SS#5: ‘Heavyweight brands’ enter the ring

Happy Saturday to you!

I wrote an article with a working title: The Curious World of UK Residential Solar in 2023. The article was a work-in-progress for another venture I am involved in. It's lengthy and not really a quick Saturday morning read, and the venture is not public yet.

The UK market is moving fast following the festive break and one particular section of the article I wanted to share you right away...

‘Heavyweight brands’ enter the ring

For many years the residential market in the UK has been served by lots of SME installers (SME Being small and medium businesses). On the whole, they’ve served the market well for many years. But as demand grows, so too does the interest of larger businesses keen to capitalise on growing consumer sentiment.

E.ON has been isolated in this case – serving their retail customers with PV for many years – on the face of it relatively successfully. But seems there's a lot of room to grow: enter here Octopus as just one of many joining E.ON in their quest to sell systems directly (or diversify their core offering of gas & electric) to their fleets of retail customers, and perhaps a first step towards Grid Services/VPP and all of that wizardry.

Again I am going to draw comparison from Europe, where Utility companies have significant business units operating in countries like Germany, France and Spain. EDF Energie Nouvelle (France) has a very solid footing in the residential solar market for many years. Iberdrola (Spain, Portugal and owner of Scottish Power) also does a seemingly good job in this model of business having seen some great results in recent years. E.ON even bought a PV distributor/integrator in Sweden a few years ago in their efforts in the Scandinavian country.

I am surprised it’s take so long for E.ON to have some main player Utility competition but I am happy to see it for this very important reason: as a sector it brings much more demand.

I am not here dissecting business plans of the Utility-type businesses, and won’t talk much about their position with Grid Services, Virtual Power Plants, Load shifting etc. In a pure retail environment of selling a PV and maybe Storage to a residential customer, I am supportive of their ability to scale. They can bring financing such as Retail PPAs, Leasing etc, and they can bring brand reputation and marketing in bucket loads.

The challenge is really in the ability to deliver at scale. Most are using sub-contractors (labour or turn-key installs), which is a large challenge in 2023 because of the general high demand on solar sub-contractors, causing bottlenecks, frustrated parties and higher prices.

Acquisitions of labour-based installers are almost certain to happen this year as the utility-type businesses must find a way to deliver. It's started in commercial installations, and it will certainly come to Residential too. Again, drawing upon Europe as case examples for this - theres certainly lots of acquisition activity - a prime example being German trailblazer 1KOMMA5° who have been reportedly snapping up installers in several European countries.

Closer to home, I’ve been working with a Managing Director of a very good installer business, to help them prepare for sale. Or "get their ducks in a row" as we like to call it! I predict I’ll be working with a few more this year to help them get into shape before marketing to buyers.

This is the end of this particular section of the article. It is fascinating to watch the residential market change, and I am excited to see where the Heavyweights take their respective businesses.

Next Saturday I am planning a super super treat for you all. But for now... enjoy your day!

Sean