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Tuesday, September 22, 2009

Renewables Doable for Electrical Distributors?

As distributors seek niche opportunities to capture any amount of business, many are turning to what is perceived as one of the few growth areas ... energy efficiency.

The energy efficiency market has a number of components and sub-segments. Two areas that are attracting much interest are solar and wind. Both have high cache, but do they represent opportunity to electrical distributors?

Consider:
  • A recent article in Wall Street Journal entitled "Wind-Turbine Makers Press for Green Mandates" emphasizes the challenge that renewables have - their high cost. According to the article, wind turbine manufacturers are concerned that "windpower installation by 2012 could fall back to 1/3rd of last year's construction without additional government support" (which they feel should be justifed as the industry added 35,000 jobs last year).
  • Solar and wind installations are driven by federal and state incentives. In other words, if your state is not providing incentives, and has a high kwh, then you probably don't have much of a market.
  • Reportedly, margins are tight, especially in the solar market.
  • To date, many manufacturers in these industries have gone to market through dealers, or direct. Most don't know where electrical distributors fit into their picture (let alone most electrical distributors don't know if their customers are working on solar or wind projects).
Not all should be considered in despair.

Both markets have a new construction and maintenance component. Both wind and solar projects do utilize basic electrical equipment. Given this:
  • there is an opportunity to serve the market by providing electrical materials
  • researching your market and gaining customer input may identify that there is an opportunity if you are willing to effectively resource to pursue the niche
  • identifying manufacturers can be a challenge, but the key is developing your plan and selling yourself to manufacturers (think back to when distributors were getting into the datacom market ... successful distributors developed a plan, then pursued manufacturers (sometimes starting with tier 2 manufacturers and then migrating up)
  • Many distributors who are interested need guidance, either through a third party or perhaps marketing groups can help with strategy development and supplier recruitment (which, in all probability, will be light on rebate income.)
Do you think electrical distributors can play in the renewable energy game? Are your customers installing wind/solar (enough to justify you making an investment)? Where are you seeing the opportunities (geographically and which segment)? Are you investing in solar and/or wind?

2 comments:

  1. as a thought, I have a manufacturing 'guru' who is starting a company to build custom sub-assemblies specific to the wind and solar markets. In essence, a distributor who wants to rpovide value to a developer can design custom sub-assemblies (wiring harness sets, panels, etc) to help the developer install the systems easier and more accurately. If anyone nees a referral to this gentleman, please send me an email.
    Ted konnerth
    tk@egretconsulting.com

    ReplyDelete
  2. Ted maybe you need to reach out to Tom Naber and NAED and let them broker the deal.

    ReplyDelete

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