How to Start a Solar Energy Business (Cost Effectively)

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Green energy is making inroads as economies of scale begin to reduce the prices of production. Solar power is no exception. According to CNET, a solar panel manufactured in 1980 cost about $21 per watt to produce. Today it is nearly 90 percent less. Starting a solar power business has inherent costs, as with any business, such as wages or sales commissions, installation costs and taxes. With careful planning, efficient marketing and the appropriate use of financing, government grants and aid, you can start a business marketing this renewable resource in a cost-effective way. To save on startup costs, it's possible to use your own home as a model for solar power use.

Green energy is making inroads as economies of scale begin to reduce the prices of production. Solar power is no exception. According to CNET, a solar panel manufactured in 1980 cost about $21 per watt to produce. Today it is nearly 90 percent less. Starting a solar power business has inherent costs, as with any business, such as wages or sales commissions, installation costs and taxes. With careful planning, efficient marketing and the appropriate use of financing, government grants and aid, you can start a business marketing this renewable resource in a cost-effective way. To save on startup costs, it’s possible to use your own home as a model for solar power use.

Study solar panel installation and use. Some manufacturers and sales representatives will offer materials free or at a nominal cost. Utilize the Department of Energy and other government websites to aid in this process.

Write a detailed business plan explaining to potential investors and lenders how you will make money, your cash flow, manufacturing or purchasing costs and other details about your business process. Consult with the U.S. Small Business Administration for help. Decide on whether to organize your business as a limited liability company or another type to shield yourself from personal liability in the business.

Apply for an Employer Identification Number from IRS.gov. This allows you to hire employees and establish a business checking account. It also provides an identification number to use to apply for grants.

List your business with the secretary of state's office that licenses businesses in your state, and establish a sales tax number. License your business locally with city government, if necessary.

Establish a very small storefront. The location is more important than the size, as you can establish a model home at your residence. Purchase an inexpensive computer to use applying for grants and loans.

Set up accounts and installation arrangements with solar panel manufacturers and distributors. Some of these companies may offer samples, display literature and materials to use in your store in exchange for meeting minimum purchase requirements.

Utilize green initiatives such as Energy Star tax credits and state initiatives if available -- such as the bill credits from the California Solar initiative -- to power your home completely with solar. Your credit for home-based solar will cover 30 percent of the cost, up to $500 per 0.5 kW of power capacity. Purchase a solar water heater with the help of an unlimited 30 percent credit. These credits will save you a lot of money compared to leasing a bigger location and installing large panels there without the help.

Market tours of your home to demonstrate the merits of solar power. Show "before and after" energy costs. Utilize your storefront to display a small solar panel and to schedule appointments to visit your model home.

Sell your installation service at local trade shows for homebuyers, shows dedicated to green initiatives and other events. Make contact with local contractors promoting your service as a way to increase home prices.

Tips

  • Purchase a portable solar cell display that operates a small radio or charges a cell phone to use as a traveling conversation piece. Establish a website and connect with contractors willing to install out of your area. Look extensively for grants and low-interest loans in the public and private sectors.

Warnings

  • Be sure your home is positioned to get the best solar power available before making it a model home. If it performs poorly, it will deter consumers.

References

Photo Credits

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