The Department of Energy estimates 3% of total energy comes from solar. How would you gauge the interest in this renewable energy from the business community?
With the new administration change, it’s in the forefront of people’s minds. When you’re continually hearing about it, that’s going to lead to people to ask more questions here in Missouri. Compared to places like California, we have a knowledge gap that we have to overcome. People are less knowledgeable about green energy, and sometimes can politicize it a little bit too much. On the commercial side, what’s really made the push is, there’s three things that businesses are continually looking to do. No. 1 is cut expenses, and it does that by lowering their electricity costs, which is a lot of times one of their top three expenses. Second thing that it does is it increases cash flow through savings. They’re able to inject those savings into other business investments. And their internal rate of return is seeing numbers between 13% and 18% as a guaranteed return, as opposed to a high-risk investment. They’re able to see those types of returns on solar – (return on investment) sometimes up to 300%.
What about the initial cost? How have those prices leveled and will supply chain issues in the past year impact that going forward?
The technology has certainly gotten better. They can figure out ways to become bigger, better, faster, stronger. The costs have leveled off, but with the rate increases that are coming, we’re looking to see a 30% hike in prices across the board. It’s a big reason why we moved into this facility. There’s an 18,000-square-foot facility with an additional acre of storage. We got this location knowing that hike was coming down the pipeline. We’ve been able to place an order to be able to service our current customers on the commercial side and be able to basically fill up our warehouse and yard with inventory so we can keep those costs the same for as long as we can.
What’s behind the price jump in solar?
Issues in the supply chain with shipments. Being able to get help certainly has been something that companies are struggling with. You look at the demands. Generac is a partner of ours. Generators have gone from a two-day lead time to two months, and now we’re almost to a year out. As the demand for that goes up, prices are going to follow as well.
A number of national companies have made energy reduction pledges, and the city of Springfield recently met its pledge to use 45% renewable energy. Will we see more of those pledges from local companies, and what’s the business case?
A 2015 study by Harvard found companies that committed to corporate social responsibilities, like green energy, significantly outperformed firms that weren’t. And it’s in the front mind of consumers, as well. In 2017, Unilever did a study and 33% of consumers are choosing to buy from brands they believe are committed to having a positive environmental impact. We’re all into making money and (to) leave the world better than the way that we got it. As it becomes more and more part of our social fabric, being green, the more cost savings that companies are able to see from it, you’re just naturally going to have these car companies gravitate toward that way of doing business.
I imagine the biggest hurdle is the initial investment. What’s that cost on the commercial side?
Generally speaking, it all varies according to how much energy somebody is using. With a commercial account, we’re looking at anywhere from a four- to seven-year, at most, return on their investments. Whatever amount of money that they’re spending in electricity over the next five, six years is how much it will cost to go solar. The difference is when they go solar, they own that power and they’re going to continue to see cost savings the remainder of the lifetime system, which is 40 to 50 years.
Many industries are facing hiring challenges in this current labor market. What’s the size of your workforce and are you facing those difficulties?
We certainly face those issues. We’ve got a fantastic core group of employees that have been with us since day one. And they’ve done a really good job of stepping up where we’ve been short. An entry-level position certainly is something that we’ve had a challenge trying to fill. We’ve got 32 employees right now. We’ve got another 10 to 12 that are independent contractors. We probably need to increase staff by 10%.
Will Cox can be reached at firstname.lastname@example.org.