Evolving solar business models

1. Evolving Solar
Business
Models
Carol Giles Neslund
Vice President & GM, Americas

2. Agenda
•Evolution of the residential
solar market
•Successfully navigating
change
•Ideas for consideration
| © 2014 Enphase 2 Energy, Inc. | Confidential

3. Market Consolidation
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
Top 10 US Top 20 US Top 10 CA Top 20 CA
2012
2013
Percent of MW installed by top installers (US & California)
Source: GTM Research
| © 2014 Enphase 3 Energy, Inc. | Confidential

4. What’s driving consolidation?
Solar goes mainstream:
• Cost to install solar falls dramatically
• Paradigm shift from “selling solar” to “selling cheaper
energy”
• “The money figures out how to make money” and opens
market for middle income buyers
• State based RPS and incentives further encourage
adoption
• Business model innovation allows economies of scale
Results for installers?
• Emergence of “super installers” – vertically integrated
companies
• Large and mid-tier installers forced to rethink business
models and adapt – rise of the outsourced solar
4 | © 2014c Enophamse Epneragy,n Incy. | Confidential

5. Take a moment to reflect…
How have you done keeping up with the trends?
• Selling energy versus solar?
• Improving your marketing & sales competency?
• Driving efficiencies in business?
Or have you just been
hanging on tight for the ride?
| © 2014 Enphase 5 Energy, Inc. | Confidential

6. What are the business model options?
1. Full vertical integration: provide all aspects including
financing
1. Building block approach: build business around core
competency
– Lead generation
– Sales
– Design & installation
– Financing
– Logistics
What’s your approach? And why?
| © 2014 Enphase 6 Energy, Inc. | Confidential

7. Where has this happened before?
High tech channel evolution:
• Suppliers focused on improving channel economics
– Logistics: 2-tier distribution to reduce working capital
requirements for partners
– Marketing & Sales: marketing partnerships, co-branding, sales
training and technical support programs help partners increase
revenue
• Partners hone business models and forge partnerships
that support business goals
– Focus on business goals/strategies with 3 year horizon versus
“just keeping up”
– Active cooperation with suppliers/partners that add business
value versus traditional vendor relationships
– Business fundamentals focus – cash flow, operating profit,
operations improvements
| © 2014 Enphase 7 Energy, Inc. | Confidential

8. There’s plenty of market
for everyone – how will
you capitalize on the
growth?

9. Ideas for navigating change
Make a conscious decision about your goals/strategy
• How do you want to participate in the market? What is
your goal?
Evaluate how you stack up on the key competencies
necessary to achieve your goals and assess the best
way to close the gaps
• What are your strengths/weaknesses? What will it cost
to fix them yourself? Can you cost effectively outsource?
(make versus buy decisions)
Model it out
• What’s required (cash, people, process) to achieve your
goals?
Look for partners and establish mutually beneficial
relationships
| © 2014 Enphase 9 Energy, Inc. | Confidential

10. The next
inflection point:
Beyond 2016

11. The choices you make now will
affect the choices you’ll have
post-ITC….it’s worth the time to
think it through.