Community Power Network Unleashes Group Buying To Bring Down Solar Costs

SI Staff
Written by Michael Puttre
on April 23, 2015 No Comments
Categories : New & Noteworthy

15232_toysolarhouse Community Power Network Unleashes Group Buying To Bring Down Solar Costs One challenging aspect of the residential solar business is putting motivated buyers together with effective installers. The Community Power Network (CPN) is a nonprofit organization that functions as a group buying ‘referee’ for homeowners, rather like a state-sponsored Solarize program. The main difference is that the nature of the group that drives the bulk-purchasing dynamic.

The groups typically form around a kernel of ‘solar champions’ that may be neighborhood solar activists or some other organization with motivations for going solar. For example, the CPN formed a group composed of World Wildlife Fund members.

The core members of each group generally do the heavy lifting of recruiting friends and neighbors to join. Group members sign a memorandum of understanding that is not a contractual obligation to purchase a solar power system but simply serves as a formal declaration of interest. In addition, CPN personnel inspect the property of each group member to make sure each could usefully support a rooftop or pole-mounted array.

When a group reaches a critical mass of members – 20 to 30 families – it issues a request for proposals (RFP) for solar contractors able to handle the work. A selection committee in each group evaluates the bids according to a point system that CPN has created and picks a winner.

The CPN, which currently operates in Maryland; Washington, D.C.; Virginia; and West Virginia, receives a referral fee from the installers that participate in the program.

Anthony Colella, solar project manager and co-owner of Beltsville, Md.-based Edge Energy, says the CPN group buying programs have had a tremendous impact on his business. The company started out performing energy audits and expanded to include energy-efficiency, insulation and roofing services. Installation of photovoltaic power systems grew gradually from this process.

‘When we started installing solar in 2009, we were at a pace of doing one or two systems a month,’ Colella says. ‘It was, by no means, a huge part of our business. But we very much saw solar as the future. We saw this thing coming, and I really wanted to be a part of it.’

Edge Energy's association with the CPN began, in part, through the recommendations of colleagues and even home energy audit customers who had heard about it. Colella says the Maryland-Washington, D.C.-Virginia region is relatively new to solar, and the education and motivation aspects of the groups formed under the CPN's aegis or in partnership with it make a big difference.

‘The quality of leads that come from typical advertising sources is all over the board,’ Colella says. ‘And this is also true of state Solarize programs. We get what I call tire-kickers. The customer-acquisition costs with a neighborhood bulk purchasing program are much, much lower. Basically, it's a huge group of homeowners who are already well aware of what solar is all about. They are motivated. They are excited.’

The benefit to homeowners in the group and installers alike arises from the group. The contractor that is selected through the group's RFP process now has a pool of centrally located customers that have a very high likelihood of following through with a contracted solar sale. The contractor is then able to buy materials and schedule labor with a number of projects on the plate.

‘Right off the bat, one of the biggest advantages for the installer is volume of work,’ Colella says. ‘We're ordering in bulk, so instead of buying a small system, one-by-one, we're ordering systems by the truckload. We're bringing in hundreds of panels and dozens of inverters all at once, which is huge, real-money savings that we are confident about, so we can offer savings to the customer in our bids.’

At the same time, having a group of projects also helps reduce soft costs. Colella says he can go to the permitting office and come back with five permits in the time it used to take to get one. Similar efficiencies can be found in the scheduling of inspections and in even deliveries of materials and allocation of labor.

‘We had some key solar staff, and we were not selling all of their time with solar,’ Colella says, describing the early days of the solar business. ‘We got started in our first group with the CPN about a year and a half ago. We're now completing our fourth group. We thought this could be just the thing to take our solar business to the next level.’

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