Pricing in the Commercial PV Market: Q&A with Henry Dziuba, Strata's Chief Revenue Officer
Q: You say Strata doesn’t bid on price, but doesn’t price drive pretty much everything?
A: Most customers are completely focused on the capital cost of the installation, which is of course important, but it’s easy to forget that what’s really important is how the system will perform over its lifetime. Strata’s focus is not only on the system install costs but also the bankability of its clients forecasted returns. IRR’s are typically based on the assumption that the system will operate at 100% capacity, 100% of the time. Our philosophy, to build with long-term ownership in mind, limits our ability to compete on purely price. This results in a more predictive, secure investment for our customer.
Q: Why do procurement activities matter so much?
A: To safeguard the long-term reliability of a system, you need to invest in the procurement of materials from suppliers who share the same vision of quality and performance. Strata’s procurement of system components adheres to the strictest quality controls, including on-site quality control of 100% of panels we secure. Working with Clean Energy Associates, every panel we install has been checked to ensure we only install the best. Without a strict QA process, an entire system can be at risk for under performance, putting our customers’ investments at unnecessary risk, so it becomes absolutely essential to certify that stringent guarantees are in place. This approach comes from owning and operating over 860 MW of our own solar assets so we’re only too happy to share our knowledge and experience with our customers to save guard their investments.
Q: Other than utilities and co-ops, who are your main customers?
A: Strata Solar Commercial works with a variety of customers; however, we are particularly proud of our move to partner with a number of large REIT (Real Estate Investment Trusts) customers, which has adapted our model, slightly. These relationships take us across the U.S. leveraging our ability to scale and move quickly into new markets. In addition to our long-term ownership design and construction philosophy, Strata’s O&M team works closely with these customers to continually look for ways optimize performance and increase plant availability.
Q: What’s it mean to be a “full service” or “vertically integrated” business and why does that matter?
A: At Strata Solar, full service means precisely that. With our roots as a provider of EPC services, Strata organically grew its capabilities across the value chain because it just made sense for us to be able to offer everything under one roof. Today, our customers lean on us through the entire project, from concept to asset management and everything in between, we’re there with you every step of the way. From structuring the financing to the first engineering drawings; from site permitting through the entire construction process, into final operations and maintenance of the site. By handling all of these functions in house, our customers benefit from not having several different organizations piecemeal the project together. And our customers can benefit from our experience and ability to predict outcomes and respond accordingly. We’ve learned a thing or two after building over 1.3 GW and becoming a leading O&M provider. Our ability to manage more projects that any other solar company in the U.S. means that our customers can relax knowing that whatever unforeseen event arises, we’ve probably already seen it before and we’ve got it covered.
Q: What advice to you give to those who are serious about investing in a solar installation? What pitfalls can they avoid?
A: Do your due diligence and select a business with a strong track record of delivery and performance. Experience and bankability are critical to the success of your project. Remember this is a significant investment with returns that are calculated over 25 years, so you want a partner that’s going to give you the best chance of achieving those goals and has the financial health to manage any unforeseen problems during and after the installation. You wouldn’t make your decision on where to invest your 401K purely based on the lowest management fees, would you? So why make the same decision with your solar investment purely based on the system cost, without understanding how your investment will perform over 25 years?
At Strata, we would rather not do a project if it doesn’t make sense for both parties, long term. We’re not going to commit to a price that impacts our standards of quality and performance because we know it won’t be a positive long-term experience for either party. We are very transparent during initial talks and negotiations, and we are focused on a win-win environment. We’re not in the business of just building and selling projects, we’re in the business of making solar work because it’s the right thing to do.
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