A Peek Behind the Curtain

A Solar Insider’s Perspective

As many of you know, there has been a lot of volatility in the solar industry over the past year. The 30% residential tax credit went away, well sort of, as you’ll read about in another article in this newsletter. Around the same time, almost every large solar company either went out of business, downsized by a factor as much as 1/20, restructured, or diversified into other areas of construction.

That was on the heels of a very unfavorable ruling from the Public Utilities Commission the year before, where the value of solar power without batteries was dramatically reduced. Over the last three years, there have been several changes that, frankly, have not been friendly toward the solar industry.

Commercial solar was already hard to pencil out, and more regulations and higher costs have made it even more challenging. The number of batteries allowed was limited. Tariffs and special restrictions were added. It seems AHJs are changing the rules multiple times a year. New fire code updates introduced a surprising amount of ambiguity and complexity. We have also seen unprecedented CSLB changes, lawsuits, and more changes.

If one were a conspiracist, you might swear there are powerful, wealthy entities trying to slow the implementation of residential solar, and really any solar that is not utility- or government-owned.

That said, this is nothing new, perhaps accelerated. It’s expected; the solar industry has had ups and downs every year since going mainstream around 2010. For those of us who were there at the start and are still here today, resilience and creativity come with the territory. We are not running for the hills because the sky is falling. In fact, we are excited about the future, from taking homes completely off-grid to powering light commercial buildings and large industrial facilities, all with the power of the sun.

Even with all the noise, we are still able to find the sweet spot for a good return on investment by evaluating each client’s needs individually and being creative. The path toward a distributed, renewable grid is obvious, even if it is not always easy.

Somewhat ironically, the utility companies’ enthusiasm for raising rates is one of the main things that keeps us in business. With rates increasing double digits, sometimes year after year, the return on investment today is about the same as it was last year. While we expect more changes ahead and some loopholes to close, we actually believe the return on investment could improve over time. That is not to say anyone should wait and miss out on the benefits available today. What it does mean is that despite the shakeup in solar companies, business models, and market presence; the calm, the nimble, and the thoughtful have a bright future. So do those who want to take advantage of the massive amount of energy landing on our roofs every day.

We look forward to servicing our clients for decades to come, meeting new ones, and continuing to be a source of truth in an industry that is always evolving.

Nate Otto
CEO, Hot Purple Energy