Is This the Key to Unlocking Residential Solar Growth?

For the past decade, the solar industry has primarily sold residential solar projects through high-touch door-to-door or telemarketing channels. Companies have to push sales to customers rather than rely on customers to pull demand, and that's caused costs for sales and marketing to rise. 

There are a lot of reasons solar sales haven't been easier, but a big one is that the process is just too complicated. Someone has to tell you what the solar installation will look like, how much energy it will produce, how much money it will cost, and how big savings will be, and some of those steps can take days or weeks. It's not like going online to order a pair of socks, or even shopping for a car -- rooftop solar is a complicated process, and no one has found a great solution for pushing sales online. 

Home with solar panels on the roof.

Image source: SunPower.

SunPower's best shot at online sales

This week, SunPower Corporation (NASDAQ: SPWR) introduced its Design Studio, a website that allows a homeowner to type in their address and get a solar layout, estimated energy production, and projected cost savings within a minute. It's as painless a process as I've ever seen in solar, and in just a few minutes I was able to request a quote from a local installer for my home. 

This compares with Tesla's (NASDAQ: TSLA) recently launched online tool, which was supposed to be simple but requires customers to sign a contract before the company will even give out any designs or cost savings. A sales rep even told me I would have to send pictures of my house before a quote could be completed, so the process is far from simple. Competitors Vivint Solar (NYSE: VSLR) and Sunrun (NASDAQ: RUN) look to their websites as ways to generate leads, taking information that leads to a sales call before they're able to provide a layout or cost savings, but they aren't modeling installations before they talk to customers. 

SunPower's tools are a great step forward in residential solar sales and may lower costs, but it's the technology behind the quote that's most impressive. 

How SunPower builds solar models in seconds

To develop solar quotes, there's normally a lot of manual work that designers have to do. Roof pitch, penetrations, shading, and typical weather in a location have to be accounted for. Thousands of installations and the data they've provided have made this process easier, but there's still about 30-60 minutes of manual modeling that had to take place up to now. 

What SunPower has done is lean on Alphabet's (NASDAQ: GOOG)(NASDAQ: GOOGL) Google Maps, Google Sunroof, and Google Cloud AI Platform to build a modeling process that's scalable and smart enough to model a solar home in seconds. Automating the work allows customers to essentially window shop without the pain of giving their information to a salesperson. The entire sales process becomes more accessible to millions of homeowners. 

Will faster quotes translate to more solar sales? 

The technology behind SunPower's solar quotes and the speed they're created is great, but if it doesn't translate to more sales and higher margins it'll just be a cool toy. Management hopes residential volumes will be increased just 243 megawatts (MW) of the company's 1,823 MW sold in the past year, or 13.3%. Even though production is low, residential solar sales are much higher revenue per watt, accounting for 37.7% of the company's $1.86 billion in non-GAAP revenue over the past year. And the segment typically has higher margins than commercial sales or solar panel-only sales, so even a small amount of growth in installations will have an outsized impact on the bottom line. 

SunPower has an impressive tool on its hands that could lower sales and marketing costs while increasing volume sold in residential solar. But that's just a theory until the company proves the strategy is successful. For once, I think this is an automated tool that has a chance to improve the solar sales process -- now time will tell if it has a positive impact on SunPower's bottom line. 

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Travis Hoium owns shares of SunPower. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Tesla. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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