By Pamela Cargill
A version of this post was originally published on Chaolysti
The United States has quickly become one of the top solar markets in the world. This has happened even without a streamlined national incentive program like the feed-in tariffs that have propelled solar adoption in Germany, Australia, and many other countries. Though the federal investment tax credit (ITC) offers the closest approximation to a nationwide solar incentive, it demands a complex tax equity financing infrastructure to properly capitalize for third-party-owned deals and individual tax liability for direct ownership.
The market in the United States consists of a tapestry of solar policies, incentives, climate regions, micro-markets, and diverse consumer attitudes.
If you’re curious about how to navigate the U.S. market, either expanding from outside the U.S. or from one part of the country to another, here are some assumptions you should reconsider as you evaluate your expansion plans.
Success in One Market Guarantees Success in Another
… from Overseas into the United States
If you represent an EPC (Engineering, Procurement, Construction) firm interested in expanding into the U.S. market, your success in Germany, Japan, Italy, or other markets will not immediately translate into success in the U.S. market. The historical landscape of expansion into the U.S. is littered with the failures of exuberant EPCs who assumed their portfolio of projects and expertise in the overseas markets would immediately translate into success in the U.S.
Prospects in the U.S. want to understand your expertise in this market, with their utility, and in their authority having jurisdiction (AHJ). Shipping a lean operation of one or two good project developers who have been successful in Europe to the U.S. will not be enough to support success. Why? The market is too varied and complex.
… or from West Coast to East Coast (or vice versa)
To add complexity to this puzzle, the United States is an economically and culturally diverse nation. While much of the West Coast prizes entrepreneurial thinking and more “pioneering” qualities, the cultures of the East Coast and South are hyper-local and more wrapped up in tradition, history, and their sense of place.
For example, it would be detrimental to credibility to exhibit a lack of understanding of how local climate, like year-round rainfall, overcast summer months, or winter snow and ice, affect perceptions about solar energy.
Showing New Englanders solar-clad photographs of gigantic, modern, tile-roofed Southern California homes with sprawling backyard pools will also fall flat. New Englanders want to understand how the solar panels will look on their clapboard-sided colonial or three-bedroom ranch. To complicate matters, many New Englanders also hold deeper cultural biases against “outsiders.”
States are Homogeneous Markets
Not only are there 50 different states — within each state there are urban and rural areas with vastly different economies, lifestyles, utility rates, and local jurisdictional requirements. Take New York, for example. In the state of New York the utility tariffs, landscapes, business climates, regional economics, and regulations for doing business vary widely whether you are in:
Buffalo alongside Lake Erie
Ogdensburg by the Canadian border
Ticonderoga in the Lake George region
The White Plains suburbs north of New York City
New York City’s five boroughs (get ready to hire “expediters”)
For example, a few years ago, I drew a “territory” map of Massachusetts for a project manager new to the state. In an area smaller than the nine counties comprising San Francisco’s Bay Area, I delineated micro-territories where solar installers would not do business. Cape Cod and the Islands was a special territory in and of itself. Located North of Boston? Then they won’t travel to Southshore. And so on.
The Culture of Doing Business Is Similar Nationwide
On the contrary. On the East Coast north of D.C., the culture of doing business is hyper-local and based on networks of trust and tiny geographic clusters, some of which trace all the way back to the colonial era. People are more likely to do business with someone they know within their community or from within their established business circles.
Your market diligence will require much more than understanding local/state incentives and what types of business licenses you need to obtain. Cultural touch points for a Long Islander, for example, will be much different from those of someone living Upstate.
What Can Be Done?
Whether commercial or residential solar is your focus, there are lessons from either sector you can evaluate here.
Your market diligence should include research on lessons learned from those who entered and exited. Will they speak candidly about why they exited the market? Is public data available that shows incentives claimed and whether or not they won any market share or how they faltered?
Is it worth investing in a report from market analysts like GTM Research, NPD Solarbuzz, or PV Solar Report?
Can you learn about the local culture, relevant social touchpoints, and biases — and roll that understanding into your marketing, sales training, and customer service programs?
Disclaimer: Any opinions expressed on this site by persons not affiliated with PV Solar Report reflect the judgment of the author and not necessarily that of PV Solar Report.