Shopping for a set of solar panels for your roof can be daunting. You can comb the web for reviews and cautionary tales, or make a lot of phone calls to compare deals. But a startup with a small grant from the U.S. Department of Energy plans to launch a new online marketplace next month that aims to take away some of the anxiety and time it takes to make a smart solar decision.
The startup is called EnergySage, and it has designed a site to enable consumers to get multiple bids from installers, view those bids in formats that make it easy to compare various line items in their quotes, and even check out the specs of the solar energy systems already installed in their neighborhood. The site is in private beta testing, but already has dozens of installers and homeowners, said John Gingrich, vice president of corporate development at EnergySage. The company has raised less than $1 million since its inception, including money from angel investors and the DOE grant, and currently it’s working on raising another $1 million round.
Buying a set of solar panels and getting them installed are big purchases. The prices rival that of a new car and the technologies involved are unfamiliar to the vast majority of people. “We help consumers get apples-to-apples comparisons and answer questions to help them cross the finish line,” explained Gingrich.
Wading through the solar service providers
It’s only been in recent years that new companies have appeared to serve the solar retail market, thanks in big part to state incentive programs such as the California Solar Initiative, which offers rebates and tax breaks for rooftop solar. Some of the better known, venture-backed solar service startups are SolarCity (s SCTY), Sungevity, and SunRun.
Many of these solar service companies began to introduce leases to entice those who don’t want to fork over tens of thousands of dollars upfront for a solar energy system. In California, the largest solar energy market in the country, over half of the residential rooftop systems installed in 2011 involved leases, according to state regulators. The popularity of such alternative financing options also propelled the growth of companies such as SolarCity, which pulled off an initial public offering in December.
I wrote about a need for a “Kelley Blue Book” for solar back in 2011 because objective and informative sites for consumers were lacking. States that subsidize solar installations often have some advice to give, or publish a list of installers that have gone through some vetting process, but being on a list doesn’t guarantee good services.
EnergySage’s site could be a useful tool. The company, founded in 2009, launched its beta site about 18 months ago, and it already offers a shopping guide for solar and other clean power technologies, such as solar water heaters and geothermal pumps. But the new site will have more features, like reviews and comparison charts, and will serve as a communication center for consumers to connect with installers.
EnergySage designed the new portal not just for consumers but also for the installers. One of the goals of the project is to reduce companies’ customer acquisition costs, which include the expenses of advertising and signing up customers. Anecdotes put the customer acquisition cost at around 15-20 percent of the cost of each system sold for some installers.
EnergySage makes money by charging installers a commission, on a per-watt basis, for every new contract signed. The company used to charge based on the gross sales of a system, but the often big variations on system prices between two neighboring states drew complaints from installers who argued that they shouldn’t pay more for a sales lead.
Not every installer will be able to use the site to find new customers. EnergySage reviews and signs up installers, and there are around 50 now across New England and in New York, New Jersey, Pennsylvania, Maryland and Virginia. By the end of this year, the company wants to include California, Washington, Oregon, Hawaii, Colorado and Florida.