Financial Incentives Boost Burgeoning Solar Installation Business

San Diego Business Journal
By Marty Graham

As one of the nation’s top solar generating cities, San Diego is a popular place for the business of solar installation. The city has the most solar installations and generating power in the state and more solar rooftops than either Los Angeles or oh-so-green San Francisco, according to advocacy group Environment California.

While the idea of solar power came early and obvious to San Diegans who enjoy more than 300 sunny days a year, most of the solar installation businesses remained small and local until the combination of rebates, tax credits and financing schemes began with the California Solar Initiative and became more substantial with the American Recovery and Reinvestment Act of 2009.

“It’s difficult to keep track of the businesses because solar energy is blossoming so quickly here,” said Sue Kately, executive director of the California Solar Energy Industries Association. “But most of the companies installing solar energy systems are small, local companies with fewer than 25 employees.”

California has about 770 companies in the solar installation business, according the association.

A study by Berkeley-based The Greenlining Institute released in January found that the 10 largest installation companies captured just 41 percent of the large-scale installation work in the state, and less than 30 percent of the small-scale installation contracts. Put another way, there’s plenty of room for small companies to compete in the rapidly changing industry.

“Smaller companies have shown the greatest concern and connection for the communities they serve,” said Samuel Kang, managing attorney for The Greenlining Institute. “They are more likely to be diverse and to reflect the diversity of their communities.”

Solar Benefits Converge

Small businesses are also benefiting from the combination of decreasing wholesale prices, extraordinary rebates and incentives, and a national consciousness moving toward sustainable resources.

“We’ve been growing like crazy and it’s going to get better,” said Trey McCann, director of operations for Solaire Energy Systems, a Mission Valley-based company with 11 employees. “With the rebates and better financing options, we’ve seen a lot of growth in the past year and we expect the demand will increase rapidly.”

Solaire is a family-owned business, started by Jarrod Fisk, who worked in heating, ventilation and air conditioning while he started the solar energy business out of his home four years ago. He moved to San Diego from Orange County because there’s far more interest in alternative energy here, McCann said.

The company works on mostly residential installations, buoyed by generous rebates, tax credits and incentives.

Like many small companies, the focus is on technical expertise and financing. Marketing has been taking care of itself, as the world turns green.

“We’re set up to work with the city and state on rebates, and we work with the California Credit Union pretty regularly on financing,” McCann said. “Right now, customers are finding their way to us.”

Consolidation Trend

Solaire and many smaller businesses share that in common — and it makes them ripe for consolidation, according to Solar Today magazine Deputy Editor Seth Masia.

“What we think will be the next trend is consolidation, as the companies merge or are acquired,” Masia said. “Most of these smaller companies are started by engineers and construction guys, people who like to bolt stuff together. They save money on administration and insurance, get help with marketing and can go back to being paid to do what they really like to do.”

Acro Energy Technologies Corp., Real Goods Solar, SolarCity and Akeena Solar Inc. are among the most aggressive large solar companies acquiring smaller companies, according to Rhonda Fried, director of SustainableBusiness.com. Acro, she notes, began acquiring California companies in February 2009 and is already in the top 10 market share for small solar installations.

None of the big 10 installation companies are based here, but most have local offices, including Akeena, a publicly held company.

Akeena launched in Silicon Valley in 2001, after founder Barry Cinnamon put panels on his own roof — and then on his neighbors’ roof.

Akeena has several different businesses within the company. The company builds its own panels, selling to installers, and just recently began working with Lowe’s home improvement stores to sell photovoltaic solar panels and easy installation kits directly to the public. The company also installs both large- and small-scale solar projects.

“We’ve grown into the largest solar company in California, with seven offices statewide,” said Jose Tengco, Akeena’s director of public affairs. “We’ve worked extensively in San Diego and we’ll be here in the small and large installation markets for some time to come.”