

• Featured Solar InstallWhitehouse

49

Selling Solar

Interactive Site Makes Customers “Feel It”The Most Profitable Investment you can make

• Mapping Software“That’s My House!”

• Customers walk through the entire

qualification process right online!

• Staff get to choose only the most qualified ones

to follow up with

• On-site visits down over 90% - Saves $300 per

visit!

• 50%+ Closing Rate!

50

Selling Solar

Plan up front – Execute to your plan Budget, Forecast, set milestones and timelines Share market and industry knowledge – not

product Align your team, customers, community and

technology around your business and sales goals Compete hard – a little innovation is all you need Continuously look for new areas of opportunity Track your results and stay nimble

Key Takeaways

51

Selling Solar

Joe Boyce

1 (877) 331-4280 | 1 (617) 312-3866

jboyce@gaiaworldwide.com

www.gaiaworldwide.comwww.solarvisionaries.org

Twitter:@josephboyce | Facebook: solarPV | LinkedIn: Joe Boyce