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Solar Distribution: Lessons from Residential Construction, Energy, and Infrastructure-Related Products

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Woodlawn recently examined the go-to-market approaches of industries such as residential load centers (“fuse boxes”), hot water heaters, roofing materials, flooring materials, standby generator sets, windows, and central air conditioning to see what lessons they might teach us about solar distribution as the market grows and distribution matures.

Here are some of our key findings:

  • In industries with “complex” sales, such as generators, windows, and air conditioning, dealers are a significant part of the channel
  • In these industries, dealers tend to buy directly from manufacturers or from exclusive distributors
  • Industries with more commoditized products, such as roofing, load centers, and hot water heaters, tend to rely more on wholesalers
  • Wholesalers are rarely good at market development.  Their value is in inventory, terms, and bundling of related products from different manufacturers
  • Where sales are made indirectly, producers often have sales and marketing teams that “skip” levels of the distribution chain to generate goodwill, familiarity, and assist downstream partners with marketing and unusually large contracts.

Download a detailed summary of our findings here.  Also, see a slightly updated version that appeared in Solar Industry.

Solar Sales Channels: Current Status and Likely Evolution of Residential Solar Sales in the U.S.

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Woodlawn Associates recently interviewed more than 20 solar dealers and other experts to understand what they want from manufacturers of solar modules and inverters and to help dealer-installers understand how the sales channel is likely to evolve.

In summary, we found SunPower and SMA had highest consideration rates for solar modules and inverters, respectively.  We also found that Mitsubishi, Schott, Sanyo, and Trina could gain market share in PV if they execute well.  These manufacturers had consideration rates considerably above their current market shares.

Installers told us product availability, commercial terms, and customer sales leads are among the most important purchase drivers, although the supply shortages that were endemic over the past year appear to have eased.

Leases and PPAs have become hugely important in the market, now accounting for nearly half of residential sales in some states.  The rise of such financing potentially reduces the importance of manufacturer brands, as the risk of non-performance is placed on the lease provider, not the consumer.

Many people in the industry find Sungevity’s and SunRun’s business models to be highly novel and risky, but based on our experience in other industries, they are much less so than many people think.  On the other hand, we find that solar franchising is missing some of the ingredients common in other successfully franchised industries.

Finally, since the residential sales market is highly fragmented, we think it is unlikely manufacturers will integrate downstream.

Download a complete report here.

Multiple Device Data Plans for Wireless Operators

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The growth in data traffic on wireless networks over the past several years has been truly astonishing.  The trend is likely to continue, too, as faster data speeds, reduced latency, more capable devices, and lower cost encourage customers to connect more types of devices to the network and use them more heavily.  It is not surprising, therefore, that many operators believe wireless data services are the key to maintaining or growing average revenue per user.

However, while individuals, families, and businesses are likely to use more data, they are unlikely to tolerate separate, full-priced data plans for each device.  Very soon, one individual could conceivably want wireless internet access for a laptop, home computer, smartphone, tablet computer, camera, video camera, gaming device, e-reader, automobile, and numerous “smart” appliances.  Therefore, operators need to develop offers that give customers a simple and affordable way to connect multiple devices while growing revenues at least as fast as costs.

In addition to driving revenue, multiple-device data plans have the potential to significantly reduce churn.  Customers with a large investment in devices are unlikely to switch carriers if doing so requires upgrading their entire device collection.  One little-recognized implication of this is that operators able to get compatible radios embedded in more consumer products will have considerable advantage in attracting customers and minimizing churn.

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Chinese Solar Powers Up: Lessons for the Wind Energy Industry

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We recently looked at the overseas penetration of Chinese solar photovoltaic module makers to see if there might be lessons for the wind turbine industry.  Chinese solar PV module manufacturers have rapidly increased their overseas market share.  For example, they have increased from 0% to over 30% of the California solar market in three years, and have seen similar market share gains in Germany.  Moreover, Suntech, a Chinese PV manufacturer, rated #1 in consideration rate in our recent U.S./Europe survey of solar buyers.

In contrast, the overseas penetration of emerging wind turbine manufacturers has been much more muted.

Six main factors account for the growth of the PV module makers:

  1. Cost leadership
  2. They entered market when supply was tight
  3. Solar modules are (relatively) simple, modular, and scalable, which makes entry easier for new entrants
  4. PV modules viewed as commodity-like
  5. The executive teams of the leading Chinese solar manufacturers have extensive experience outside China
  6. As businesses, the leading Chinese PV makers are relatively transparent to those outside China

The implications for wind turbine manufacturers heading into new regions are:

  1. Expect new market penetration will take a long time due to need for an operating track record.  It may be a long time before local manufacturing capacity is required
  2. Purchasing projects or doing project development can get beyond bankability issues
  3. Developing local engineering and support capabilities should be high priority in overseas expansion
  4. Certain partnerships could accelerate progress and increase probability of success
  5. Prioritize markets appropriately

Download our detailed analysis here.