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How Technology Is Fueling The Push Toward Solar

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Solar energy in the United States has seen immense momentum throughout the years. When the Solar Energy Industries Association released its annual report in 2008, it concluded that U.S. solar photovoltaic (PV) capacity reached a total of 1.183 gigawatts — a stellar achievement at the time.

Contrast that figure with today, and the number is dwarfed by the United States’ installed capacity of 21.3 gigawatts, enough energy to power 4.3 million homes.

As to what is powering this widespread adoption, one only needs to look at the residential market. According to recently released research by GTM, 72 percent of the market growth in 2014 is a result of solar tech companies offering diverse financing solutions and easy-to-navigate web platforms. Going solar for homeowners has become as easy as online shopping.

The commercial sector isn’t as fortunate, outside of a few large-scale projects driven by Fortune 500 and utility companies. This impasse is mostly because small and mid-scale companies face a number of complications when it comes to investing in solar — the largest being a lack of easy and cost-efficient methods to evaluate and mitigate the risk of any given project.

Tech is changing that. First it made waves in the residential sector, introducing seamless tech platforms with creative financing options to make solar a reality for homeowners. Now it’s paving a path for similar, widespread national success in the commercial space.

Outpacing Commercial Solar

We often hear of large companies, like Wal-Mart, Amazon and Target, deciding to go solar in a move that makes both economic sense and decreases their carbon footprint. If you were to search for large commercial solar sites, such as major corporate headquarters, metropolitan arenas or vast solar arrays, you wouldn’t be hard pressed to find them. They’re abundant, and they’re generally well publicized as a part of any company’s corporate social-responsibility program.

The future of solar has never looked brighter.

However, just because we know of an Apple or Google going solar doesn’t necessarily mean that the greater commercial solar industry is on a consistent upward swing. It is merely a segment of the market that is able to access renewable energy at scale because of their vast resources and investor relations. A significant portion of small and medium-sized enterprises are not adopting solar at record rates.

In fact, in 2014 the commercial solar market was no longer the leading market segment when it came to installed capacity — that’s when residential took over. This flip of leading markets is due to two facts: one being that residents are able to install PV systems at cost-effective rates thanks to technology advancements in established solar companies, the other being that a significant portion of the commercial market is bottlenecked and untapped.

An untapped market is untapped potential, and the tech industry is beginning to take note.

Bringing Small And Medium-Sized Businesses To The Solar Grid

When it comes to making the actual investment, large corporations have economies of scale that drive down costs and increase efficiencies. Additionally, financing of solar projects for these large corporations is generally easier to come by, typically because they have reliable and accessible public credit ratings that satisfy Wall Street’s risk evaluation and mitigation criteria.

Aside from large commercial facilities, we are left with the small to medium-sized firms that haven’t been able to go solar in similar numbers as the nation’s homeowners and their large corporate brethren. Think restaurants, wineries, galleries, printing shops, local gift stores and local religious community centers.

With complex tariff modeling, demand charges, time-of-use rates and limited roof space, as well as layers upon layers of decision-making, an average sales cycle can eclipse 12-18 months. That is if the deal ever closes.

To top it off, most of these smaller commercial facilities lack those readily available and reliable public credit ratings enjoyed by corporations, so even if they are able to navigate the design process, persuading external investors of the viability of the project can be an uphill battle.

This is all changing, and the credit can be given to technology and innovation. With design and modeling tools from companies like HelioScope, Energy Toolbase, Wiser Capital and the National Renewable Energy Laboratory’s Building Component Library (built in conjunction with Concept 3D), the solar industry is beginning to access a large, often ignored market.

These companies have been able to develop software to streamline a complex design and modeling process, enabling solar systems to seamlessly work for the specific needs of small and medium-sized businesses.

The bulk of whether or not your favorite mom-and-pop sandwich shop down the street is going to go solar, however, largely rests on ensuring the cost of capital falls within acceptable risk tolerances for the deal to deliver required returns.

Again, because these types of facilities typically lack reliable and readily accessible public credit ratings that satisfy investor risk evaluation criteria, the cost of capital has generally been too high for many of these projects to take off.

An untapped market is untapped potential, and the tech industry is beginning to take note.

SolarCity, however, just announced its own foray into this space, utilizing California’s Property Assessed Clean Energy (PACE) financing programs to attach a solar lease agreement to a building’s property, essentially negating the need for a risk-rating score. Unfortunately, this option is currently limited to California.

The greater solution lies in technology. If every facility and project could earn a consistent, transparent and highly automated score, then the entire U.S. market would open up.

My own firm utilizes a proprietary cloud-based platform to optimize savings and determine any given project’s bankability. By automating the process and creating a marketplace for hosts, installers and investors, we have successfully brought new capital into a once stagnant market.

This underserved market is driving a new boom in solar. According to the 2015 Solar Investment Index, for example, a staggering 83 percent of investors will make an investment in solar a priority in the next five years, with one in five already having made commercial solar investment a priority in the same timeframe.

A Bright Future

It’s becoming increasingly clear that the new boom in solar lies in the innovation and disruptive nature of tech bringing down the cost of capital required to make more solar projects possible, as well as simplifying the entire design and sales cycle.

This is true of both markets. Homeowners have been able to reap the joys of lower electricity costs while ensuring a positive impact on the environment, and now the small and medium-sized business market is starting to enjoy similar benefits.

The future of solar has never looked brighter.

Featured Image: Gencho Petkov/Shutterstock