This post is part of a blogging series by marketing students at the Presidio Graduate School’s MBA program. You can follow along here.
By Mark Sutton
At the Affordable Comfort, Inc. (ACI) conference in San Francisco, an event for the home energy efficiency industry, a panel of high-level VCs posed the question: which company or companies will emerge as leaders in the field? To look for a model, panelists pointed to the residential solar market, whose floodgates have opened largely due to two factors:
1) Financing options that include no money down, and 2) Effective marketing. Companies like SunRun, which is largely a finance company, navigate the maze of financing, tax breaks, and grants, and get a simple message to consumers who want solar installations on their home.
Energy efficiency (EE), which is more cost effective than solar, has its challenges from both the financing and marketing perspectives. Most notably is the difficulty in quantifying the amount of savings and how the monetize those savings. In the case of solar, the modules can be leased by the homeowner, and the price of electricity can allow for a revenue stream which leads to an effective financing structure. Solar also benefits from the cash grants available from the government. While some EE grants exist, in 2010, the Property-Assessed Clean Energy (PACE) program was gutted cutting off an important source of funding for residential EE.
Once the financing issue is solved, the marketing message needs to be clear and simple, and right now there is what one panelist called a “Prius branding opportunity.”
Companies like SunRun, FirstSolar, and SolarCity have a clear message and use Google Maps to identify solar opportunities with potential customers over the phone. Energy efficiency has more granular details to examine. Each home is set up differently, and reductions are harder to quantify. A home energy audit will include a number of tests, including air leakage, ducts, load calculations, appliance and lighting audits, and more.
One method that could be used by the industry to reach out to consumers who are efficiency minded is the standardization of metrics. The Energy Performance Score, created by the Oregon-based Earth Advantage Institute, bills itself as a “Miles-Per-gallon rating for Your Home.” The Home Energy Rating System (HERS) is another program to measure home energy usage. Whichever metrics are widely adopted, having a rating that is well understood by homebuyers, sellers, real estate agents, and long-terms owners will provide an incentive to incorporate EE upgrades.
Recently, SolarCity, the nation’s leading rooftop solar provider, has thrown its hat into the home EE ring. For the consumer, bundling the EE upgrade with a solar installation makes sense, as one company can handle both jobs. For SolarCity, it is a natural extension of their brand, and builds on the financial and marketing expertise it has already developed. Wondering how much you can save with solar? Check out their solar calculator. Confused about local building codes? Solar City can help you as it already has a foothold in over 500 areas. Request a free consultation, and be connected automatically with an agent who can use Google Maps to inform you about how effective solar can be for your home. Perhaps you already have solar, but want to upgrade your energy effiency and save even more. (Unfortunately, my home will not work for solar, because as Google Maps shows, we have skylights on the roof.)
The offer of no money down and instant savings with solar is a compelling one that has put SolarCity at the top of the rooftop solar market. So is it that the answer to the VC’s question of who will be the SunRun of home energy efficiency, ironically, is SolarCity?