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Solar rooftop installer should join hands with partners (EIC)

EIC thinks the shift in policy coupled with fallen prices have made solar installation business more interesting than in the past.

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The shifting solar support policy and declining installation costs have increased opportunity in solar installation business. 

Previously the government’s support measures mainly targeted investments in large-scale solar farms, where each farm can generate enough electricity for 800 homes.

Its focus is now on investments in residential rooftop solar system that can power for use in individual homes to provide the long-term energy saving.

A 50% drop of installation cost

Solar technology cost has dropped dramatically as well. It has driven down the installation cost of solar PV system as much as 50 percent in recent years.

EIC thinks the shift in policy coupled with fallen prices have made solar installation business more interesting than in the past.

Highlights
  • The solar support policy is transitioning from solar farm to solar PV system on rooftops. This change has created interesting business opportunities for rooftop solar installation. However, high upfront cost is still the major challenge in the residential-scale market.
  • EIC recommends the solar installers to explore and adapt the successful business models in other countries to unlock the Thai market.
  • These models include leasing the solar rooftop system or selling generated electricity to the homeowner at discounted rates.
  • EIC sees opportunities for solar rooftop installers to target new homebuyer through a partnership with the property developers because it sidestep the homeowner’s challenge regarding upfront cost.
  • In addition, providing after-sale services and promoting the incremental home value will be key to a sustainable competitive edge in the solar installation business.

 

Despite the lower cost of system installation, the upfront cost is still too high for homeowners to go solar.

It is the primary challenge in the residential-scale market. Solar installer may consider implementing successful business models from international market in Thai context.

Though the cost of rooftop systems is expected to become 30-40% cheaper in the next 3-5 years, still, the initial investment is considerable, potentially costing more than THB 200,000 on the typical home.

Moreover, financing can also be complicated, particularly if homeowners borrow from a different bank than their mortgage and monthly installment could be costly. For these reasons, many homeowners are staying put.

This issue is not unique to Thailand

In other markets, the business model called ‘third party financing’ has been developed to unlock the residential rooftop market.

In the US, for example, SolarCity, a system installation company, offers rooftop solar installation and maintenance service with different monthly payments options for homeowners, including loan, lease, or sell the discounted electric rates to hosts.

These models help expand the size of the market significantly. Currently, residential rooftop solar power accounts for approximately 20% of all solar power generation capacity in the US. This business model has the potential to apply in Thailand, too, but may require some adjustments for the Thai electric-related business context.

Alternatively, the solar installers may target homebuyers by joining hands with real estate developers to expand their customer base.

Because companies providing installation service can approach numerous clients at one time, the installers can sort the system equipment at the lower cost due to economy of scale. Additionally, homeowners can pay both for the rooftop solar system and the house in installments through a long-term mortgage.

Last but not least, differentiation of the installers by offering services that fulfill the needs of both homebuyers and real estate developers such as a system warranty, maintenance service, and mobile application that allow effective monitoring etc.

Though the price of a new home with rooftop system will rise, the solar installers should highlight the increasing value of the house to real estate developer to build up the selling point of the property development. For homebuyers, location, size, and price remain key factors. Using solar…

Author: Apinya Aksornkij

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