Up for debate: Do brands matter in solar power?

September 11, 2009

In Los Angeles, listeners of public radio hear SunPower promotions on the airwaves while at the Oakland International Airport, travelers see ads for the solar power company.

San Jose, California-based SunPower Corp has banked on building a brand, a strategy that bucks the idea others argue — that brands don’t matter in the solar power industry because the renewable energy is essentially a commodity.

“When I buy electrons, I don’t care what flavor they are. I do care a lot about what they cost,” said Stephan Dolezalek, managing director of Silicon Valley venture capital firm VantagePoint Venture Partners.

At the Reuters Global Climate and Alternative Energy Summit in San Francisco, Dolezalek said different customers, such as residential versus utilities, analyze solar power choices differently. But Dolezalek doubts brand matters within the specific categories of solar power systems.

SunPower’s chief executive Tom Werner stands behind his company’s branding strategy, comparing it to the debate that arose in the personal computer industry.

“Remember white boxes PCs were going to run over the brand-name players? But people wanted to buy from a brand-name player because they wanted the service, they wanted that future-proofing –that I don’t buy it today and it’s obsolete in six months,” Werner told Reuters at the summit in San Francisco.

Werner said his company, which is vertically integrated, charges a premium for its high-efficiency solar panels and added services for residential customers.  He said brand carries weight for commerical customers and utilities, too, because they make significant capital investments and want a product with low technology risk.

“Does brand matter? I think it is definitively yes today,” Werner said. “Will it be sustainable? Of course that’s subjective, but you see tons of examples where brand and scale matter,” he said, noting how eBay has maintained a brand status among Internet auction sites.

Venture capitalist Dolezalek said that where brand does play a role in the solar sector is “whether my bank is willing to lend me for my project on an unknown brand.”

“As long as the bank is willing to lend on it, it really doesn’t matter whose brand it is because it is a commodity,” Dolezalek said.

We were wondering where readers stand in the debate. Does brand matter in solar power systems? Does its importance vary, depending on whether the panels are used in a small roof-top system or large field installation? Is solar power just a commodity — or is it more complicated than that?

(Top photo: Passengers at the Oakland International Airport sit next to an advertisement for solar power company SunPower Corp. Photo credit: Laura Isensee/Reuters. Second photo: Tom Werner, Chief Executive Officer of SunPower, speaks during the Reuters Global Climate and Alternative Energy Summit in San Francisco. Kimberly White/Reuters)

17 comments

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Everyone likes a winner, and brand does matter to some degree. Solar is a fast changing market. Many manufacturers state that they are the best. I find many people are looking at the details and working to understand what they are getting for their money. Especially the old adage best for less vs. the best at any cost. There are different segments of the marketplace who buy from each end. I have always believed buying the best gives you the most value. Sunpower’s products are definitely one of the best. Michael

[...] Environment » Blog Archive » Up for debate: Do brands matter in … [...]

I have always associated a brand name with my ability to obtain as good of a product or service as any other purchaser at my buying level with my buying power alone. I also feel that there are certain technologies,like solar power, that in their gestation and birth become much more important to the function of civil society than was thought. Like the internet, solar power will quickly become a logical necessity.Solar power will spread at a rate that equals cell phone technology once it reaches adulthood.
It is a no brainer!

What is a brand if not a reputation? When I buy a fridge, I’m not buying 4o degrees, I’m buying a name I trust will do the job well. To my reckoning buying a solar system evokes similar emotions but more so. Solar Power is not crude oil, it’s a harness. Not all systems are assembled equally. Nor are the components created equally. I believe most consumers will see it in these terms.

Brand identity is a favourite word with businesses and they and me have spent a lot of money trying to improve it. However we have found that it is one identity that has to be developed. That one word/picture/emotion that pops into peoples heads when they hear your name. That is the one you want. All businesses need that one identitiy initially. Lead on brands can be developed after that if needed.

In the residential solar energy market, brand matters. Most solar installations require a significant up front investment from homeowners. If a solar company has developed their brand in such a way that it builds trust and instills confidence in the homeowner, they are more likely to win the deal over other companies. SunPower has the right approach. I’m surprised about the view the VCs quoted in the article have on this.

Dolezalek is talking more of the commercial segment, where his comments are spot on. The US residential segment does have room for branding as it partially driven by emotional/green impulse to install rather than pure economics – and SunPower is the quality and effciency leader so it plays to that desire. SunPower charge a price premuim for their product in what is a de-facto commodity market and so it is logical they defend that with marketing dollars. With panel prices approaching 50% of this time last year, though this has not fully fed through into the residential market yet, it will be interesting to see if SunPower sales are impacted.

Posted by Julian | Report as abusive

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Just like I don’t care if my cable or satellite TV’s set-top box is made by Motorola or Scientific Atlanta, I don’t care if my residential solar modules are made by Kyocera or Sharp or some other company.

But I do want to know that when there are problems, I can call a single number and get a reliable, prompt, competent response. With a system lifespan of 20 or 30 years that means I need a company that has created an established brand, not some fly-by-night installer who will never be heard from again.

Plumbers and electricians are a good model, but it took decades for governments to figure out how to license those professions. It will take more decades for most governments to figure out how to license and regulate house-by-house solar and wind power installation and maintenance.

Posted by George McKee | Report as abusive

[...] Environment » Blog Archive » Up for debate: Do brands matter in … [...]

Brands, e.g. advertising, do matter, especially in the nascent solar market. The industry represents perhaps 1% of the total energy market. Therefore, advertising and brand-building are essential means to educate consumers and stimulate the market. SunPower is smart because 1) they are establishing their name, and 2) they are driving new customers today.

Brand obviously does not matter. System reliability, performance and cost effectiveness are what matter to financing; if you want to call that a brand, fine.

Posted by lloyd | Report as abusive

Branding has served SunPower well as the domestic market matures, but now there are peers and equals in the game, with comparable efficiency’s at far less cost. There are also many players looking forward to $1.00 per watt panel prices due in 12-24mos verses the current $2 or the $3 of last year. That may not bode so well for premium cost SP panels or service. The VC’s have it right in regard to brand caution. In a new world of TBL costs and limited leverage, premiums will be harder to justify if the ROI and NPV are equal.

Yes, I fully agree with Mr.Werner – solar power equipment and installation services are just like other market commodities. Next to cost, people will always care about who they’re getting those services from. The industry is rapidly developing, with many new players getting in trying to catch a ride in this massive green wave. Eventually, only those who succeed in equating their brand to quality and excellent customer support will rise above the crowd and dominate the market.

I agree that brands can provide a certain level of comfort and assurance of stability to the consumer, and I don’t see why a company such as SunPower–who can back up their claims with years of experience at this point–shouldn’t pursue that element of marketing. However, I fully agree with Mr. McKee: ultimately, what consumers need is reliable service and accreditation. The solar industry so far does not have easy-to-parse standards that consumers can access; NABCEP is great but it’s nothing close to a standardized national system. The companies who can offer value together with quality products and customer service will eventually be the ones we recognize as trustworthy brands–to a large extent this will be an organic, market-driven process.

Branding has a lot of power, but only when it is competently and substantively ties to quality, durability, and reliability.

For this particular product and market segment, no one manufacturer can back up its claims with real-world data. SunPower obviously understands this, and is trying to establish that association. The question is, do their products have the inherent quality to back up these claims?

If a manufacturer evaporates in a few years, then all such marketing is wasted effort. This technology is still undergoing heavy innovation and improvement. The form factors for various applications, their applicability and desirability for various markets and installations, costs – both up-front and long-term, and the longevity of the manufacturer are all factors in the equation.

The trick is to evaluate the factors detailed above and make the correct choice, which will be proven or disproven through the years.

Posted by Prototypical consumer | Report as abusive

nice article, i think this strategy will work for sunpower.

although solar energy may be a commodity, the actual panels can be made to higher specifications and use better materials increasing the life of the product. i could imagine panels with different colors to match or compliment the building’s exterior.

Posted by dvictr | Report as abusive

Installers play a critical role in the brand since they are the real face to the end customer. The premium product needs to be available through a premium channel. SunPower has selected top-notch installers to maintain their brand presence.

Posted by Richard | Report as abusive

Brands matter because the quality of the installation, the longevity of the panels, etc. vary from manufacture to manufacturer and company to company. Autos are a commodity too in this fashion. Pretending brands don’t matter ignores about 95% of the equation.

Posted by Robert1234 | Report as abusive

Brand is the result of your reputation. If you have succeeded in making goodwill, then your name will become a brand promising people to provide the best quality. In my opinion, brand always contributes in customers choice and as compared to solar power, still good brand will win the race.

[...] is where brands come in. Brands matter in all markets, especially so in emerging markets like solar [...]

[...] is where brands come in. Brands matter in all markets, especially so in emerging markets like solar [...]