Community solar is the hottest vertical in the solar space and every company with any connection to delivering power from the sun is racing to be out front. But solar developers blinded by this gold rush mentality could find themselves in a precarious situation down the road if they don’t pay attention to the power of brand. More particularly, community solar is a space that cries out for a sustainable, purpose-drive brand in order for project owners to experience long term success. My experience in the retail electric space has taught me valuable lessons that developers in the community solar space ignore at their own risk.
Community, or shared solar, is a way for anyone who pays an electric bill to share in the benefits of solar power without having to install anything at home. Rather, households subscribe to large projects in their area and get virtual net metering credits from the solar production. Their electric meters virtually spin backwards as their share of the project produces power for them each month. My company, Neighborhood Sun, is a market leader in the space in Maryland and we are looking to expand nationally. I founded the company as a B Corporation because it is a purpose-driven enterprise with the mission of bringing solar to everyone, not just the select few.
Previously, I founded and ran Clean Currents, the Mid Atlantic’s premier green energy electric supplier, also a B Corp. What I’ve witnessed in the retail electric space applies directly to community solar. The vast majority of retail electric suppliers acquire new customers based on savings compared to the utility. This can be a teaser rate that gets hiked after a few months or a fixed contract that starts below the utility but may not remain cheaper if utility rates go down. Indeed, studies in both New York and Maryland have shown that thousands of people who switched to competitive suppliers ended up paying more for their electricity than they would have if they remained with the utility.
How does this relate to community solar? Because the same mentality on customer acquisition that drove retail electric suppliers is driving most aggregators, the customer acquisition businesses in the community solar space. It’s all about the savings. Acquiring customers simply on the savings is a very dangerous game for project owners to be part of. While it might help fill up a solar farm at a low cost and quickly, it puts the long term health of the project at great risk. Consumers who are enticed by the savings of a community solar offer will switch to a competitor the second they hear about an offer with more savings. It’s that simple. Project owners counting on a 25-year revenue stream have their heads in the clouds if they really think that customers acquired via promises of savings will stay with them long term. In short, their financial models are pure vaporware.
We take a very different approach at Neighborhood Sun. It all begins with the most authentic, credible green brand in the business. Building this brand means sometimes taking actions that don’t offer an immediate ROI. Working in the community even if our bottom line is not in play, radical transparency, giving customers a true voice in how we run things, advocating for positive legislation, and adopting the mindset as a team that we are to be humble, and of service to the communities where we operate are all part of this approach that helps us build brand credibility. The fact that I, as the company founder and leader have put two decades of my life into fighting climate change and supporting clean energy ads to this credibility.
Our brand purpose extends to how we acquire customers, which will ultimately impact how we manage customers. We are confident that like Clean Currents before, we will have an industry-leading low attrition rate. While savings are certainly a part of our sales pitch, the big driver for our consumer acquisition is community. People have a yearning for authentic community and we use “community solar” as a vehicle to build real community. Our members feel like they are part of something bigger than themselves. They are not just buying a product, but proclaiming where they stand and with whom they stand. They proudly display lawn signs, joyfully come to our events, and invite us into their living rooms to talk. When they are inevitably offered bigger discounts from competitors, they won’t leave without a moment’s thought. They would be giving up something more valuable than a few dollars in savings. They would be turning their backs on their new community and the values they share.
Any entrepreneur looking to use business as a force for positive change in the world has to first put a stake down in the spot where his/her/their values are deepest. Then, building from that spot, the social entrepreneur can attract employees, customers, stakeholders, and others to join the new community created by the business, founded on those values.
This version of community we and our members are building together would not be possible if we did not first do the hard work of building a credible, authentic green brand. It will not continue if we fail to nurture and grow the connections between our members and each other, and our team. In community solar, where project owners are looking to have a steady 25-year revenue stream, meaning a high attrition rate is anathema to them, the work we’ve done and will continue to do at Neighborhood Sun brings value that translates the power of a sustainable brand into a strong financial outlook for the assets.