There's a lot of volatility in the thriving U.S. residential solar installation and finance sector. We covered a recent flurry of finance here.
The growing number of firms and funds innovating in financial engineering, solar rooftop engineering, and customer acquisition techniques are radically changing the costs and channels for residential solar.
SolarCity, by virtue of a prescient early entry and strong execution, is the outright leader in the field, with a downright gaudy market share in the first half of this year. In distant second but fast gaining momentum is Provo, Utah's Vivint Solar, part of the Vivint home security and automation giant, acquired by Blackstone for $2 billion last year. (If you're looking for the exact, up-to-the-minute market share data on solar installers in the U.S., check out the U.S. Solar PV Leaderboard.)
Emerging from the strong pack of Verengo, Sungevity, Real Goods, REC Solar, Astrum, and others is Vivint, which was founded in 2011, a bit later to the table than SolarCity.
But Vivint Solar continues to expand, today informing GTM that it's opening a 60-person office in Orange County, giving it a total of 260 employees in Southern California.
We spoke with Brendon Merkley, Vivint Solar's COO, who noted that the rapid expansion of Vivint has been "natural and organic." He said that the firm has grown fast by "replicating the model pretty precisely" and "repeating the same plays from the play book."
"And it comes down to [the fact that] we are fanatical about the customer experience." To Merkley, that means "being in control of all touch points -- creating the customer, survey, design, installation -- all done with Vivint Solar employees."
Both Vivint and SolarCity are vertically integrated, and the COO admits that "SolarCity is the analogue." It may not be a coincidence that the leading solar installers are all vertically integrated.
Merkley points out that Vivint has 800,000 customers in home security and automation and a system and platform already in place. Solar "is an extension on a preexisting customer service and fulfillment platform."
Another distinction is Vivint's door-to-door solicitation style. The company works with a door-to-door sales model made up of a local sales force looking to employ veterans, long-time residents, graduate students, and community organizers. The sales force is trained to make "a pitch from the porch." SolarCity has been in an all-out customer acquisition partnership frenzy aiming to employ similar face-to-face methods. Solar Universe just acquired Gen110, a lead originator focused on door-to-door sales.
The cost of a door-to-door marketing/lead is $1,000 to $2,000 per customer for a 6-kilowatt system, according to GTM Research's most recent report, U.S. Residential Solar PV Customer Acquisition.
Kady Cooper, Director of Communications at Vivint, notes that a Vivint customer in Southern California can get a fixed rate of 15 cents per kilowatt-hour. If the customer approves, an on-site visit follows, and soon after, a CAD design is created. Permitting and interconnection time depending, Merkley said that on average, Vivint can go from contract to electrons on the grid in six weeks.
The 879-employee firm uses the Zep mounting system and Enphase microinverters in its installations. The COO said a Vivint crew routinely installs a residential solar roof in half a day, and its teams regularly do two jobs a day. Vivint has installed solar on nearly 5,000 residential rooftops in California in 2013. (SolarCity currently has 68,000 customers across fourteen states.) The company also provides home energy management services as part of its offering. In August, Vivint Solar secured $200 million in two new tax equity funds to finance residential solar.
Residential solar penetration is no longer about cost per watt for hardware, but instead about cost per customer gained. A study from Lawrence Berkeley National Laboratory found that customer acquisition costs were $0.07 per watt in Germany and $0.69 per watt in the U.S. There's still room for cost savings in the U.S. residential solar market.
From Residential Solar PV Financing: The Vendor, Installer and Financier Landscape, 2013-2016