Over the past few weeks, the residential solar industry in the United States has seen layoffs, warnings of declining demand, and a rush to move as much work online as possible.
So far, many reports of pain have been anecdotal. But soon, state-owned companies in the sector, including Sunnova, Sunrun, SunPower and Vivint Solar, will report their first periods of earnings since the far-reaching impacts of the coronavirus landed in the United States. keep facilities moving, even though most of the country remains stranded.
The third-largest solar installer in the United States, Tesla, has already released its first quarter results, detailing disappointing numbers of solar installations that have reduced gains for two consecutive quarters. Tesla’s solar installations fell 26% from the first quarter of 2019 to the first quarter of 2020, and fell from 54 megawatts in the fourth quarter of 2019 (typically the biggest quarter for solar installations) to 35 megawatts in the first quarter of 2020.
Although the first quarter only partially overlaps with the COVID-19 crisis, Tesla’s dismal installation figures do not bode well for the rest of the industry. For more than a year, the automaker has experimented with fully online sales techniques and low up-front rental options – tactics currently being adopted by Sunrun and SunPower to reduce sales during the pandemic.
Tesla began shifting to a passive selling process in 2017, shortly after the company acquired then-market leader SolarCity. Tesla cut door-to-door sales before ending a partnership with Home Depot and ultimately shutting down most of its retail stores. Although its sales fell, Tesla’s solar power sales remained at a lower level thanks to the company’s fervent following, the strength of the brand, and synergies with its storage and auto offerings.
None of the other major solar installers in the country can call on this same support.
Catching up with… Tesla?
Despite its poor first quarter numbers, Tesla likely profited from its switch to online sales only at the start of the pandemic, said Bryan White, solar analyst at Wood Mackenzie. “For them, sales primarily involve the customer completing the entire sales process on their website. […] In that sense, Tesla had already eliminated one of the … pain points that businesses face during the pandemic, namely the lack of face-to-face interaction as a way to move the sale forward and close the deal. “
Other residential solar companies are now catching up, trying to both generate leads and close sales through virtual platforms. While Tesla has contented itself with watching sales grow at the pace chosen by customers, its competitors are tapping into the digital toolbox to emulate a face-to-face transaction with Zoom or other video conferencing.
Additionally, SunPower and leading installer Sunrun have deals in place to attract customers, requiring no down payment and raising little to no cash for the first six months of a traditional 20-month solar home contract. year.
Residential solar appears to be the sector hardest hit by coronavirus lockdowns so far, compared to large-scale projects which are less directly affected. An ongoing survey by the Solar Energy Industries Association shows that layoffs are concentrated among residential market respondents. SunPower has cut hours and salaries for executives, while Sungevity has laid off hundreds of employees. SunPower and Sunrun both reiterated their forecasts for 2020.
All of the major publicly traded residential solar companies are expected to report their first quarter results in the coming weeks, starting with Sunrun on May 6. Sunrun’s finances are relatively healthy and its core install numbers could cushion the slowdown. SunPower could be in a more difficult situation than others due to its relatively weak financial position. Vivint Solar, the company that relies the most on door-to-door sales, can describe shifting sales tactics.
Overall, the numbers to look for are megawatts installed, number of new customers, and any 2020 forecast updates. In an era of abundant uncertainty – and in an industry where quarterly losses are common – most companies will be gearing up for a tough rest of the year and a tough entry into 2021.