How Can Solar Module Manufacturers Differentiate Themselves?

According to a recent Bloomberg article, it seems the top two U.S. solar manufacturers are shifting away from the domestic utility market.

(First Solar’s #1 and Sunpower’s trying harder at #2.)

Thanks to last year’s shift of the federal tax credit, utilities aren’t signing as many deals as they were 12 months ago. That’s because the tax credit was due to expire in 2016.

And so everyone and his dog rushed to get contracts signed and projects launched so they could qualify for that hefty 30% credit. However, the federal government unexpectedly extended the deal until 2021. That’s great news for solar in general.

And there will surely be another solar project gold rush that year too. But what happens between now and then?

Well, there’s a bit of a dropoff coming:

  • 4.4GW of solar farms were built in 2015
  • 8GW of solar farms are being built in 2016 this year (a huge boom get that tax credit)
  • 7.1GW of solar farms are scheduled to be built in 2017 (an 11.3% drop)

The Bloomberg article didn’t give numbers for 2018 onward, but it seems likely those numbers will be smaller than 7.1GW. Certainly First Solar and Sunpower think so.

That’s why they’re trying new approaches to deal with the problem:

Two Different Marketing Approaches

Sunpower is shifting its focus away from utilities to rooftop power. It expects “sustained strong industry growth” according to Chief Executive Officer Tom Werner on a conference call.

Meanwhile, First Solar is looking to sell panels to other companies even though First Solar CEO Mark Widmar says, “We’re seeing a lot of very aggressive pricing behavior in the market.”

Each idea comes with its own challenges:

1. Selling into an expanding rooftop solar market rather than a utility market means significantly higher per watt costs, smaller orders and a LOT more work required to get the same number of panels sold as compared to a large farm

2. Selling into a market with declining unit prices is going to really squeeze margins, especially if it combines with the first point.

How do you succeed in such a market?

While a rising tide of solar market expansion might lift all rooftop solar boats, how do you stand out? Especially if competing on price is likely to be financial suicide?

Let’s look at a few differentiators companies could use to make themselves stand out from their competition.

Some Solar Panel Differentiation Ideas

How proven is your company’s track record?

What recent successes can you highlight that would make a prospect more comfortable about doing business with you? And how long have you been delivering these successes?

Prospects worried about paperwork should be reminded that your company’s track record is proof you can quickly and easily meet local specifications, regulations and other requirements better than the competition.

Plus …are any of these successes newsworthy for being “first” or “the biggest” or “the most cost-effective”? Or maybe there’s something quirky or attractive about the location of the project, such as being near a local landmark.

The more of these that can be backed by happy testimonials from satisfied customers (and case studies), the better. Case studies can be stand-alone marketing pieces, of course. But testimonials can go everywhere: your website, brochures, sales proposals, videos, and more.

Is your payback period shorter?

This isn’t necessarily about up-front costs. A higher panel efficiency (thanks to module type) or capacity factor (thanks to tracking mounts) might cut your customer’s payback period significantly even if the initial costs seem higher.

Do you have a better guarantee or warranty?

It goes without saying that the longer and/or more comprehensive your guarantee, the better. But is there anything else unique about your guarantee that makes you stand out?

Is there a special service you can provide? Some kind of perk no one else has available?

Is your product better known and trusted?

Heavyweights Sunpower and First Solar will have fewer problems here than most. But even the biggest companies need to think about their branding and the image it generates in a prospect’s mind.

Here’s a quick test of your marketing: can you summarize your company’s biggest benefit or advantage in a 3-6 word tagline?

Do you offer complementary products that make you a one-stop vertically integrated shop?

Tesla is doing this right now with their Solar City merger, of course. But is there anything similarly integrated you can offer, such as monitoring or reporting software? Racking and tracking hardware? Inverters? Batteries for storage?

Does your product feature proprietary technology that no one else has?

First Solar’s cadmium telluride panels are relatively unique. They lose efficiency more slowly at higher temperatures (important in hot climates) amongst other advantages. What does your module offer that’s truly special?

Is your product custom-made for a specific industry?

Looking at it another way, is there something you can do to make your product specifically more attractive for rooftop installations?

Do you have a closer or more convenient location?

Sometimes being closer counts. Not just for the initial consultation and installation, of course. But customers will feel reassured about maintenance if you’re nearby and your competitors aren’t.

Why It’s Not Just About Price

If your margins are going to shrink with an increased emphasis on rooftop solar over utility solar, then you’ve simply got to compete on something more than price.

“Being the cheapest” isn’t likely to work for very long. And it’s going to be painful even when it does get you an extra order or two.

So think about using one or more of the differentiators above to make your company and your product truly stand out. And then use it consistently and persistently in all your key marketing materials.

Because if you don’t stand out, then someone else will!

Do you need some help doing that?

Contact me and let’s chat.

P.S. As a side note, it seems China is going through the same solar demand woes. In an article titled “Solar prospects dim as subsidies peter out and overcapacity builds“, the South China Morning Post highlights the key Chinese solar problems right now.

It seems Chinese firms are trying to cope with financing difficulties, a reduction in government subsidies, and power grid bottlenecks as key impediments during the second half of 2016 and 2017 too.

That suggests Chinese solar companies will be in even more need of company and product differentiators than their American counterparts.