Do you want to start a solar panel installation business? If YES, here is a complete guide to starting a solar panel installation business with NO money and no experience plus a sample solar panel installation business plan template.
Indeed Solar panel installation is a business with a future. Many scholars expects solar installations to provide one-quarter of the world’s energy needs by 2050, and it has been predicted that 11 percent of solar energy will come from panels installed on houses and office buildings.
Individuals who live in sunny climates have traditionally been more apt to take advantage of solar technologies, but as panels become more efficient and less expensive, solar installations increasingly make sense virtually anywhere. You don’t have to be an electrician to go into business installing solar panels, but it helps.
The astonishing growth of solar creates opportunities for a variety of innovative entrepreneurs though, not just those working on rooftops.
Every solar project involves marketing, finding leads, sales, financing, and a variety of sales and services in addition to installation, and each of these steps is an opportunity for you and people from many fields to carve out a niche to join the solar boom while keeping your boots planted firmly on the ground. This is a comprehensive guide to starting a solar panel installation business;
Steps to Starting a Solar Panel Installation Business
1. Understand the Industry
Alternative energy sources are on the minds of everyone today and this trend is going to continue. Oil prices are going to continue to go higher and saving the environment is being tackled by lawmakers and entrepreneurs alike.
Two of the biggest venture capital firms have recently shifted most of their funding to businesses that specialize in finding ways to save the environment and make money at the same time and solar is at the forefront of this revolution.
Interesting Statistics About the Industry
Businesses in the solar panel installation industry install solar panels as part of general residential and commercial contracting services.
These companies are contracted either by a homeowner, a solar panel manufacturer or by solar marketing firms that arrange a buyer for solar panels and contract an industry enterprise to carry out the work. Solar is growing because it makes sense on many levels, helped by a 30% drop in the price of photovoltaic panels last year alone.
The U.S. installed 1,665 megawatts (MW) of solar PV in Q1 2016 to reach 29.3 gigawatts (GW) of total installed capacity, enough to power 5.7 million American homes.
With more than 1 million individual solar installations nationwide, the industry is on pace to nearly double in size in 2016. The residential solar market remained strong, with a fourth consecutive quarter with more than 500 MW of capacity brought online.
The Solar Panel Installation industry has forged ahead in recent years, moves by rapid technological developments, falling solar panel costs and favourable government policy. In the coming years, demand for solar panel installation is expected to continue growing.
Continuing government aid in the form of tax credits and rebates, along with technological advances in solar energy, as well as the rising popularity of solar power purchase agreements (SPPAs), are expected to help revenue grow sharply over the next five years. Roof-mounted panels are the most popular type of solar panels, especially in the consumer market.
As the name states, these panels are attached to the roof of a dwelling or building. Roof mounting has an advantage over ground mounting because it lifts the panels over natural sunlight obstructions, such as trees or other buildings. This segment is expected to contribute 35.0% of industry revenue in 2015
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
Powering homes with solar power has also been a major part of the solar revolution the last two decades have seen. Solar panels can be placed on the roof of homes, businesses, or remote research stations, and can be used independent of or in conjunction with the local power grid.
3. Decide Which Niche to Concentrate On
It has been reports that the annual growth rate for the solar panel market in the united states from 2006 to 2011 was 78 percent.
Between 2011 and 2012, the market value of the solar industry increased from $8.6 billion to $11.5 billion. The expectation is that the industry will experience a 35 percent increase in the amount of electricity produced using solar energy, from 3,313 megawatts in 2012 to 4,400 megawatts by the end of 2016.
The states with the most installations during 2015 were California, Arizona and New Jersey. But how can you take your share of this enormous marker if you don’t marginalize or rather choose a specific niche where you can focus. Planning indeed is the bedrock for success and choosing a suitable niche remains one of your utmost priorities if you want to excel in the solar panel installation industry. They may include…
- Solar tracker panel installation
- Fixed rack solar panel installation
- Ground-mounted solar panel installation
- Roof-mounted solar panel installation
- Monitoring services
The Level of Competition in the Industry
The saturation in this industry appears to be despite a smaller number of new companies. Among the installers in the United States, most began installing residential solar in 2005-2010, and none began in 2014.
This is likely due to the previously scheduled expiration of the U.S. Investment Tax Credit, which has since been extended through 2019 with a phase-down thereafter. And with this diversity of installers, customers appear to be becoming savvier. 88% of installers believe that their customers see two or three quotes before making a decision.
For these installers, cash sales remain the dominant form of business, and over 50% do not offer a lease or power purchase agreement (PPA) product.
This is in sharp contrast to national trends, as 60% of residential solar is sold through lease or PPA arrangements. These third-party-owned solutions have been championed by the largest solar installers, including SolarCity and Sunrun.
In addition to cash sales, unsecured loans were also popular. Installers believe that over 25% of their customers utilize unsecured loans.
Finally, despite the increasing popularity of solar, customer acquisition remains a big issue for installers. Installers in the United States solar market believe that customer acquisition has become less difficult or remains unchanged; access to more leads was listed as the #1 competitive need going forward.
4. Know Your Major Competitors in the Industry
There are several well-known solar panel businesses. Here are some them;
- Canadian solar
- Vivint solar
- RGS Energy
- Trina solar
- Solar power
- XOOM SOLAR
Carbon-based fuel sources are becoming a hot commodity as the domestic electric industry watches the future. Proponents of renewable energy argue that an alternative approach will allow for more sustainable energy usage, help support future growth, avoid price spikes, allow for energy independence, and ultimately help slow the progression of global warming.
The U.S. has enough installed solar energy capacity to power 4.6 million homes. Solar energy accounted for 32 percent of total new power generation in 2014, exceeding coal and wind energy but lagging behind natural gas. In just nine years, the installed cost of solar energy has fallen by more than 73 percent – setting up the industry for explosive growth.
Major trends in this industry may include continuation of unprecedented boom, Misinformation in the solar market continues, Dizzying array of solar options, solar financing options will sure expand, and Solar will be generating the majority of home electricity consumption.
5. Decide Whether to Buy a Franchise or Start from Scratch
Starting a solar panel installation business requires learning about the industry, available products, installation and solutions for home and business owners. It also involves establishing relationships with suppliers and their sales consultants so as to install solar equipment, along with a source of in-depth information for the questions the business owner can ask and answer.
The easiest and most cost-effective way to ensure all of the foregoing is to buy a franchise, as the entire Business model is already created, the kinks are worked out and the business is essentially ready to go.
To accurately survive in this business, Research various solar power franchise opportunities and select a franchise to work with. This way, the business model, including the business plan, and advertising media and materials are all ready-made.
Establish a relationship with the chosen franchise and get as much information as possible about the way the business is operated, the start-up capital required and the process of becoming a franchisee. Take the business plan provided by the franchise, or create a fresh business plan.
Apply for the capital needed to buy in to the franchise. Participate in all the required training to learn the operational and installation details of all the solar power systems in which the new business deals.
6. Know the Possible Threats and Challenges You Will Face
Solar panels are used to power different kinds of electronic equipment, from solar-powered handheld calculators that will function as long as sunlight is available, to remote solar-powered sensor arrays in buoys, and even some experimental vehicles and boats.
Solar panels are also placed on outdoor lighting structures – the solar cell is charged during daylight hours, and at night, we get free electricity to keep our streets well-lit and secure. Solar panels are used extensively on satellites, where array of solar cells provide reliable power for the satellite’s electrical systems. Few challenges to starting this business may include:
- Getting adequate training
- Registering your business and getting a certification
- Choosing a suitable name
- Legal issues
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
Starting up an LLC Solar panel installation business is an option you should seriously consider because it can protect you from personal liability if something bad happens. If you are planning on Setting up an LLC for your business you can file for your authority at the same time the LLC is being formed.
An LLC is one of the most popular business forms available, and for good reason. There are many advantages of a Limited Liability Company including workplace benefits! Below are some of the primary benefits an LLC can offer your solar panel installation business!
- Limited Liability
- Pass-Through Taxation
- Determine Your Own Structure
- All Members Can Be Involved
- Build Business Credit
- Attractive to Foreign Investors
8. Choose a Catchy Business Name
Thinking of a catchy name for your solar panel installation company and filing it with the county as a fictitious business name or your business name is a very unique step to starting your business.
While this step is not essential, it will allow you to write checks, conduct financial affairs and advertise using the name of the company, rather than your personal name. Catchy names for a Solar Panel Installation Business includes…
- Ray Ray
- Power Ray
- Sunny Day
- Personal Power Providers
- Sunshine electrics
- Chacko’s installers
- Zurich powers
9. Discuss with an Agent to Know the Best Insurance Policies for You
Part of running a business is figuring out how to balance all the different aspects of your work and that means that you’re constantly juggling tasks. One moment you’re training new recruits, the next you may be meeting with clients and then finally installing solar panels.
Because all instances involve a level of risk where someone could get injured or something could go wrong, you need to make sure you’re protected if the unexpected happens. The insurance you need to consider may include.
- General Liability Insurance
- Workers Compensation coverage
- Professional Liability Insurance
- Equipment floater
- Optional Mould Coverage Endorsements
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
Every day, the sun radiates down onto the earth a thousand times more energy than we could ever use. The demand for technologies capable of tapping into that energy is booming as pressure mounts to find solutions to climate change and sustainable development
Solar photovoltaic (PV) systems – which convert light energy from the sun directly into electricity – produce no greenhouse gases in their operation, have no moving parts, require virtually no maintenance, and have cells that last for decades. Intellectual property is the area of law that deals with protecting the rights of those who create original works.
It covers everything from original plays and novels to inventions and company identification marks. The purposes of intellectual property laws are to encourage new technologies, artistic expressions and inventions while promoting economic growth.
When individuals know that their creative work will be protected and that they can benefit from their labour, they are more likely to continue to produce things that create jobs, develop new technology, make processes more efficient, and create beauty in the world around us. Seek the advice of an IP attorney to help you understand the various segments to protecting your intellectual properties.
11. Get the Necessary Professional Certification
Professional certification is a means in which a person proves that he or she has the knowledge, experience, and skills to perform a specific job. The proof comes in the form of a certificate earned by passing an exam that is accredited by an organization or association that monitors and upholds prescribed standards for the particular industry involved.
In the solar panel installation industry, having professional certification gives your intending customers the fulfillment that they are protected and that your worthy of their patronage- hereby giving you an edge in Business. Listed below are few professional certifications in the industry.
- North American Board of Certified Energy Practitioners
- SEI Solar Professionals Certificate
- Residential and Commercial Photovoltaic Systems Certificate
- Battery-Based Photovoltaic Systems Certificate
- Solar Business and Technical Sales Certificate
- International and Developing World Applications Certificate
- Renewable Energy Applications Certificate
12. Get the Necessary Legal Documents You Need to Operate
Research the licensing you need in your state to conduct solar installations is very important. Massachusetts and Connecticut both require an electrician’s license before you can pull permits for a solar installation, and Massachusetts additionally requires a construction license.
In other states, you can work on 12-volt photovoltaic (PV) wiring without a license only to the point where it ties into the inverter.
From that point on, you are wiring 120-volt electricity, and you need an electrician’s license. Some states may also require you to have a roofing contractor’s license to conduct rooftop installations.
Each State or county with its own designated documents to run a solar panel installation company. Basic documents may include tax, insurance, business license, driver’s license, maybe operating agreement.
13. Write a Business Plan
As simple as it sounds, if you don’t carry out a proper research before venturing into this type of business, you might end up losing your investment.
It is imperative that you conduct a research so that you are be able to know what is required in the market, how to source for materials, where to get the right kind of staffs, and loads of other information that will be useful to you. That is why your business plan should be ready even before you start up business.
14. Prepare a Detailed Cost Analysis
Are you looking to start your own business in the growing solar field? Solar is one of the hottest businesses around and with the growth in alternative energy, this permanent trend is going to continue. But starting a solar panel installation business will not be an easy task but it is sure lucrative.
You can start a solar panel installation business from your car park and move to a better location as business grows. Cost of starting a small scale Solar panel installation business in your backyard include:
- Installation training and certification – $600
- Necessary tools – $250
- Legal aspect like business registration and insurance – $3000
- Truck for carrying equipment – $2000
- Marketing – $1900
- Miscellaneous – $1000
From our detailed analysis above, it will cost $8,750 to start a small scale Solar panel installation business from your backyard.
A medium scale Solar panel installation business with a suitable location in consideration will cost $560,000 and a large scale Solar panel installation company is believed will need to an enormous $2,240,000 as start up capital.
15. Raise the Needed Startup Capital
Every business known to mankind needs fund and financing to be able to stand firm and grow. There is a popular saying “that money is used to make money”; any business that lacks funding is literally dead and doesn’t exist. The major problem faced by entrepreneurs is not choosing a business niche but the capital and funding for the business.
You need fund to be able start up your solar panel installation business, buy tools, rent offices and utilities, pay employees, and also build a corporate identity. Ways of financing your solar panel installation business may include
- Personal savings
- Loans from friends and family
- Small business loan
- Attract investors
- Bank overdrafts
- Community schemes
16. Choose a Suitable Location for your Business
Choosing a location for your solar panel installation business should be one of your paramount decisions when starting the business. The location you choose for your solar panel installation business has a direct effect on your operation’s costs as well as your ability to serve customers (and therefore your revenues).
Also, location decisions, once made, are difficult and costly to undo. A good location for your solar panel installation business should be a well-travelled street where the shop will be seen by many individuals who can easily pull into the lot and patronize your services.
Also consider whether your location can benefit your business if you’re around similar businesses that are already drawing the type of customers that you want. Like starting your business beside a solar manufacturing company or other related businesses. It is also very important that you go for a location where you can easily afford its rent and not going bankrupt.
Finally, the location that you choose needs to be legally acceptable for whatever you plan to do there. A certain spot may be good for business, but if it’s not zoned for what you plan to do, you’re asking for trouble. You should never sign a lease without being sure you’ll be permitted to operate your business in that space.
Your city planning or zoning board determines what activities are permissible in a given location. If your zoning board has a problem with any of your business activities, and it’s not willing to work out a way to accommodate your business, you may have to find another space.
17. Hire Employees for your Technical and Manpower Needs
Just as a cook needs special tools to grill, bake, or fry a chicken all with the goal of preparing delicious food there are various tools available to solar Panel installers who strive for successful installations on multiple types of PV systems.
Pitched-roof, flat-roof, and ground-mount arrays each have unique characteristics that require specific tools. The number of staffs you need for your business will depend on the scale and size at which you started. Explain below are the service/installation process and all required tools to install a solar panel.
Safety equipment tops the list as the most important set of tools you will need as a solar panel installer. This collection includes a rope and harness, safety glasses, gloves, earplugs, boots, hard hats, etc. These items are known as personal protective equipment (PPE). Each installer must have individual PPE and know how to use it properly.
Array layout/site assessment
Every installation begins with the layout of the array. In most cases, a 25-foot tape measure, a 100-foot tape measure, chalk or string line, marking pencil and solar pathfinder will get the job done.
Using the solar pathfinder to recheck the install location for shading allows for adjustments to the array before installation. Taking the time to design an accurate layout helps installation go smoothly and ultimately saves time and money.
Working on a roof requires a ladder long enough to extend three feet above the dismounting location. Layout on a pitched roof includes finding the roof rafters or trusses.
Tapping on the roof with a hammer allows you to audibly determine the location of the structural support. Once you locate the first support, you need to mark it with a pencil and measures 18 to 24 inches to the next rafter.
The greatest difference between the mounting types, in terms of the tools needed, is how the structural support should be installed for a racking system.
Solar panel Installation Hand tools
For pitched-roof installations, a cordless drill and impact driver, drill bits, sockets, a utility knife, and a caulking gun should take care of most installs. Drilling a pilot hole helps prevent splitting the roof rafters and makes installing the standoff anchor bolt easier with the impact driver.
After installing structural supports, the racking and module installation is similar for each of the different mounting types. It is common to need only one socket size for the entire racking installation. Many manufacturers recommend a torque wrench to install all of the bolts.
A cordless reciprocating saw allows one to install the rails long on one side of the array and trim to fit once all of the modules are installed.
All PV systems require equipment grounding, which can be accomplished with wire cutters, a flat-head screwdriver, and a drill for installing lugs. A stubby flat-head screwdriver makes tightening ground lugs on the back of roof-mounted modules possible.
Though connecting modules in series does not require the use of tools, taking modules apart may require tools specific to the connector. The next step is creating a home run wire, which uses a specialized crimping tool to assemble a connector on the wire that matches the module connector.
After installing the positive and negative home runs for a string, one must check the voltage with a multimeter. Checking the voltage as each string is completed verifies proper installation and avoids troubleshooting later on.
18. Write a Marketing Plan Packed with ideas & Strategies
Demand for solar energy is on the rise. Due to increasing concerns over global warming and a desire to reduce energy costs and personal carbon emissions, an ever-increasing number of consumers are weighing solar power as a serious option.
Getting a solid customer base is essential in the solar panel installation industry. Basically the only way to get customers for your solar installation business is to go out and explain the benefits of solar and show potential customers pictures of different systems.
Advertising does little beyond getting your name out, and solar systems get sold through personal interaction, not through a yellow pages ad.
Meeting potential customers can be done in a variety of different ways. You will be mostly marketing to the affluent in your community, so you need to figure out where these people spend their time and what activities they like to do.
Maybe there is a home show in your area where you could set up a small table advertising your services. Or, you could visit some of the local clubs and pass out some brochures or sponsor an event. The local Chamber of Commerce is a really great way to get customers for your installation business. You will not only meet business owners
19. Work Out a Reasonable Pricing for your Services & Products
In the USA, a rule of thumb is that the average house consumes electricity at the rate of 1 kW per hour (kWh). There are about 730 hours in each month, and the average price of a kWh of electricity is $0.10. So an average monthly bill would be around $73 for 730 kWh of electricity.
Of course, this can vary considerably if you have non-standard items such as a hot-tub, or some electrical appliances running continuously. Extended computer use, plasma screen TVs and video games consoles can also make an impact. Your usage will increase significantly in months when you run an air conditioning unit, as well.
Finally, the cost of electricity varies widely across the USA, from as low as $0.07/kWh in West Virginia to as much as $0.24/kWh in Hawaii. You’ll have to adjust my guidelines accordingly, because they apply to an average home with average consumption and average electricity costs.
20. Develop Iron-clad Competitive Strategies to Help You Win
Here are few strategies to win your business competitors.
- Show them the money
- Sell the Environmental Benefits of Solar
- Make it look easy
- Know Your Solar Products
- Offer Referral Credits for Solar Installs
- Be a thought leader in the solar space
21. Brainstorm Possible Ways to Retain Clients & Customers
There are numerous types of solar systems but in this course, we are talking about rooftop PV systems. These are the most popular types of systems and are the most requested by homeowners. A few other types of systems are ground mount, pole mount and solar thermal systems. The systems all work the same in that you are trying to replace electricity usage.
Loyal customers help build a profitable business because they are more likely to stay with a utility that treats them well and more likely to recommend it to others, becoming a highly credible volunteer sales force. They are more likely to buy additional services, further boosting their lifetime value.
They also cost less to serve due to shorter interaction times and lower outstanding receivables. Ways to retain your customers may include…
- Winning on price
- Delight on image
- Keep on service
22. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
The solar panel installation industry, by comparison, is still relatively new, and many companies are searching for their own version of ‘V Power’. Ways to get your own ‘V Power’ may include;
- Research the customer’s mind set in each local market
- Nail your message
- Use valuable content to show your difference
- Be educative
- Ride the locavore movement
23. Create a Supplier/Distribution Network
The need to develop alternative energy sources has been widely accepted in the world. Solar energy is one of the alternatives being developed and its potential contribution is highly touted. The possible utilization of solar energy for heating and cooling of public, commercial and residential buildings has gained considerable attention and support.
Information on the application and viability of solar energy for heating and cooling buildings is being distributed by both public and private sources in an attempt to generate awareness and interest.
Recognizing that information alone will not result in widespread adoption, both Federal and state governments are offering financial incentives to encourage interested consumers to incorporate solar options into their homes.
The traditional distribution channels for residential heating and cooling equipment are more similar to those used for industrial products than for consumer durable goods.
It may appear at first glance that the seller/installer is the retailer selling end use products, but he is more than that. In the case of residential heating and cooling, the seller/installer plays a critical decision making role.
You as the installer is a “packager,” or final manufacturer of the system. You are the system designer. It is your duty to take a number of components, frequently from different manufacturers, and assembles them into a system. Thus, it is not a final product which flows through the channel to the installer, but rather a group of components.
Therefore, you as the installer could be thought of as the final manufacturer (of the heating and cooling system), while the other members of the distribution channel are industrial goods suppliers.
The installer could also be viewed as another industrial goods supplier, since the heating and cooling system is another component in the final end use product, which is the home. The consumer does not purchase the heating and cooling system as an end use product, and in the technical sense, the installer is a manufacturer more than a conventional retailer.
Therefore, the relationship of the consumer to the seller/installer is not the same as the normal consumer-retailer relationship for consumer durable goods.
24. Tips for Running a Solar Panel Installation Business Successfully
Managing a solar installation business isn’t an Easy task. Whether it’s a small local installer working on one system a week on neighbourhood homes, or a large installer working on 500 systems a week in multiple states, the logistics, engineering, financing, customer relations and project management are daunting.
In reality, it’s much easier to sell solar than it is to run a profitable, sustainable solar panel installation business. To actually run your solar panel installation business successfully, you need to be creative and eager to work.
- Search for solar tax incentives available for your area on the Solar Energy Industries Association website or on the Database for State Incentives
- Establish connections with wholesale suppliers of solar panels, batteries and miscellaneous equipment needed for a solar installation. Be sure to identify yourself as a contractor so that you get wholesale prices.
- Buy a truck or van large enough to handle the equipment you need to carry, or buy a fleet of trucks if you plan to start a large operation. You may be able to secure a business loan from a local bank or credit union to offset your initial start-up costs, which will also include buying the tools you need.
- Advertise your services in local newspapers and real estate magazines. Post flyers at local lumberyards and in supermarkets. Once your business starts, you’ll be able to cut back on advertising as more and more of your clients begin coming through referrals.
- Utilize social media. This is a must with any solar business. By social media, we mean Facebook, Twitter, and MySpace along with numerous others. You can open an account for free and then just post updates about what you are doing and the progress your business is making. You don’t want to be spamming potential customers, but it is fine to provide them with discounts and even pictures of other installations you are doing.