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Tuesday, March 17, 2009

Ethical Business Leadership for Solar Professionals, Why it is desperately needed today.

There is a huge amount of competition emerging in the Solar Photo-Voltaic (PV) world. Renewable Energy "Professionals" (i.e. Salesmen) are trying to communicate complex information about technology and financing, along with government incentives, utility directives, contractor costs, site surveys, inspections, safety, liability insurance, and alternatives. The huge gap between the lay-person and the informed pro is growing wide, and this imbalance in power is fraught with potential for unethical behavior.

At this time we decide our fate. Either we will organize to provide clear and transparent accountability for ourselves, and secure potential customers, or we will fall into the old traps of greed and competitive manipulation. I suggest we police ourselves, and lead our peers away from the darkness, not out of some sappy moral convention, but out of shear selfish self-preservation and hope for prosperity. If we fully inform our customers and provide them with the facts about energy efficiency and conservation, rather than fatten our pockets selling them unnecessary large solar arrays.  If we charge FLAT FEES, rather than work on a percentage commission like some slick haired realtor. If we police ourselves, and provide a code of ethics, then we will earn the public trust that NO OTHER INDUSTRY NOW CARRIES.

Energy costs are going to rise, the economy is going to get worse before it gets better. People with equity in their home or business are golden, and the only safe place for investors looking for secure and stable returns. In the current frenzy to capitalize upon people's ignorance about sustainable energy, and take advantage of the customer desire to adopt the NEW GREEN technology, many unscrupulous "GREEN" contractors, hungry for work in this down market, are willing to push the most expensive solutions, and over-build with expensive solar photo voltaic panels.

I want to make it clear. For any contractor to even SUGGEST putting Solar PV on a site without first doing a full site energy efficiency survey, maximizing conservation, and minimizing energy waist, is UNETHICAL. That is why it is vital to have a third party, Sustainable Energy Consultant (like me) do an independent energy survey and create a technology transition plan that makes economic sense for the individual customer.

At this crucial time, at the beginning of our new carriers in the Sustainable Energy field, it is crucial that we police our peers, and set an ethical example. The next few years will set the stage. If we fall into the mistakes of the past, then "Solar Professionals" will become the car-salesmen of the 21st century. But if we do right by our customers, we can become the heros in a failing economy, and be part of the change this country needs.

Some interesting numbers for you to chew upon. 

Size and Scope Comparison:

  • 38,000+ SYSTEMS
  • 17,000 JOBS
  • $2.3 BILLION SALES 2007-2008
  • 410MW INSTALLED 2000-2007
  • 823,075MWH/YR
  • Huge potential to shift technology soon.

  • EVERY BLDG (TITLE 24) - new building LEED certificaion
  • 364 MW AVG DEMAND REDUCTION 2000-2004
  • 1.9MWH SAVED IN 2004
Economics and Incentives:

  • PROJECT COST $16,800 TO



Anonymous said...

Thank you for a well thought out post. It got me thinking.

There are parts of your post that I agree with and part that I do not.

There is a lot to digest in the renewable energy field. I believe the gap is getting smaller not larger at this time. It still has a long way to go. I think those of us that are in the field or getting into the field can make the gap even smaller.

Providing clear and accurate information is an excellent business plan. It promotes trust from your customers that turn into more customers as the word gets around.

I am more in favor of providing my customers with the best service and products and building and promoting my business rather than policing the market or my competitors.

What fees any other business charges or how they structure it is not my concern.

Often an energy audit can create a sales barrier that did not exist before hand. Often the customer feels upset when you suggest their lifestyle needs to change. It could kill the deal and in the end the environment suffers as well as the parties involved.

I provide energy audits by the way and am not a solar contractor. So I feel I have a good idea of what I am talking about. Some customers are open to change others are not. It is fine line to walk. You do not want to insult or talk down to your customer.

I understand why some contractors would not want me in the door first. They have families too. A sale is difficult to build and easy to destroy.

I am hopeful that I can position my company in such a way that they call me before they call the PV contractor.

I am all about providing my customers with cutting edge techniques and technology the make the home more energy efficient and healthy. I believe that conservation is the best and cheapest product for the public.

I feel I can sell this service and thus my involvement in the industry. It also has a humanistic approach in that I can help the envorinment at the same time. I can feel good about waht I am doing at the end of the day which is no small thing.

I am not interested in becoming a policeman.
I am not interested in becoming a hero.

I am interested in building a customer base and a successful business.
I am interested in educating my customers so they can make an informed decision.
I am interested in putting my kids through college and putting food on the table.

Once again thank you for your post. I agree with much of what you said. I belive in ethics and morality.

Glen Gallo

Phil said...

The ART of the DEAL

"Often an energy audit can create a sales barrier that did not exist before hand. Often the customer feels upset when you suggest their lifestyle needs to change. It could kill the deal ..."

- First, I want to address the misconception that conserving energy or increasing energy efficiency ever requires a "lifestyle change".

The fact is that we have generally become lazy and sloppy about our energy use in the USA. We leave the lights on, we leave the big car running to listen to the radio, we keep our thermostat on when we are not at home. Yet, if we have the money to waste, WHY NOT? Honestly, do you know anyone, anywhere, who wants to waste money? It is dishonest to suggest that energy conservation and efficiency techniques would create any 'sales barrier', as they are always in the customer's best interests.

Once and for all, there are no necessary limitations upon "lifestyles" or "quality of life" issues when it comes to saving energy. (only a limitation on the sales commission)

There are only opportunities to conserve and become more efficient. In my experience, once I lower a homeowners energy use by 40% and their energy costs by more than 50%, they tend to increase their "quality of life", because they have more money to spend and aren't worried about wasting energy (i.e. money) anymore.

True, once their energy bills are lower, customers often choose NOT to install expensive renewable energy systems (for now), because currently it is not always economically beneficial. I leave them with the facts and a plan. When next they fix the roof, or build an addition, or replace the water heater, they will judge me by the honest relationship I've created. The energy technology and the costs will change, and when they do, I believe they will come back to me.

Frankly, if you're more worried about making the short-term "deal" than your customer's well being, then I question your belief in ethics and morality.

Second, we need to deal with the concepts of personal and collective responsibility.

"What fees any other business charges or how they structure it is not my concern. "

- It's unfortunate, but most businessmen feel the way you do Glen. This kind of libertarian, anti-regulation, 'free-market' capitalism is what created the current economic crisis. It is what caused the environmental crisis. It is what is causing the energy crisis. "Let the buyer beware" IS NOT A SUSTAINABLE BUSINESS MODEL.

"I am not interested in becoming a hero."

- In my opinion, a hero is someone who does the right thing, even when no one is watching.
Even when it is not in their short-term, individual interest.

I'm not asking you to police others, just yourself.

"I am interested in putting my kids through college and putting food on the table."

- I understand many people are hurting in the current economic climate, and most of us have been victimized by unscrupulous businessmen before. Often this leads people into a competitive, "dog-eat-dog", paradigm, but if you truly care about the LONG TERM future for OUR children, then you'll readily admit that we must stop this near-sighted competition for personal financial gain over the common good. That kind of unethical business model is what created the problems we now face.

In the end, this emerging Solar Industry will be judged by how well we serve our customers. If the industry is seen as a scam, we will waste not only our own time and resources competing with our customers using traditional unethical sales techniques (manipulation and confidence schemes), we will decrease the efficiency of the transition to sustainable energy, and thus endanger the world. In the long term, it is in all of our best interests to commit to the common good over our selfish interests.

That is why I'm asking YOU to commit to a CODE OF ETHICS.

Phil said...

What I mean by FLAT FEE Consulting.

When selling a Renewable Energy Solution, the Energy Audit and "Sustainable Energy Transition Evaluation", should be done independently of the sale of any PV or other equipment. The evaluation should NOT be priced on a PERCENTAGE of the cost of any new system.

For example: a house salesperson (i.e. REALTOR) traditionally charged 6% of the final price of the house. This gives the realtor an incentive to maximize the cost of the home, and artificially increases the home prices, thus inflating the huge bank loans necessary to buy the home. This is an unsustainable system where people are rewarded on commission without benefiting the customer. Thus homeowners become enslaved by to banks by interest rates on ever larger, unaffordable loans. Housing prices rise without increase in demand, so it creates the appearance of wealth where none was actually created (thus our current economy).

True Solar Professionals should not be salesmen, we should be wise teachers and respected protectors of our customer's futures.

If an ETHICAL SOLAR PROFESSIONAL is designing a system they MUST do an Energy Audit and Sustainable Energy Transition Plan first, and they should provide the customer with ALL their options, with inexpensive conservation and efficiency work the top priority. If the Solar Salesman's FEES are linked directly to the cost of (THE LOAN for) an EXPENSIVE PV SYSTEM (just as the realtor's fees are linked to the loan for your home), then there is a direct CONFLICT OF INTEREST.

Therefore, Solar Professionals should charge a FLAT FEE (hourly) to consult and provide the Energy Audit and an Energy Transition Plan. This way the customer is fully informed of their options, and the best, most cost efficient, and wisest methods to transition from unsustainable carbon power to renewable energy.

This inevitably means that WE SOLAR PROFESSIONALS will have to earn our money, work hard to become ever smarter, and will not be rewarded with huge windfalls for installing unnecessary gigantic solar arrays on inefficient homes and businesses. The upside is we will create real wealth by providing solid advice that is truly valuable for a vastly ignorant world population, and likely save the planet in the process.

Sorry, but the cost of ethical behavior is work.

Phil said...

"All we can hope to do is put them out of business and differentiate ourselves with honest customer service" - Rahn

Of course everyone wants a viable WIN-WIN-WIN, but then the competition becomes "Who gets to win the most?". I'm looking at how we put the "bad apples" out of business, even before they get started.

Looking at this group meetup as the potential beginning of an Association of Solar Professionals, we can brand ourselves using a STRICT CODE OF ETHICS, and DIFFERENTIATE ourselves from our competitors. Then the only real choice for new Solar Professionals will be to join our association of ethical professionals.

I'm worried that new brokers of PPA's will become just like the real-estate brokers that sold you a sketchy home-loan, took their commission, then packaged and sold the loans as (sub-prime) securities. If that happens, Solar Professionals will be branded as the next group of confidence men.

If our aim is just to make money, then of course, the larger the solar project, the larger the size of the loan, and the larger the commission. Thus I introduced a FLAT FEE Consulting strategy that protects the customer and encourages efficiency, yet still guarantees we get paid (reasonably).

In the long run, I'd rather the industry be identified as skilled professionals, like engineers or doctors, who work with the patient to reach a common goal, rather than as commissioned salesmen using specialized knowledge to push products and preying upon customers.

With the levels of complexity: Technology, Government Bureaucracy, Utility Manipulation, Environmental Science, and Business Financing, there is too large a gap in information between the customer and the professional. We need some check to bridge that information gap, and just as M.D.s must swear to "first, do no harm", we should swear to "first, do conservation upgrade efficiency", even if its not as profitable.

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