According to the Solar Energy Industries Association (SEIA), solar energy installation has been growing by an annual rate of 33% over the last decade.
“Thanks to strong federal policies like the Solar Investment Tax Credit, rapidly declining costs, and increasing demand across the private and public sector for clean electricity, there are now more than 130.9 gigawatts (GW) of solar capacity installed nationwide, enough to power 23 million homes,” the association writes.
A main factor in the increased use of solar energy is a decrease in cost. Per SEIA, the cost to install solar has decreased by over 60% in the last 10 years, which has made solar prices more competitive with other power generation methods.
However, by some estimates, only 1% of the potential solar market has been reached so far. But adaptation is picking up quickly with solar projected to become the source of at least 30% of electricity generation in the United States by 2030. The jump is expected to occur quickly because the cost declines in solar installation are beginning to become more prevalent in residential applications.
As with all new technologies, adaptation goes in a cycle. First to get it are the early adopters, who have the money to access the technology when it is at its most expensive to acquire. But as time passes, the cost of producing the technology decreases. In addition, more people become skilled at providing the technology. Eventually, the technology reaches a tipping point where it becomes more financially and physically accessible to the masses – and that part of the cycle is where many consider solar energy to be close to, if not entering now.
According to SEIA, “The biggest cost-decline opportunity in residential and small commercial solar exists in soft costs, which includes installation labor, customer acquisition, and permitting/inspection/interconnection.” And it’s in these areas of residential and small commercial – especially installation labor and customer acquisition – where solar energy franchises mainly operate.
Over the past decade, especially, a number of franchise opportunities have built their own programs allowing prospective franchisees who want to be a part of the solar energy industry an easier path into the field than going at it independently.
And if you’re hesitant about considering a solar energy franchise because you don’t want to or cannot do the installations, don’t fret! There are options that don’t include doing the physical installations.
There are many solar energy franchise opportunities that are white-collar in nature, meaning franchises are only responsible for bringing in the customers, then the corporate office takes it from there. As Arvo Solar states, “As the franchisor, Arvo Solar does all of the heavy lifting! We handle all designs, permits, utility approvals, arranging for all equipment, and installations! You are responsible for everything on the front end with regards to customer acquisition.”
But if you want a more hands-on approach, you have that option as well. For instance, here are the three options given by the Solar Grids franchise for operating its business:
- Focus on installations only. With this franchise method, you as the franchisee work with the company’s direct sales team for you do the installs with its “virtual sales centers.” The corporate wing of the franchise with the permitting, utility approvals, and equipment.
- Focus on sales only. In this franchise method, you would focus on the administrative side and work with one of the company’s installation franchisees to do the installation jobs you bring in.
- Do both.
And don’t forget about cars as a factor in the growth prospects of the industry.
While solar cars aren’t a thing, the number of drivers with electronic vehicles has been steadily increasing. Some electronic vehicle charging stations run off of solar energy. Not only do these stations need to be installed, they will also need maintenance and repair as well.
Initial Investment and Opening Costs for Solar Energy Franchises
The amount necessary to open a franchise varies depending on the unique business system and execution requirements for that particular franchise. The initial investment required for a solar energy franchise can range widely, mostly dependent on if an office outside your home will be needed.
For solar energy franchises, it is wise to factor in the lease or purchase of a vehicle to your initial budget estimates. Also, factor in what it will take to properly outfit that vehicle, if necessary.
A vehicle purchase is becoming more of a norm because of the trend in many industries of moving away from traditional storefronts, if possible. “Let’s face it, the way business has been done in the past will not be how business will be conducted in the future,” Sean Cochrane, SuperGreen Solutions founder and managing director, said when the franchise introduced its mobile showroom van concept in 2019. “Bricks and mortar is changing, some people don’t want a five-year lease, that’s why we’re introducing this.”
Our franchise profiles will present you with a basic range for the initial investment or minimum cash required to open a franchise. But when it comes to finding out the details of an initial investment, the franchise disclosure document (FDD) is the best place to look. Franchisors offer itemized estimates in their FDD based upon their experience establishing, and in some cases operating, units.
Keep in mind these estimates are just that, though—an estimate. Prospective franchisees should review the figures presented with a business advisor, taking into consideration their unique circumstances, before making the decision to enter into a franchise agreement.
Ongoing Costs for Solar Energy Franchises
Don’t forget about the additional costs required for nearly all franchise businesses. This includes expenses such as royalty fees, marketing fees, software fees, training fees, and more.
The most common is the royalty fee. Royalty fees are assessed for the continued use of the franchisor’s trademarks and patented processes, along with certain types of operational support. In addition to regularly assessed fees, other fees are charged on an “as needed” basis such as audit fees, or costs for additional, non-mandatory, training.
It’s important to note that while many initial and ongoing costs are detailed in the FDD, there are some costs inherent to business ownership, like employee wages or utility costs, that aren’t.