Understanding How Solar Energy Companies Make Money
A Look Behind The Industry
When you look at the prices of solar energy, and the fact that you can often make money back on your energy bill once you install your own panels, it can seem like solar energy companies aren’t making any money. However, there are a few ways that they contribute to their bottom line and that will help you understand where they are doing with their business plans as well. This may help you feel more confident about investing in solar and help you understand how the business is going to grow in the future.
The first way that solar energy companies make money is by installing solar panels. There is a bit of a profit margin when the installation is being done, and when people buy panels. Obviously, this isn’t a huge profit margin, but it is often enough to keep the company in business. This is why they focus on getting more people connected and on keeping their relations with their clients completely positive. They want their clients to refer their friends and to feel like they can trust the company like a friend.
The second way that they make money is through offering their investors a stream of revenue at a fixed percentage. If someone invests in the company and is told that they will get a guaranteed 7% return on their investment over the next few years, the company can make money if they are making more than that on the investment. As an example, the company could be making 10% on that investment, giving them a 3% return on the investment, while still giving their investors a great return on their money. This makes everyone happy, but also helps the solar company stay above board.
The next way that they make money is through solar tax credits. These are put into place to help people switch over to solar, but they also allow the company to write off a large number of things. This allows them to have lower expenses, get more people signing up, and in many cases to get a credit for the services that they provide as well. This applies to situations where they are using their own panels to provide electricity to customers, getting the tax credits for their own panels.
Non-Existent Maintenance Costs
They also make money off the fact that properly maintained panels need very little work done on them. Their labor cost is almost non-existent, and they can always invest in more panels. This means that they can provide more electric to customers and to other companies that are buying, with very little cost to themselves. Once they have set up a good solar farm, it will just continue working with just a few hours of work a week, something that other forms of electric just can’t do.
Overall, the solar energy companies make money from having low costs, being able to guarantee results, getting more people to use their services, and from building great relationships with the people who invest in their services and who might be future customers. When you’re ready to make the switch to solar, make sure you understand how to find the best solar energy contractor for you.
For solar energy in Albuquerque, consider working with us at NM Solar Group. We are a full-service solar power company with locations around New Mexico and El Paso. We even have a new office for solar energy in Alamogordo. For more information or a consultation, contact us today!