When looking into either adding solar installation to your business, or want to know how to get the best deals, there are several factors to consider.Reliability is key; investigate the company you’re doing business with first, be sure they’re going to stand behind their products and have the finances to stick around for the same number of years their solar systems will last.
It’s critical any integrator large or small consider their reputation when it comes to acquiring certain products. Remember, you’re putting an entire solar system onto somebody’s home or business – you’re name is on the line. Also, focus on the best relationship you can build and maintain with your distributor. As a result, any integrator large or small can give their business to one distributor, driving pricing down. The bigger guys can send out request to proposals to multiple manufacturers and almost expect them to give them the most competitive bid to provide them with whatever equipment they need.
Solar systems break down into four categories of equipment or materials. Here they are in order of cost:
PV (photovoltaic) Panels:
Most high-profile solar contractors benefit from aggregating their demand across the entire company, putting them typically in a better position to negotiate with and buy from manufacturers directly. Meanwhile smaller contractors and companies have to buy from distribution. Like any manufacturing company, solar products manufacturers can’t afford to set up accounts for every single person who wants to buy, so they market their products through distributers – it’s just more efficient. The challenge with that is you’re introducing one more person in the string who has to take a profit.
What contractors have to do is look for the best-valued panels out there, and that can be challenging because of the variety of panels. There are panels of varying types, sizes and voltages, and sometimes reliability levels can vary as well.Keep in mind shipping costs for panels can also be very expensive. Also, in those cases some times you have to step up and enter into a ‘take it or pay for it’ type of arrangement, meaning when that month comes and they’re going to deliver 200 kW of product to you, you have to take it. There can be conditions for securing a lower price, and once more, be wary of reliability.
Also remember; it’s buyer beware. Occasionally there are spinoffs of companies that may use the reputation of a company with a great track record. In those cases, sometimes you can find panel manufacturers that are trying to make an entry into the industry and they may offer some discounting to try to get some market share to start. Make sure you know where all those components of the system are being manufactured, and you also have to weigh the risk against the reliability of that company being around for a while.
Not everything is a challenge however; there can be amazing opportunities for any contractor to take advantage of. There are scenarios where at the end of a particular quarter, some manufacturers like to push more inventory out and they may be willing to negotiate better pricing if they haven’t quite fit their sales targets for the quarter. You may catch them in a situation where they need to make a sale.
Finally, it’s important to estimate what the amount of business is you’re going to do in a year and feel confident about it. Then, try and negotiate a supply of panels at a price that reflects the sale of those panels or the sale to you of those panels over the course of the year. Volume pricing is one of the ways to get a better deal.
Inverters - string and micro
When it comes to inverters there are two types; string and micro. There are several inverter manufacturers, but the key challenges that are going through the industry right now are the use of micro inverters versus the use of string inverters.
Micro inverters are beginning to become very popular. Historically their pricing has been a little higher because it’s now about adding a small electronic device at every panel, for every panel. Occasionally it reduces the amount of balance of system materials (which will be explained later) and therefore costs you may have to use.
With micro there can be less wiring involved, so there is some benefit in the balance of system cost of materials, as well as labor costs. Those things should always be taken into consideration when pricing out a system using a micro inverter over a string inverter.
As far as sourcing goes, smaller integrators will have to look to distribution. Try to stick with one or maybe two types of inverters that enable you to create project usage over the course of 12 months. That becomes more attractive compared to going to a distributor on a project-by-project basis and paying top dollar each time.
Do your research; look at the size of the system you’re dealing with or you may be paying for something much larger then what you need. You want to make sure you’re optimizing the size of equipment.
Racking systems are hardware used to mount solar systems to the roof or anchor them to the ground. They can have a variety of parts. One of the things you want to look for when choosing the right racking system is the lowest absolute cost to install a particular system. You may get some that have a lower unit cost on the component basis, but then the labor to erect them is much more others. So it’s always important to do a full cost evaluation.
There are many manufacturers out there and there are many different applications; for example, racking systems can vary according to the type of roofs. There can be flat roofs with penetration or flat roofs with no penetration.
Always be critical when looking at costs, which include any ceiling and roofing materials that have to be involved. The competitive bid process is always beneficial to any type of acquisition and this is no different. Finding comparable roofing products for a typical application will always help you drive costs down, but it does put the responsibility upon you.
Overall, racking systems benefit from competitive bidding but make sure you’re considering all the associated costs. It’s good to look at how much labor is estimated, it’s also a good idea to consult with people who have used those products.
Balance of system
The balance of system is literally everything else; screws, anchors, combiner boxes, circuit breakers, and so on. The obvious impact of scale comes into play here yet again; the bigger you are as an integrator, the more projects you do and the better negotiating leverage you’re going to have working with a supplier. They will give you the best price because they know they will be selling you a lot more of those components that are so typical in that system category.
You may find a really great deal on some electrical hardware somewhere, but remember to invest in the best quality. You don’t want to have to go back up there a couple times a year over the course of the 20-year life cycle and replace them. You’re going to end up destroying your profit. In the end, it’s the reliability of that product that will benefit your business.
When it comes to sourcing, remember: it’s always a good idea to see who is disposing of extra inventory; there will always be people out there that are getting rid of their products. Another thing to consider is franchising. Franchising can make it possible for smaller businesses to accomplish what they normally may not be able to do. A franchisor would be able to aggregate the demand of all of their individually owned and operated franchisees and then function like a large integrator. They can negotiate with manufacturers directly, and as a result you can get better prices on materials.