Transforming the Solar Energy Market: Most people agree that a transition towards sustainable energy and solar power will create a better future, but only few people feel the urgency to act upon this. The Dutch startup Solar Monkey is determined to make this transition happen a lot quicker, by offering risk-free investments and guarantees on energy output. This way solar energy becomes a no-brainer for everyone.
A saturated market with little certainty mitigates growth
Research indicates that more than 60% of all Dutch households is interested in solar power. And although the market is growing, only 3% of all households has got solar panels installed. A key factor in this is uncertainty. There are only few markets where consumers request so many offers before a final decision is made; less than 20% of all offers eventually lead to an installation. The wealth of choice more than 1200 installers active installers does not make this any easier, and the strong price competition often leads to promises that cannot be kept. Many installers go out of business within a few years after they started.
“How can we bring more certainty into this segmented market, and how can we use that to boost market growth?”, is the question Mels van Hoolwerff, co-founder of Solar Monkey, asked himself when he started his research in 2013. He concluded that in order for solar power to be more attractive, the risk of investments had to decrease.
Guarantees based on calculation tools predicting the output
“To bring 100% certainty to the Solar Energy market by facilitating guarantees on the energy output”, reads the mission of Solar Monkey. Calculation models were developed at TU Delft to design a solar power system and calculate the expected output before installation. In cooperation with existing installers the system is designed, output is calculated and the guarantee is determined. If the guaranteed output is not achieved in practice, the consumer receives a full compensation for the deficiency.
The calculation models combine climate data with system specifications, in addition with a unique shadow analysis algorithm based on 360 degrees photography. Risk funds are managed through a separate foundation, named ‘Stichting Zonnegarant’. Both the installer and Solar Monkey reserve risk funds in the foundation to cover the risks for the full guaranteed period. This way the consumer can always be sure the guarantee is fulfilled, even in the case that the installer goes bankrupt. The output of all systems in the portfolio is monitored actively against live climate data to ensure all systems are performing properly. All of this is done from the mantra of giving 100% certainty.
Using existing installer networks for scalability and efficiency
Solar Monkey has made a very conscious decision not to go into the installation business themselves. “There are already too many installers fighting for consumers, and another player in the market doing the same thing would not add any value”, Mels explains. “Instead we offer our services to installers so they can use their existing networks. Installers on their turn can expect a drastic increase in conversion rates with the added value of an output guarantee. We facilitate everything from software for calculating system output to juridical documents for the guarantees and live monitoring of installed systems.” Their first partner installer 365zon has almost doubled their conversion rate during the pilot period. “The added value and reliability just sells a lot easier”, according to Lars Buuts, director of 365zon. This way both parties benefit from the increased profit.
200,000 PV installations within 5 years
After Mels had finalised his research at TU Delft Jan Pieter Versluijs quit his job as operational consultant at Newton Europe and joined him to found Solar Monkey October 2014. Recently Tino de Bruijn joined the team as software developer.
As a team they are determined to storm the Dutch market in 2016 through collaboration with 10-15 installers. In 2017 they will expand to the rest of Europe, the United Kingdom to start off with and Germany to follow. Their ambition is to facilitate 200,000 PV-systems within 5 years. From November they will actively be looking for financial partners to support their growth.