How companies sell services to make their home comfortable and energy efficient—and how homeowners discover and buy them— is rapidly changing. This week’s installment breaks down clean energy consolidation and what it means for contractors.
Managing projects, courting new business and navigating new policies—it’s easy to be overwhelmed if you’re a contractor! And when you’re overwhelmed, it’s easy to miss big changes happening right in front of you.
Clean energy consolidation is the name of this evolving game and the companies that come out on top won’t just have the best installers or salespeople. The winners will make integrated, multi-project clean energy journeys for homeowners a reality. Let’s talk about why.
Big tech is leading the way on bundling
The clean clean energy gold rush is not a startup-only affair. Mature companies like Tesla, Sunnova, and Swell are just a few big boys already salivating at making millions in the home energy management space. Google recently acquired home energy management company OhmConnect to create the nation’s largest virtual power plant in Renew Home.
These companies aren't interested in just selling hardware: they're preparing to sell unified clean energy transitions and the ripple effect could be huge.
A Big Five like Google isn’t in it to quit it. These companies are in the game for valuable data and consumer behavior insights. Being able to predict and facilitate purchasing decisions is a huge strategic advantage on the horizon and the little guys need a plan of action, too.
Affordably decarbonizing American homes and building a resilient grid depends on new technologies and intuitive, enjoyable consumer journeys. Getting cleaner air and lower bills shouldn’t be a piecemeal process and the moment that homeowners can avoid a project-by-project hellscape, they will. I believe this inevitable demand for streamlined processes is what the big dogs are preparing for.
To stay relevant and relied upon, contractors need to evaluate and elevate their business models now. Like, right now. This is especially true for single-service contractors.
The fallout from California's net metering policy changes should be a wake-up call for every contractor. Nearly 20,000 solar job losses in just a year is a stark reminder that market disruption can happen fast and will hit those who fail to adapt the hardest. Ignoring this reality and thinking that policy changes are the only threat to businesses is a recipe for failure. You can't anticipate every policy shift, but you can get ahead of evolving customer expectations, cost dynamics, and technological advancements.
What happened in California has exposed a deeper vulnerability for many businesses. Contractors that relied solely on solar sales couldn’t pivot or adjust when the market dynamics shifted, ultimately impacting their bottom line. That should serve as a warning for any contractor operating a single-service business model. The clean energy transition won't slow down for anyone and it’s still accelerating, but adaptation is essential for business survival.
Manufacturers and OEMs are making serious investments in direct-to-consumer channels, too. Lennox recently launched an e-commerce platform for more than 2,000 contractor dealers in North America, who will now operate a portion of their businesses online. Daikin is also exploring new DTC pipelines where software nurtures the customer’s journey all the way to preferred contractors in their network.
From single-service to one-stop-shop
The writing is on the wall. Major corporations and investors are pouring resources into streamlining the clean energy customer experience. Their goal? To position themselves as the go-between for homeowners and the technologies they need. We're approaching a fundamental shift in how consumers source, purchase, and manage clean energy solutions.
Homeowners will soon jump at the opportunity to work with one trusted advisor who can guide them through the complexities of a whole-home energy transition instead of juggling a dozen specialists.
What does this mean for contractors? Pivoting away from single offerings and incremental upgrades and focusing on bundled solutions and integrated packages that address heating, cooling, energy storage, and more.
Become a trusted advisor, or energy transition expert, who consumers can trust. Invest in technology and partnerships that make the process as smooth as possible for the homeowner. Build relationships so strong that folks won't make a clean energy decision without you. This is the path forward for many businesses and those that thrive on simplifying every step — from assessment to installation and ongoing monitoring — will win customer loyalty in the long run.
I want to reiterate this one for good measure: the clean energy transition isn't just about feel-good projects! It requires systemic change at the household level. The IRA provides greater incentives for bundled solutions and this isn’t a coincidence. Contractors need to adapt to this opportunity and offer packages that maximize energy savings and unlock bigger rebates for their clients.
Put more bluntly? Embrace an integrated approach, or get left behind. If you're only focused on a single service, you're leaving money on the table and opening the door for competitors to swoop in. Every clean energy installation should be a stepping stone for further improvements. This is how you become the homeowner's go-to expert, securing your place in the value chain and outmaneuvering those vying for the customer relationship.
Adopting tech and owning the relationship to stay competitive
The construction and home services industries are in the midst of a tech revolution. AI-powered software will streamline everything from job assessments to sales processes and operations – failing to adopt these tools will severely limit your growth potential. Don't assume you will have time to catch up later. Companies that invest early in digital solutions will gain a massive competitive edge, especially as they gain insights into customer preferences and operational efficiency that old-school competitors lack.
Contractors shouldn’t underestimate the agility of competing startups. Newer companies won't be weighed down by legacy systems, outdated processes, and an inflated payroll. They're poised to disrupt the industry with tech-driven solutions and leaner, more adaptable business models. If you're carrying bloated overhead, you're going to struggle as the market rewards efficiency and data-backed decision-making.
The future belongs to those who offer integrated solutions, build strong customer bonds, and harness technology to deliver maximum value to homeowners. This doesn't mean the playing field will be level – the competitive intensity is only going to ramp up as corporations continue to eye the market and manufacturers and OEMs seek to go direct to the consumer.
The ultimate prize? Owning the customer relationship. The company that becomes the trusted advisor for the energy transition will be the one with the greatest leverage and long-term security.
The clock is ticking. The longer you wait to strategically reposition your business, the greater your risk of disruption. The clean energy opportunity is enormous, but success depends on understanding the trends, evolving with customer needs, and proactively building a business model designed to thrive amidst change.
Invest in technology. Build partnerships. Focus on becoming the one-stop-shop for your customers’ clean energy needs. I believe this is how you can secure your business's future in an increasingly dynamic and disruptive market.