If you attended this year’s RE+, you know it was the craziest yet. With over 40,000 attendees and three whole expo halls filled with solar vendors and their booths, it was solar as far as the eye could see. But after a tough year for residential solar, was all of this hubbub a sign of a recovering market — or just further proof that the solarcoaster can swing up and down in a heartbeat?
When we ran into Wood Mackenzie, one of the top energy research firms, we asked their solar analysts for their take on all of this: “So, how many installers have come up to you asking when the market will recover? And what have you told them?” Her answer? A lot of installers were finding her on the show floor. And she told every one of them the same thing:
That the market would continue to improve into next year, but probably not as fast as everyone wants.
Whether you attended RE+ yourself, or you missed the festivities and now want the scoop, we wanted to take a look at the conference through this lens. After all, in our opinion RE+ 2023 was a study in contrasts: We saw a maturing industry with certain sectors thriving while other sectors face tough headwinds.
Below you’ll find the top 3 signs of challenging solar headwinds, along with the top 3 signs of an upswing on the horizon.
Challenge 1: Solar financing is no longer an easy sell.
There’s a reason our talk, “Sh** my sales are half of what they used to be!” attracted an audience at RE+. Higher interest rates mean less obvious solar economics and more hesitant homeowners, leading to more frustrating sales cycles for solar businesses. What was once the linchpin of residential solar’s dramatic growth the past 5 years, loans have now fallen out of favor, which means that solar businesses have either had to pivot their business or switch their customer profile — and we saw evidence of both on the show floor.
Based on the number of PPA dealers exhibiting and mingling at RE+, it’s clear that 3rd party ownership is on the rise with solar installers. Given Fed predictions, we expect this trend to continue well into next year. While we’re fans of anything that gets more solar on rooftops, we do want to caution installers that PPAs come with their own special customer experience considerations. For example, if your homeowner ever sells their home before the PPA agreement is finished, they’ll need clear documentation to ensure the transfer isn’t mishandled.
For solar companies whose markets aren’t amenable to PPAs, we’ve seen installers have success with returning to their own customer base and scouting out potential follow-on sales. While new prospects may not have the budget for a new system, existing customers may be interested in installing an EV charging system or battery or system expansion, all in cash.
Challenge 2: No one knows what to do with solar service.
Looking across the show floor, it was clear that the industry is still figuring out how it wants to handle the customer lifecycle post-install. Yes, there are plenty of design and sales tools for installers looking for help. But when it comes to the post-install residential O&M and customer experience, there just aren’t as many options.
Orphaned systems are worsening this challenge. Especially with the rough year of bankruptcies we’ve seen, orphaned systems are growing. If we don’t get ahead of these systems, angry homeowners will complain that solar doesn’t work, and we’ll see the industry’s reputation take another (undeserved) hit. Installers need tools that will help them service their existing PV fleet, while also giving them the power to take over (and turn a profit from) orphaned systems, no matter what inverter they used or what the install looked like. Without this paradigm shift, we’ll continue to see bad press about solar promises.
Challenge 3: RE+ has gotten too big.
The last challenge we wanted to touch on was the challenge of RE+ itself. 40,000 people, three conference rooms, thousands of booths — RE+ has gotten so large that it’s actually made it hard for people to navigate the show and get what they need out of the event. As our head of business development put it, “You’d have a hard time finding someone more excited about solar than me, and I groaned when I realized how much more show floor I needed to see.”
We want the solar industry to continue to grow, but we also want RE+ to help conference-goers make sense of this growth. This year, the words we heard most often to describe the show were “maze” and “labyrinth.” People come to RE+ to collect information that can help their business, but it’s becoming harder and harder to find the tools that you’re looking for or meet the people who might be able to help you. For example, our customers are residential solar installers — but our booth was next to a 50-ft, autonomous, pile-driving robot. Not exactly an intuitive layout for either audience.
Moving forward, we think RE+ needs to take a more regimented approach to dividing up people’s interests. This could look like specific days of the conference focused on specific segments of the industry, like C&I or residential. Alternatively, the show floor could have a more rigid lay-out, with specific markets in specific buildings or areas. We love the fact that solar and RE+ are growing, but we want to make sure the show is still serving its purpose of connecting folks with the tools and resources they need.
Of course, for all of these challenges, there were also plenty of signs that the solar industry is getting ready to rebound bigger and better than before. We noticed three major indicators of an upswing:
Sign of upswing 1. Utility-scale solar and C&I are thriving.
While residential solar has undoubtedly had a difficult year, utility-scale solar and C&I are booming. Wood Mackenzie reports that “utility-scale solar installed 3.3 GW in Q2 2023, representing 22% growth over Q2 2022.” We also spoke with a number of residential installers at RE+ who have added C&I to their portfolio.
One solar business told us that this was actually a natural transition for them, since many of their resi customers are also business owners themselves. By mining their existing customer base, they were able to easily add small-scale C&I projects to their project mix without needing to hunt down a whole new line of leads. We’ve also heard from more solar companies that, thanks to existing and upcoming IRA incentives, have been able to grow the utility and C&I parts of their business.
In our opinion, this is all nothing but good news: The installers get additional support, and we get more large-scale solar projects powering our world.
Sign of upswing 2. Module prices are coming down.
Whether you’ve seen it in the headlines or witnessed it first-hand on the show floor like us, module prices are falling. While this may be bad news for the module manufacturers, it’s a big win for installers, especially the smaller contractors. Lower module prices mean that these installers are able to maintain more margin. To put it bluntly, these cheaper modules are a much-needed release valve to counter other inflationary prices.
And this trend may not stop with module manufacturers. We also saw some evidence at RE+ that inverter manufacturers are also willing to slash prices in order to retain customers. And with each new hardware discount, the resi industry gets a little boost.
Sign of upswing 3. RE+ is attracting some big names.
And no, we’re not talking about Michael Phelps’ appearance on the show floor. Previously, there were some players in our industry that just felt too big to exhibit on the show floor. Their position seemed so secure, they didn’t need to invest the marketing dollars to spotlight themselves with a booth. However, a bigger show and more competitive solar market meant that even Tesla and GM were present on the exhibit hall floor.
We were especially surprised by Tesla, given that Elon Musk famously had eschewed marketing spend in the past. But the fact that Musk is changing his tune is proof that, for all the slowdown we’ve seen, the top dogs in solar are no longer safe. With the coming rebound, market share will be up for grabs, and we’re excited to see some smaller companies give the Teslas and GMs of the world a run for their money.
What comes next after RE+?
One way or another, these challenges and opportunities are going to shape the solar industry for the next year. We’re excited to magnify the awesome things and to work as an industry to face the challenges head-on.
For anyone that stopped by the booth or attended one of our events at RE+ 2023, thank you. Whether you tried durian for the first time, signed up for Bodhi Free, or just had a conversation with us about customer experience, we loved getting to connect with you. For those of you who missed us on the show floor, reach out. We’d love to hear your thoughts on what highs and lows you’re expecting on the solarcoaster.