Solar as a Service providers should try to unlock non-energy related revenue

U.S. Solar

 

Solar as a Service (SOaaS) providers should focus on unlocking value otherwise unavailable to customers, says a new research from Navigant Research.

Following a recent decline in solar leases and power purchase agreements (PPAs) in California (which represents roughly 60 percent of the US market), traditional SOaaS players began joining financial players and offering loans instead of leases as a way to retain market share.

However, to increase their long-term survival prospects, players must find a way to unlock non-energy related revenue, and ideally in a way that creates win-win situation for solar service players, the research said.

“SOaaS was popularized in the US between 2010 and 2015 and it seemed that solar leases were going to be the winning business model, allowing large players to both increase the market size and displace local installers,” says Roberto Rodriguez Labastida, senior research analyst with Navigant Research.

“But since the share of solar leases and PPAs plunged in 2015, Navigant Research does not expect that the trend against leasing will reverse and anticipates that the revenue that SOaaS players receive per watt of installed capacity will decline as a higher share of installations move toward loans,” Labastida added.

According to the report, transforming solar leasing and PPA providers into virtual power plant providers could be a viable way for SOaaS providers to increase their value to customers going forward.

Strong consumer-facing brands like SolarCity, Vivint, Sunnova, or SunRun and their current customer relationship expertise could open up new revenue streams key for provider survival, the research said.

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