Potential solar power customers are becoming more savvy every day. They do their research, get multiple estimates, and make sure they compare apples-to-apples with all those estimates.
In a market like this, separating your offer from the others can be difficult. One strategy companies are turning to — and customers are increasingly asking about — is production guarantees. In this blog we’ll take a look at production guarantees, why you should offer them, the potential risk factors, and what you need to make sure you meet them.
What are solar power production guarantees?
As the name indicates, with a production guarantee (PG), the solar installer guarantees the homeowner that the installed system will produce a certain amount of energy over a certain amount of time.
Since solar panels are generally a long-term investment, production guarantees are commonly offered for 10-to-30 years. Guarantees often step down over time, for example guaranteeing 90% of a certain production amount at 10 years and 80% at 20 years.
While the specifics of plans vary, if there’s a difference between the actual production and quoted production, the installer generally reimburses the homeowner in some way.
This may come in the form of making tweaks to or repairing the system, and/or paying the homeowner for the difference. The range of what installers offer is wide — with some offering to pay double the difference between the guarantee and actual production, for example — but generally include:
- A guarantee that the system will meet a certain percentage of guaranteed output
- A cash payment for any performance under the guarantee
- System maintenance to resolve the problem
Making the solar energy production guarantee model work
For new renewable energy systems, production modeling is extremely important to decision making: accurate projections can clearly illustrate the power production expectations for the duration of the equipment’s lifespan.
When comparing their options, solar customers look for the system that will generate the most energy. To make their investment more of a sure thing, buyers are more likely to choose a provider with energy guarantees set over a long period of time.
To generate accurate production guarantees, modern installers must use qualified development tools designed specifically to accurately calculate solar output. While considering the system size, efficiency, location, sun irradiance, and more, today’s advanced solar software platforms can instantly project decades worth of solar production and cost savings against local utility power.
What’s the difference between production guarantees and warranties?
Production guarantees cover power production, not the physical assets involved in solar production. Most solar installers also offer equipment warranties of up to 25 years on parts like panels, inverters, and racking systems.
While production guarantees are often referred to as “production warranties,” as the name implies, they cover the actual production of a customer’s system, not the physical materials.
It’s important to note that battery storage is usually not covered in a production guarantee. Instead, it generally comes with a manufacturer’s warranty.
Why you should offer production guarantees
For installers, production guarantees can help sales in a couple ways. First, they give homeowners peace of mind that, even if the system doesn’t deliver as promised, they won’t be on the hook with higher energy costs.
Companies can also use production guarantees as a way to differentiate themselves from competitors. “Choose us, we’ll guarantee your energy cost savings,” can be a compelling closing pitch, especially if competitors aren’t offering them. If competitors are offering them, finding a way to improve your guarantees can also give you a leg up.
Designing a system that can meet production guarantees
Of course, for production guarantees to be cost effective, any system you install needs to live up to those guarantees. Paying customers for energy your installation didn’t produce is a good way to lose money.
The good news is that it’s very possible to design production guarantees that are both good sales tools and realistic to meet. For example, using a blend of solar design software and know-how Altair Solar hits virtually 100% of their production guarantees.
So, how can you put yourself in the best position to consistently meet the PGs you offer to customers? Let’s look at some tools and techniques that will get you started on the right track.
Solar system design software
Let’s start with the obvious: No software solution can guarantee that you’ll meet production guarantees.
Solar design software can, however, help you get started on the right foot. After all, the first prereq of meeting solar production guarantees is accurately designing the system in the first place. If you design a 5kW system and make a PG against that number, but your layout doesn’t correctly account for shading, or the exact angle of the sun, you’re in the hole before a panel ever hits the roof.
Let’s look at some features that help.
Bankable shade reports
Shading is the bane of any solar installation. Shade from nearby obstructions can affect performance, so it’s important that you can model panel shading as accurately as possible. Software that offers bankable reports that have been validated by NREL and other authorities is the best bet for making sure the shade analysis for any site is accurate.
HD Imagery & LIDAR
Remote site design saves time and money. Full stop. To make sure those designs are as accurate as possible, however, you need the clearest possible images of the site, including roof features and obstructions.
Thankfully, most solar software now offers HD imagery, but to help meet those PGs, there’s one more level to look at: the HD package has to be updated regularly and hyper-accurate. For these reasons, software that has multiple image sources, like Google HD and NearMap, is the best bet.
LIDAR also adds to the accuracy of designs by providing pinpoint, 3-dimensional information about a site, including building and tree heights, other obstructions, and even roof slopes. A solution that has both LIDAR and HD imagery helps you produce accurate power estimates, without ever getting up on a roof.
Accurate irradiance mapping
Irradiance and performance simulations help test your designs against real-world data. Irradiance maps, in particular, show where on the roof gets the most sun, and can identify how obstructions and the specifics of a roof will affect how much light the panels get.
Software that lets you easily update your simulations can help you identify the ideal amount of panels for a project, and translate that into accurate power production potential estimates. It also helps consultants easily explain to homeowners why they’re placing panels in certain areas for maximum energy output, and not in others.
On-demand modeling services
A big part of using production guarantees is to help you sell. And a big part of selling is making sure the customer understands exactly what they’re getting.
Even the best solar designers can use a hand. Whether it’s a particularly complicated project, or your business is too busy to quickly turn around accurate designs, or you want your designers to be able to help out more with all aspects of a proposal, or any number of other reasons, sometimes you need some help.
On-demand design services, like Aurora’s 3D Modeling Service (3DMS), can help you deliver dead-on accurate 3-dimensional models in less than three hours — with an average time of about an hour (contact us to see about plans that guarantee 30-minute turnaround times). You send the specs, one of Aurora’s designers takes on the project, and a 3-D model comes back that’s ready to go. And since experts create the models, you can feel confident that they’ll be accurate.
For more information on important solar software features, check out our Big Book of Solar Software Must-Haves.
A note on weather
To be extra careful with your production guarantees, consider consulting historical weather data for variances. The weather data used for simulations in Aurora is a Typical Meteorological Year (TMY) format, meaning that it represents an average year. While areas with steady climates may not vary too much year-to-year from that average value, some regions can see substantial dips in production in years with more storms or clouds.
You may also want to have a disaster clause to handle disruptive global events like the 1991 eruption of Mount Pinatubo, which is estimated to have blocked 10% of the sunlight for the year.
Factors that can affect system performance IRL
You know this, but let’s put it out there: Your job isn’t done when the system is installed. While an accurately designed, properly installed system is crucial, that’s just the start of potentially 25+ years of power generation. Every site has its own personality and unique issues, so you can’t overlook system maintenance. In our series on PV system losses, we identified a few common categories that can cause a system to underperform:
- Nameplate, mismatch, and LID losses: These are factors that reduce the amount of direct current (DC) energy produced by the solar panels before that energy is converted into alternating current (AC) by the inverter for use in the home and on the electric grid.
- Wiring, connections, and system availability: These refer to factors like how the system is wired, resistance due to wiring and connectors, and system down time.
- Soiling, snow, and system degradation: This captures the amount of sunlight that is blocked by dirt and debris that accumulate on solar panels over time.
- Tilt & Orientation, Incident Angle Modifier, Environmental Conditions, and Inverter Losses & Clipping: This catch-all group involves some values that are usually automatically calculated by your solar software, but can have an effect on an installation’s efficiency if they aren’t accurate.
A lot of these factors can be addressed at the time of system design — for example, making sure your system wiring is designed correctly and shading is calculated accurately — with the right solar software. There are others, like system outages and soiling, that installers can actively mitigate after the install.
Panels that aren’t operating efficiently can quickly get an installation behind a production guarantee percentage. One way to make sure a customer’s panels keep working like new for as long as possible is by providing ongoing maintenance — often referred to as O&M (operations and maintenance).
What’s involved in O&M for solar? It’s generally a combination of preventative and corrective maintenance, offered either by the installer themselves, or through a subcontractor. The services can include tasks like solar panel cleaning and regularly checking components to ensure that the system is operating efficiently.
As an added bonus, O&M is a great way to keep in touch with customers, make sure everything is going smoothly, and be the first to know about any additional work they’re considering. It’s also a great way to show value and stay top-of-mind for referral leads for new customers.
In addition to performing maintenance on installations, tracking system performance can help to nip any potential under-performance problems in the bud.
This is where system monitoring is crucial. Just as it’s important that customers find out there’s a problem with their panels before they’re surprised with a high electric bill, installers don’t want any surprises when it comes to production guarantees.
Therefore, close monitoring of each customer’s system to identify issues before they become problems is a must. There are many monitoring options out there, just make sure you’re using one that identifies problems quickly and alerts you automatically. And make sure you have a system in place so that alerts get escalated to the right people quickly, so small hiccups don’t become problems that cost you money down the road.
Note that this monitoring can be a selling point in itself. Certain solar consumers are interested in the “plug-and-play” model — they want the savings of solar, but don’t want to think about it. Selling these customers on your ability to root out problems quickly and efficiently can be a real differentiator.
Likewise, as solar has gained popularity, there has also been a rise in solar “nerds” [raises hand], who are interested in closely watching their system’s production. A robust user interface that provides insights into their system can be a selling point, not to mention the fact that these customers can be good self-reporters on any issues that may be affecting performance.
The solar industry is tough, and companies need every strategy at their disposal to get ahead. Production guarantees can be a valuable tool in your belt — both for sales and keeping an ongoing relationship with customers — provided you take the necessary steps to be as sure as possible that you meet them.
Solar power production guarantees are a great way to help close and maintain new client relationships. They let customers know that you stand by the quality of your products and services, and that they’re designed for decades of efficient use.
The key is: They have to be accurate. If they aren’t, not only will your customers lose confidence in your company — hurting potential referral business — but you’ll be left holding the bag to cover the shortfalls.
Featured image by Mika Baumeister