Tennessee contractor pivots to residential storage after incentives expire

It’s a time of great transition in the solar industry. Many contractors that have long benefitted from net-metering incentives or rebates are seeing their states rework those programs or get rid of them altogether. One Top Solar Contractor had to overhaul its residential business model to accommodate the changing rules in Tennessee.

2018, LightWave Solar (No. 177 on the 2022 Top Solar Contractors List) realized the state’s feed-in tariff, which gave solar installations a reasonable payback period despite Tennessee’s generally low energy costs, would be erased by the end of 2019. The team knew it needed to change its residential business or risk losing it.

“There’s no return on investment anymore,” said Chris Koczaja, CEO of Lightwave Solar. “We saw the end, and so we started figuring out, ‘How are we going to do the next thing?’ Without net metering, without a program, what is that going to look like?”

The answer to those questions was a pivot to energy storage. Instead of using the ROI of solar installations as the main selling point for residential projects, LightWave learned how to sell and design systems based on the need for resiliency. It wasn’t a hard pitch for customers to grasp as worsening climate and other disasters wreaked havoc on their area.

“In the last four years, we had a tornado go through downtown Nashville, we had derecho wind, straight-line winds come through like two months later, we’ve had a flood, we’ve had a bombing in downtown [Nashville] and we’ve had an ice storm,” Koczaja said. “Our customers see the value of resiliency.”

Once the company found out the solar incentive would end, LightWave got right to work finding prospective storage adopters in its existing customer base and figuring out how to sell, design and install these new systems. The company has always focused on custom projects, which meant install timelines went from one day for solar alone to up to a week for solar with storage.

“These now are crazy complicated microgrid systems,” Koczaja said. “There’s just a lot more equipment to install now and find places for and interconnect.”

Despite the changing workloads, these new systems are double the price of solar alone, so the company is able to stay profitable. LightWave now estimates that 99% of its installed systems are paired with storage.

But higher prices and a 20+ year payback period mean solar power is even more cost-prohibitive to those with less income.

“Have our clients changed in the last two years? Yes. It’s somewhat regressive. Our clients are wealthier just because the systems are expensive,” Koczaja said.

Still, he doesn’t expect it to be this way for long. Through his work as president of the Tennessee Solar Energy Industries Association, Koczaja is pushing for storage systems to be properly valued by utilities and incentivized for the benefits they bring to the grid.

“I’ve got these great tools all installed now. How do we use them to help with grid congestion, voltage support, all the other things that are out there?” he said.

Even without utility rebates, energy prices will likely increase and make solar + storage systems more economical over time. And the proliferation of electric vehicles could drastically change residential electric needs in the coming years, with many Americans trading a gasoline bill for a higher electricity bill from at-home charging.

All these factors will help solar + storage become a sound economic decision rather than one based solely on resilience.

“Instead of solar just being supply…now we’re moving into solar + storage demand management. With the tools you have available, you can start to manage your demands,” Koczaja said.

He expects homeowners to take an increased interest in their own home energy usage thanks to the growing number of tools available to monitor and control it. Whether it’s a miles-per-gallon gauge on a vehicle or a solar + storage monitoring app, saving energy and money will become easier.

“This monitoring app is going to be an addiction. We’re going to have a club here in a year for ‘Monitoring App Anonymous,’” Koczaja said.

Although there is a promising road ahead for solar, storage and demand management, it’s not a simple shift for early adopters. But the pioneering work of companies like LightWave will illuminate the route for others to follow.

“We have made the change, but it’s going to be easier for others to change because the tools, the products, everything is going to be better when they have to make the change. But it’s a really difficult whole mindset change,” Koczaja said.

This story was featured exclusively in our 2022 Top Solar Contractors issue. See the issue and full list of top US solar installers here.

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