In this episode of the Solar Connect Podcast, Enerflo Co-Founders, Spencer Oberan and Pat Bennett, dive into 2024's solar industry trends, discussing data from Ohm Analytics, Enerflo, and Sunobi. They explore the rise of third-party ownership (TPO), financing challenges, market share shifts, and rising installation costs. The conversation highlights the importance of operational discipline, financing diversification, and innovation in navigating the industry's complexities. Tune in for actionable insights and predictions for 2025.

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2024 by the Numbers: Solar's Evolution and Challenges

Key Solar Industry Trends and Numbers for 2024

As 2024 draws to a close, it’s time to reflect on the numbers that shaped the solar industry this year. From financing trends to price shifts and market dynamics, the year has provided valuable insights that will inform strategies for 2025 and beyond.

Financing Trends: The Rise of TPO

One of the standout trends this year was the growing role of Third-Party Ownership (TPO) in the financing mix. At the start of 2024, TPO accounted for 30% of projects, while traditional financing dominated with 56%, and cash deals held a steady 13%. By year-end, TPO had gained significant traction, rising to 35%. Meanwhile, financing dropped slightly to 51%, and cash deals remained unchanged at 13%.

This shift highlights the evolving preferences within the industry. While TPO offers lower upfront costs for consumers, it also presents challenges for installers, such as delayed payments due to stringent documentation requirements from TPO providers.

Price Per Watt: A Gradual Increase

The cost of solar installation, measured by price per watt, saw an upward trend across most states. For example:

• California: Prices rose from $5.90 in Q1 to $6.03 by year-end.
• Florida: Prices increased from $3.59 to $3.67.

In general, most states experienced a $0.06 to $0.12 increase per watt. This price growth occurred despite reductions in equipment costs, suggesting other factors like rising dealer fees and installation costs are influencing the market. For the industry to achieve wider adoption, reducing costs will be critical.

Market Share Shifts: Lenders and Installers

The competitive landscape among solar financing providers shifted dramatically:

• EverBrite: Experienced a steep decline, with their market share on some platforms dropping from 43% in Q1 to just 9% in Q4.
• LightReach: Emerged as a rising star, increasing their share from 6% to 21% over the same period.

This diversification reflects installers’ efforts to mitigate risk by working with multiple lenders. Many have moved away from relying on one or two providers to ensure business continuity and financial stability.

Installer Trends: Consolidation vs. Expansion

Installers faced a pivotal choice in 2024: expand into new markets or consolidate within existing ones. Data showed that:

• Installers focusing on fewer states with deeper market penetration were more likely to remain financially stable.
• Over 70% of businesses that expanded into multiple states in the last two years faced financial difficulties, with many going out of business.

This underscores the importance of disciplined growth and market familiarity in ensuring long-term success.

Looking Ahead to 2025

While 2024 presented its challenges, there are reasons for optimism. Industry veterans predict a healthier solar market in 2025, driven by:

• Innovations in direct-to-consumer models, which could lower customer acquisition costs.
• Potential policy changes under a pro-job administration that might ease financing constraints.

However, success will hinge on the industry’s ability to reduce costs, stabilize financing options, and foster healthy partnerships between installers and sales organizations.

Final Thoughts

The solar industry’s resilience was tested in 2024, but the lessons learned will shape a stronger, more sustainable future. By leveraging these insights, businesses can position themselves for success in a competitive and evolving market.