Out-Competing a Crowded Market: Post-Manufacturing Strategies for DER Manufacturers in 2024

As we start 2024, the horizon for Distributed Energy Resources (DER) manufacturers is both promising and challenging. The push towards deployment has never been more significant, fueled by a surge in incentives and rebates. Initiatives like IRA incentives, NEVI for charging station infrastructure, utility VPP incentives, and V2G incentives are driving the adoption of renewable energy technologies. This is especially true for heat pumps, with well-established technology and a growing market despite delays in IRA rebates.

However, the landscape is evolving rapidly. A wave of lesser-known Chinese manufacturers is entering the battery, solar inverter, and HVSE space. Even industry titan Tesla is making a foray into the residential inverter market. The competition is intensifying, and the battleground is shifting towards the often overlooked add-on functions post-manufacturing.

“Batteries by themselves are relatively inexpensive… but that’s just the beginning. Building out a national sales and service organization costs a fortune. New battery system entrants — without the investment and army of people that it takes to support customers — will not succeed.”

— Barry Cinnamon, “10 Solar, Storage and Energy Predictions for 2024,” Solar Power World

In this landscape, the post-manufacturing value chain becomes a crucial differentiator. Manufacturers need to navigate this terrain strategically to succeed in a market where deployment is the name of the game.

Navigating the Post-Manufacturing Value Chain

After a hardware product is designed and manufactured, the follow-on steps in the value chain are 1) customer acquisition, 2) distribution & logistics, 3) installation & commissioning, and 4) maintenance & servicing. The key decision point for manufacturers is which of these elements to take on in-house, and which to rely on external partners. As the illu team works with solar, storage, and EVSE manufacturers, we see 3 main strategies emerging. It’s important to note that these models are not mutually exclusive, and companies may employ a combination of them across different geographies or product lines.

1. Manufacturing Specialists: Focusing on Technology Expertise

A large portion of established hardware providers in DER space choose to specialize in R&D and manufacturing, allowing them to focus on new technology development and out-competing the field on the quality and cost-effectiveness of their product. In order to manage equipment logistics & distribution, customer acquisition, and ongoing servicing, they rely on partnerships with equipment distributors and large installer-contractors. However, since many distributors and large contractors choose to work with only the most reputable manufacturers, this strategy is often not feasible for new entrants without existing brand recognition.

Strategy:

• Key Partners: Equipment distributors such as CED Greentech, BayWa r.e., Soligent, WESCO
• Target Market: Residential and smaller commercial & industrial (C&I) systems for solar and storage equipment

Considerations:

• Even though these companies sit some degrees away from customer and are not actively managing the installation and servicing of their products, they are still negatively impacted by issues resulting from poor quality of installs, which to the end customer are likely to be interpreted as equipment quality issues
• Success hinges on providing great support and overall experience for their installer network, including providing clear guidance and documentation, access to VPP programs, and benefits for top tier installers

💡illu helps manufacturers provide resources and documentation to their installer network, including options to rollout VPP programs and reward top installers with priority resources and services.

Example:

• Panasonic and LG solar arrays are only sold through distributors and wholesalers, who help them ensure a wide market reach and capitalize on the expertise of their network installers.

2. Direct-to-Customer Solutions Providers

Manufacturers that sell directly into government programs, municipalities, or utilities often take on the customer acquisition effort themselves instead of rely on distributor or contractor partners. As these companies maintain a direct relationship with the end customer, they often play a management role across the the full scope of project execution, including logistics and distribution. However, these manufacturers do not often maintain full resources in-house to deliver the installation and servicing themselves, especially if they operate across different geographies. They instead rely on local subcontractors for on-the-ground project execution.

Separately, emerging manufacturers also often use this direct-sales strategy for their initial Go-To-Market efforts, as they may not have adequate brand recognition for distributor partnerships, and also have not built up the in-house resources to manage install and service. As new DER hardware companies enter the market, we expect this strategy to become more common-place.

Strategy:

• Key Partners: Strategic partnerships with installers and integrators for project execution, examples include Black & Veatch, Titan Solar, etc. Some manufacturers utilize retail platforms such as Vehya to promote their product to end-customers
• Target Market: Solar C&I systems, government/municipality projects in EV charging infrastructure, utility distribution upgrades such as smart meters

Considerations:

• As the direct contact point for the end-customer, these companies are directly liable for their contracted installer’s quality of work and can left on the hook for issues caused by installer partners or subcontractors if expectations and quality assurance processes are not managed adequately

💡 illu helps these manufacturers efficiently ensure quality of work of their installer partners, and establish ready-made processes and documentation for their end customers.

Example:

• Electriq Power teams up with large contractors to sell their equipment directly to municipality clients in New York State.

3. End-to-End Solution Providers: Comprehensive Offerings

Whereas some manufacturers specialize into Strategy 1 as they become more established, others move in the opposite direction towards full-service companies, providing turnkey installation and servicing to their customers, as well as add-on services such as optimization and insurance. This is similar to the strategy of Apple in consumer electronics, venturing that by keeping functions in-house, they can have more control over quality and better optimize the process. In the DER space, this strategy is currently more common in the EV & EVSE segment than in solar and storage.

Strategy:

• Target Market: Larger end customers who want end-to-end turnkey services, or customers who are more focused on long-term servicing
• Add-On Services: These companies can provide leasing contracts or products “as a service”, unlocking additional customer segments

Considerations:

• This type requires significantly more in-house field team resources than the other two, which requires the manufacturer to think through efficient and streamlined dispatch and field team management

💡 illu easily scales with teams and helps these manufacturers store essential know-how for their field teams to consistently deliver top-tier service even when dealing with high turnover and frequent regulatory changes.

Example:

• Ford Pro acquired ElectriPhi to provide end-to-end solutions for the procurement, installation, and servicing of residential EV charging stations for customers who purchase the Ford electric vehicles.

Embracing the Future

In a landscape where competition is fierce and incentives are driving deployment, DER manufacturers must strategically navigate the post-manufacturing value chain. Whether specializing, taking a direct-to-customer approach, or offering comprehensive end-to-end solutions, success lies in understanding the market, forming strategic partnerships, and delivering unmatched value to customers.

As 2024 unfolds, manufacturers must not only innovate in their hardware but also in how they bring these innovations to the world. The journey from manufacturing to deployment is the new battleground, and those who navigate it wisely will lead the charge toward a sustainable energy future.