Friday, August 7, 2009

Recurrent Energy: Business Strategy

Sell Local / Act Global
San Francisco based, Recurrent Energy, is a solar energy provider who is growing both inside and outside the US despite tough market conditions. The experience gained in more mature and competitive markets is aiding Recurrent in emerging market here in the U.S.

Difficult market conditions for Recurrent include:
  • In the US, solar is still emerging, even in the most supportive of states, California.
  • In Europe, solar has several strong and established players and a US company is seen as a late to the party with limited experience. In addition, local regulations make it challenging for companies to enter the market.
Europe, despite its challenges, is a good solar market. Europe’s feed-in tariff structure provides a guaranteed rate of return such that solar is an attractive and low risk investment. Recurrent Energy found an opening in Europe by:
  • Targeting US multinationals with real estate in Europe. Since Recurrent Energy is a US based company it speaks the language of US business and leverages the truism “that all business is local”.
  • Partnering with European solar companies for project management and installation to handle local issues and activities. Recurrent Energy maintains the relationship management, does design and handles purchasing portions of the value chain.
The benefits of this approach for Recurrent Energy are to exploit an under-served niche in Europe while gaining "street creed" that can be leveraged in the US.

With its large installation experience in Europe, Recurrent Energy can now position itself in the US as the local with deep experience to beat out other local competitors with only small project experience. It can also win over foreign competitors trying to break into the US who will not have Recurrent’s local connections.

Recurrent, for example, was awarded in early May 2009 the project to develop and operate for the City of San Francisco the largest California photovoltaic system with nearly 25,000 solar panels.

2 comments:

  1. Got some questions

    1)Is installing Solar energy items or appliances costly than traditional ones?
    2)Home much time does it take for getting cost savings?
    3)Is it thriving industry?

    ReplyDelete
  2. Installing solar requires 7 to 9 year pay-back depending on rebates, energy costs and financing. But there is another way to get solar without upfront capital costs. Power Purchase Agreements (PPA) allow buidling owner to buy energy from solar installer. PPA basics:
    * Buy solar power, not solar panels
    Solar installer or third paryt owns, operates the equipment
    * No capital outlay for building owner
    * Save money on electricity bills by locking into a low rate
    * Help the environment since electricity generation is largest source of Ghg.

    Solar is thriving in those areas where government guarantees tariff rate for selling solar to utilities (Europe's approach) or provides rebates (US approach) or mandates (China's approach).

    ReplyDelete