News Column

Solar Firms Warm Up Buyers with Trips, iPads

June 30, 2013
solar power

Signs that Hawaii's superheated solar energy market is beginning to cool have some photovoltaic installation companies pulling out all stops with giveaways and other promotions to drum up new business.

Installers are offering everything from free trips to Las Vegas to $1,000 cash rebates. One company has even teamed up with local mixed martial arts champion BJ Penn to offer a line of solar panels that bear his name.

Industry players say the novel marketing tactics are being driven by increased competition from a growing number of PV installers in a market that has seen growth rates slow in part because the value of state tax credits available to owners of PV systems dropped Jan. 1. There are 342 businesses in Hawaii with the word "solar" in their name, according to the state Department of Commerce and Consumer Affairs.

The growth in solar companies and discounts could signal a glut in the market as demand begins to slow.

On Oahu, which has the state's highest concentration of solar panels, the number of building permit applications for PV systems fell in May, year over year, for the first time since the 2010 when the state Department of Business, Economic Development and Tourism started tracking the numbers. And for the first five months of 2013, permits for solar systems were running about half the pace of the last five months of 2012.

"If this keeps up this month and in the months to come, it may constitute a trend or at least a slowdown from the superheated numbers of 2012," said Marco Mangelsdorf, a Hawaii island PV installer who compiles data on the industry.

"While it may be too early to say that there's a growing air of desperation among many PV integrators in the state, the apparent shrinking pie, especially when one compares the first five months of this year to the last five months of 2012, is prompting an expanding number of companies to offer bigger and bolder bribes to get homeowners to pick them," Mangelsdorf said.

A national solar industry trade group recently reported that the amount of PV generating capacity installed throughout Hawaii fell in the first quarter of 2013 to 43.7 megawatts from 53.6 megawatts in the fourth quarter of 2012.

The report from the Solar Energy Industry Associated, a Washington, D.C.-based trade group, cited the change in tax rules as a major factor restraining growth of PV installations. The Hawaii Department of Taxation tightened the rules covering the state's 35 percent renewable-energy tax credit in part because of concerns the program was being abused by taxpayers.

The Hawaii chapter of the Sierra Club and others who opposed the new rules estimated the changes will reduce the size of the average tax credit by 50 percent.The Sierra Club challenged the Tax Department's ruling in state Circuit Court. However, a judge dismissed the case June 14, saying the Sierra Club didn't have a legal basis to challenge the rules.

The trade group's report also noted that the state's two electric utilities already have high penetration of solar energy on certain parts of their grids and that there are technical constraints on the amount of additional PV that can be installed.

Nonetheless, the group forecasts continued growth in Hawaii PV installations for all of this year, although at a slower pace than in recent years. The forecast of a 66 percent increase in installed PV generating capacity this year compares with growth rates of 172 percent in 2012 and 150 percent in 2011.

"Undoubtedly, Hawaii's PV market will continue to expand in 2013, but it will not be without growing pains," according to the report.

Hawaii's PV industry got a boost near the end of 2012 when homeowners and businesses rushed to have systems installed under the old tax rules, said Todd Geor go papa da kos, managing principal at RevoluSun. Installations then slowed in early 2013 when residents waited to see whether the state Legislature would pass a bill superceding the Tax Department's rule change. Versions of the bill were endorsed by the House and Senate, but the measure died in conference committee in the waning days of the session.

Now that the uncertainty about the tax rules is no longer an issue, business has begun to pick up again at RevoluSun, Geor go papa da kos said. "We're expecting sales to increase throughout the remainder of the year," he said.

Increased competition in the Hawaii market has meant RevoluSun has had to "work harder on the marketing side," he said. But the company had done so without resorting to promotional offers.

"What we're offering is the best equipment with the best warranties out there," Geor go papa da kos said. "With our volumes we're able to offer systems that are more valuable at comparable prices to the competition."

In addition to free trips and cash rebates, other PV installers have offered such incentives as free solar panels and iPads with a minimum purchase. Still others have offered payments for referrals that result in a PV system sale.

Solar Consultants, a Kapo lei-based PV installer, recently started a campaign offering its customers a discounted price on "BJ Penn Power Panels" being marketed by the mixed martial arts champion. Solar Consultants spokes man Michael Sca lera said the company will donate $500 to the Penn Hawaii Youth Foundation for every residential installation it completes using the PV panels.

The panels carry a third-party guarantee of 10 years for materials and workmanship, and 25 years for power output, Sca lera said. "We're helping BJ introduce his panels to the market," Sca lera said.

ProVision's Mangelsdorf said his company has avoided promotional campaigns to attract new business.

"Rather than going in this direction, we decided to share with the buying public that we've been in existence for 15 years doing nothing but PV," he said.

"I think that there's something to be said for going counter to the bells-and-whistles approach to solar sales and marketing and giving people confidence that they're dealing with a company with the deepest of roots in this line of business."

Credit: Alan Yonan Jr.





Source: Copyright Honolulu Star-Advertiser (HI) 2013