It is easy to be optimistic about the future when your company has a 178% growth. That is the case with Solar Universe, a California based solar company. The company’s CEO said in an exclusive interview that last year’s installations increased 178% over the previous year.
This is good news for an industry that has suffered from a lot of bad press in 2012—most of it from political ads and politically motivated congressional hearings over Solyndra and other bankruptcies. It follows on the news of a successful IPO by another downstream solar company, SolarCity, at the end of the year.
Solar Universe’s CEO Joe Bono said that solar was alive and well despite the set backs suffered by solar panel manufacturers like Solyndra and Abound. He said that competition from China and other countries hurt U.S. manufacturers. This flooding of the market created an over supply which caused solar panel prices to drop. That hurt manufacturers, but it was great for down stream solar companies like Solar Universe.
Solar Universe’s successful business model
Bono has been the CEO of the California based firm since 2008. Unlike many downstream solar companies, Solar Universe operates under a franchise system as opposed to a vertically integrated business model. It has a product line and a system of operation developed at the corporate level, but sales and installation are done exclusively by independently owned local businesses—franchisees.
Mr. Bono says that model is working and the proof is in the revenues. All the installers are trained by Solar Universe and operate under the same quality standards. They are recruited and selected by the company and must maintain high standards. Currently, they operate in 11 states but may expand in the North Eastern U.S. in the coming years.
I asked Mr. Bono how he saw the future of he solar industry given the fact that venture capital investments in solar dropped by half in 2012, and the future of government assistance was uncertain. Overall, he was optimistic.
Consumers want solar; affordability is the issue
He sees solar as a product that consumers understand and want. They can easily comprehend the fact that solar can cut their utility bills. It can give them some degree of independence from the grips of big utilities and oil and gas companies. The issue with consumers is not acceptance of the product as much as making it affordable, and that is happening.
The CEO also made the point that the solar industry really offered an opportunity for being a real grass roots industry. What he meant is that solar provides business and employment opportunities for thousands of entrepreneurs to be involved in their local communities selling and installing of solar as well as maintaining them.
When asked what the public sector could do to help the industry, Mr. Bono mentioned a couple things. First of all, he said that the investment tax credit (ITC) should be extended when it comes due because it helps with the over all feasibility of the system while he market matures. Bono did not say this but lest anyone think the ITC is “special treatment”, oil, gas, and coal companies have enjoyed tax breaks and subsidies for 100 years.
The big issue, he said, is the high cost for permitting. Every jurisdiction sets a fee and requirements for permitting solar projects. In many communities it can add $1,000 to the cost of a home owners system. “That is a large fee for an over-the-counter permit,” he said.
Bono said there needs to be a standardized set of requirements and fees because the current system burdens the homeowner and puts the cost of a system out of reach of many who want one. Solar permit fees are often higher as a percentage of cost than the permit fee to build and inspect the home.
Solar Universe seems poised to move forward in 2013. Their business model is working and they are responsible for a large number of solar systems in the country that are reducing a lot of carbon pollution from the atmosphere. Good news begets more good news, and now that the 2012 election is over, perhaps the media will focus more on the bright spots than all the politically motivated negativity that hurt the industry and consequently our climate the last two years.
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