Note: This blog was originally published in February 2021. It was updated October 25, 2023 to reflect recent information. If you have any questions, please contact us.
The solar industry is growing, and its sun is still just starting to rise. Solar power continues to lead the way when it comes to renewable energy — and arguably energy in general. According to SEIA data, in the first half of 2023, 45% of all new electric capacity added to the US grid was from solar.
Likewise, solar installation professionals is among the fastest growing professions in the United States. The trade is projected to enjoy a 22 percent growth rate between 2022-2032, and the 2022 median income was $45,230 per year.
This data represents a promising prospect for contractors looking to cut their teeth in this exciting business. If you’re wondering what it takes to start your own solar business, this post is for you.
How to start a solar business — beginnings
Of course, there’s much more to solar installation than slapping up panels: there’s general contracting, roofing, metal fabrication, sales, repair and maintenance, consultation, landscape design, and so much more.
The best place to start a new solar business is between the cracks of large, over-saturated markets. Find out what solar professionals are doing in your area by checking in with local SEIA chapters and chambers of commerce, and conducting internet searches. It’s highly likely that even if your market is saturated with traditional solar businesses, you can find a niche that only you can fill.
Solar incentives
Becoming an expert means more than knowing your product. It requires having your finger on the pulse of the various rebates and incentives available, an important differentiator for companies looking to get ahead of the pack. Businesses that do the research to save their customers time and money have a leg up when it comes to getting the contracts.
Solar sales
Starting a solar business doesn’t necessarily mean you’ll need a crew up on roofs installing panels. If sales is your thing, there are many businesses that focus on just that.
These companies do all the work of selling solar systems: getting leads, qualifying them, doing in-home or virtual consultations, and getting the customer to sign. Once a customer has signed on, these organizations then work with a contractor that takes care of the rest of the installation process.
With the recent improvements in solar sales software, it’s easier than ever to stand out from the crowd. Click through this Tourial to see how Aurora’s reimagined Sales Mode can help you sell with confidence and close more sales.
Solar installers
Solar installers are usually the most saturated business in the market. If you’re wondering how to start a solar installation business, you might want to start at the basics: Roofing. If you’re a roofer, solar installation could be a great option to add to your business. The solar and roofing industries are starting to converge, and for good reason. Solar panels and roofs have about the same lifespan (approximately 25 years), and savvy roofers are realizing the one-two punch of installing a new roof and solar system simultaneously. Whether you’re a roofing contractor or solar installer, there’s a lot of overlap between the two, and plenty of untapped market opportunities for incorporating roofing and solar into your business plan.
What is a PV system?
Before we move on, let’s take a quick look at how a PV system works to get a better idea of how you can make money building one.
How does a solar photovoltaic system work?
Solar panels convert the energy of the sun into electricity through a process called the photovoltaic effect. When a photon hits a photovoltaic (PV) device, its energy knocks electrons in the material. These electrons begin to flow, producing an electric current.
At a high level, the process of how solar panels works involves three primary steps:
- Solar cells within solar panels absorb light from the sun, which causes electric current to begin flowing.
- An inverter converts DC electricity to AC electricity.
- This electricity is used to supply current energy demands in the customer’s building and excess electricity beyond what the customer can use is exported to the grid (or used to charge a battery).
The photovoltaic process occurs at the solar cell level. Solar panels are composed of multiple cells, and PV systems are a series of solar panels wired together (called “stringing”) to provide appropriate voltage to the system’s inverter.
After a PV system is installed, there’s nothing standing between a customer and cheap, green energy.
Solar company licensing & certifications
Solar licensing
Not every state requires solar licensing, but some do. Keep in mind that if you’re planning on working outside of your home state, you’ll need licenses for any state you want to work in. For states requiring licenses, you’ll often need a plumbing or electrician license, or both. Some states require a specialized solar contractor license.
Check here to check on what type of licensing you may need in your state, region, or municipality.
Solar certifications
Even if you don’t need a license to operate in your area, earning a solar certification is a great idea. Solar certifications are an important way to promote customer confidence, putting you ahead of the average uncertified business.
Certification can also lead to more income, with certified solar professionals earning an average of $11,000 more annually. Getting certified may also allow you to operate in more than one municipality or state, increasing your competitiveness.
The North American Board of Certified Energy Practitioners (NABCEP) voluntary certifications provide national standards for PV professionals, certifying they have the skills, experience, and competency to set themselves apart. NABCEP’s certifications include:
- PV Installation Professional (PVIP)
- PV Design Specialist (PVDS)
- PV Technical Sales Professional (PVTS)
- PV Installer Specialist (PVIS)
- PV Commissioning & Maintenance Specialist (PVCMS)
- PV System Inspector (PVSI)
Set up your solar business
You’ve nailed down your niche, identified solar certifications and licenses, and are ready to make the jump. Let’s take a dive into how to start a solar business from the ground up, starting with the legal stuff first.
Establish an LLC
An LLC, or limited liability company, is a business structure set up by state statute. LLCs provide several benefits, including liability protection, flexible structure, and tax advantages. They provide the same limited liability as a corporation but are much cheaper and easier to form and operate.
In most states, getting an LLC entails choosing a name, selecting members (which can include just you), creating articles of organization and operating agreements, and getting an EIN (employer identification number). You’ll then need to obtain any seller’s permits and licensing required by your state. Check your state’s LLC requirements for more information.
Business insurance
The right insurance coverage is essential to mitigate potential risks and liabilities. Every contracting business must meet general insurance requirements, but there are a few considerations specific to the solar industry. Here’s your solar business insurance checklist:
- General liability insurance
- Workers’ compensation
- Automobile liability insurance
- Excess/umbrella liability insurance
Most contractor general liability insurances provide a minimum of $500,000 coverage. Keep track of your inventory, equipment, and properties, and get the right insurance that would cover the worst-case scenario. Do yourself a favor and get the right insurance before you even land your first contract. Click here for an in-depth look into the right solar business insurance.
Establishing a solar team
1. How to find salespeople
Salespeople are the backbone of most solar businesses. Regardless of your niche, chances are that someone on your team is making at least part of their paycheck knocking on doors and making phone calls.
When seeking out a salesperson, here are three elements to consider when vetting your candidate pool:
- Knowledge about your niche
- Passion and persistence
- Familiarity with questions and concerns that customers have about solar
It’s crucial that you foster a culture of customer satisfaction in all of your employees, but salespeople in particular. They are usually the folks leading your conversion process and are often the face of your business.
If an in-house sales team isn’t feasible, there are several options available for sales outsourcing. Many businesses exist that specialize in outsourcing solar sales for installers, consultants, and retailers.
2. Ramping up a team
Start out with nothing but the best right from the gate. Find team members that are NABCEP certified (see above). If your team isn’t certified, give them the time and resources to do so.
Make sure your salespeople, installers, marketing team, and others know the ins and outs of your product. Give everybody on your team the time and resources to learn about your product and services.
Your dream team doesn’t have to be all employees. Network with other solar experts outside of your niche. They will become invaluable sources of help and referrals if you keep at it.
3. Setting up compensation structures
Solar salespeople are usually paid by commission. Commission payouts are usually paid as a percentage of the total contract price or as a cut of the base contract price.
Commissions have various pros and cons. On one hand, they can motivate your teams to work hard. On the other hand, commissions may encourage your salespeople to sell more than a customer needs, take on cost-prohibitive projects, and inflate project costs above market rates.
Read more on common commission structures in the solar sales industry today.
Pro tips: Avoid these solar sales barriers
There are many barriers when it comes to getting a solar business off the ground. Here are three common ones that can be easily solved with the right solar software.
Incorrect or inefficient designs
It’s all too easy to under- or over-engineer a solar system. Incorrect or inefficient designs are a surefire way to sink your business. Aurora Solar’s sophisticated solar design software uses technology like LIDAR-based shade analysis and AI-assisted 3D modeling to give you a pixel perfect design almost instantly — without a truck roll.
Electric quotes from customers
Customers are often wary of providing their electricity bills. Just a few days can mean the difference between landing a new customer and losing them, so make this process as seamless as possible for your customers.
Most electric customers receive a bill in the mail every month. If they don’t, they can likely access it online from their utility. Either way, Aurora can provide a forecast of year-round energy usage from just one month’s bill — taking into account factors like weather, HVAC, and more.
Take this opportunity to remind your customer that making efficiency upgrades in the home could drastically improve energy efficiency.
And don’t forget to study up on the net metering rules for your state. Being able to sell excess power back to the grid can be a huge selling point for solar installations.
Permitting problems
Flawed designs can lead you straight back to the drawing board. If a solar design isn’t compliant with state or local regulations, your plans will be rejected. Collecting and reporting permit-related project data constitutes up to 8% of soft costs associated with solar, owed largely to mistakes and regulatory bottlenecks.
Aurora’s Plan Sets Service expedites your post-sales permitting process. It’s also a great tool for new businesses looking to scale without the growing pains and backlogs of permitting — Aurora can handle any growing volume of plan sets you need.
See how it works in the Tourial below.
Conclusion
Starting a solar business takes research, investment, time, and leadership. But, it can be worth the effort, providing a great career in a growing and fulfilling industry.
When you do start your business, make sure you have a software solution that sets you up for success. Schedule a free demo today to see how Aurora can help you get started in the solar industry.
