How Outsourced Solar Procurement Lowers the Cost of Solar by 30%

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Originally posted on August 15, 2017

When considering switching to solar energy, one of the questions that comes to mind is: should businesses run the process themselves, or have an expert run the process for them? Obviously, hiring an expert will save time and headache, but what is the premium a business has to pay for this peace of mind? It turns out that a business can not only avoid paying a premium, but will actually save 30% on the total price!

Why Use a Solar Advisor for Procurement?

A key feature of an advisor is the tailor-made, highly competitive procurement process they bring to the client. Many pre-vetted vendors submit bids to install solar, and the business selects the top proposal based on qualities such as price, experience level, equipment, payment terms, project size, geography, and several other factors. The thinking is: the big Fortune 500 companies such as Walmart, IKEA, and Apple do this all the time and pay below market prices, so why shouldn’t smaller companies have the same service?

 

So where does that 30% price reduction come from? One way of thinking about this is that, without a procurement advisor, a business would pay roughly the median price that we see when we solicit bids. As the graph below shows, the winning vendor’s price we bring clients is significantly lower than what you can expect without retaining an expert. In general, if you go solar on your own, you will likely pay 30% more for the system than if you used a solar procurement expert.

Another way of thinking about this is to compare the range of prices received during a procurement process. There is a chance a business could end up paying a price on the high end of that range. How high exactly? The highest quotes we see are 55% higher than the final price we bring the client. Solar is a complicated product to understand, and prices vary quite a bit. For first time and one-time buyers, utilizing a solar expert to run procurement can protect against overpaying considerably for solar.

How Does the Process Work?

Can a business run its own bidding process?  How exactly does a professional solar procurement advisor bring so much value? There are a few different ways:

Tailor-made Solution: When going solar, there are a host of different potential solutions available, offered by dozens of solar vendors. A procurement advisor has access to all options, will identify the right fit for you, and will run the bidding process only with the relevant solar providers. Only vendors that specialize in the solution you need will bid for your project, providing lower pricing and better quality.

Market Expertise: Solar advisors live and breathe the industry every day, tracking pricing trends, equipment use, and installation techniques. Their finger is constantly on the pulse of the market, so they know the price and level of quality you should be getting.

Vendor Due-Diligence: Solar advisors have already pre-vetted the solar companies and regularly work with them on multiple projects. From the vendor’s point of view, your project is no longer a one-off transaction. What’s more, a solar procurement expert helps vendors meet their top goals of boosting conversion rates and improving customer satisfaction. This infuses trust into the process and leads to the vendors quoting lower prices.

Efficient Process: Solar procurement advisors run dozens of bidding processes, and therefore have the infrastructure to run a more efficient process than a business. After all, procuring solar is their full-time job! Advisors know the exact technical information the vendors need, and the vendors are familiar with the flow of the process. This allows the vendors to provide quicker responses at better pricing. All these savings lower the overall system cost.

Switching to solar energy is a complex decision. There are many unknowns, and the process seems difficult to navigate. Having an advisor walk you through this process not only sheds light and transparency on the process, but it also brings efficiency and lowers the cost. There’s a reason Walmart has completed over 350 projects, and has plans for many more. They had an expert handling their procurement process. Why shouldn’t you?

 

 

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