With the growing awareness of the implications of fossil fuels and the benefits of green energy; solar energy and other renewable power sources are beginning to gather enormous momentum. Solar energy works by harnessing light from the sun and converting it to electricity.

Flat solar panels are mounted on a roof or laid out in an open space to create photovoltaic (PV) energy. Another form of solar energy called thermal solar employs an array of mirrors to focus sunlight on a point that converts water to steam, which triggers the movement of a turbine. For most home and business applications, photovoltaic energy is the most common and practical choice.

Starting a solar panel business is indeed not as easy, especially since it requires a significant investment to acquire the first shipment of panels to be installed in a home or business.

Note that the primary job of a solar panel business is to conduct on-site surveys of potential installations, establish a solar plant for the location, work with the owner on financing and install the units.

After the installation, maintenance positions within the company offer support for the new owners, repairing and maintaining panels to ensure the greatest productivity and return on the investment.

However, for a solar panel business to succeed and generate substantial income, it requires a structured staff with skill in construction, electrical, and a basic understanding of science and solar energy.

As solar hardware becomes more affordable and efficient, solar power has emerged as a viable alternative energy source for homes and small businesses. Not only can solar panels help reduce utility expenses, but they can also be a source of profit.

As more people, cities, and states turn to renewable energy sources, the solar panel industry has been enjoying a healthy growth of 15 percent annually, according to reliable statistics. Coupled with ongoing technological improvements and reducing costs of materials, solar power is becoming more affordable and appealing to both residential and commercial clients.

However, even if a solar panel business leases solar panels, their profit will more or less depend on the number of panels they have installed. A typical profit margin in this business is about 6 percent per year, but this requires a long-term investment strategy and a total consideration of numerous industry factors.

Nonetheless, whether you choose to start a solar panel business as a franchise or wholesaler, note that both routes ensure that you all make money through the successful installation of solar units.

Some leasing programs generate regular income by charging their customers a monthly bill, which includes the cost of the panel installation and any extra power the customers are using from the grid.

In addition, customers tend to pay the retail rate upfront for their panels and appropriate labour costs for connecting their panels to their home and the power grid. According to reports, a residential installation can be priced anywhere from $15,000 to $50,000, depending on the size and type of panels installed. Leases with a zero dollar down payment can run anywhere between $25 – $200 monthly depending on the type of client and the size of the installation.

Common Ways Solar Panel Companies Make Money

Generally, solar energy companies make money from having low costs, being able to guarantee results, getting more people to use their services, and from building great relationships with the people who invest in their services and who might be future customers. Nonetheless, the basic ways these companies make money include;

  1. Installation

Just like we already know, the first way solar panel companies make money is by installing solar panels. They get a little percentage of profit margin when the installation being done, and when people buy panels. Indeed, this might not be as huge as expected, but it is often enough to keep the company in business. This is why they focus on getting more people connected and on keeping their relations with their clients completely positive. They want their clients to refer their friends and to feel like they can trust the company like a friend.

  1. Investors

Another way that they make money is by offering their investors a stream of revenue at a fixed percentage. For instance, if someone invests in the company and is told that they will get a guaranteed 7 percent return on their investment over the next few years, the company can make money if they are making more than that on the investment.

Just imagine a company could be making 10 percent on that investment, giving them a 3 percent return on the investment, while still giving their investors a great return on their money. This makes everyone happy, but also helps the solar company stay above board.

  1. Tax Credits

One unique way that solar panel companies make money is through tax credits. These are instituted to help people switch over to solar, but they also allow the company to write off a large number of things. This allows them to have lower expenses, get more people signed up, and in many cases to get a credit for the services that they provide as well.

Have it in mind that this applies to situations where they are using their own panels to provide electricity to customers, getting the tax credits for their own panels.

  1. Maintenance Costs

Solar panel companies also make money off the fact that well maintained panels need very little work done on them. Their labor cost is almost non-existent, and they can always invest in more panels.

It simply entails that they can provide more electricity to customers and to other companies that are buying, with very little cost to themselves. Once they set up a good solar farm, it will just continue working with just a few hours of work a week, something that other forms of electricity just can’t do.

Conclusion

As more people, cities, and states turn to renewable energy sources, the solar panel industry is expected to keeping exhibiting healthy growth at 15 percent annually. And with ongoing technological improvements and reducing costs of materials, solar power is becoming more affordable and appealing to both residential and commercial clients.

However, a successful solar panel business owner will need a solid understanding of marketing and use it to the greatest effect, generating new contracts for their new company and brand to grow revenue and become more profitable.

They will have shrewd personnel skills, taking the time to hire reputable technicians with all the proper licensing and training. Good managerial skills will keep the crews busy, completing jobs on time as promised, while keeping payroll expenses under control. They must also work to stay current with changing technologies, as solar is still a developing industry.

Joy Nwokoro