RevoluSun will own its first five Mainland businesses when it expands beyond Hawaii next year, a change in strategy from earlier plans to begin with solar-power franchises.
But its principals still plan to develop franchises in what they’re calling phases two and three of their expansion plans.
The Hawaii solar-power company plans to open businesses as early as March 2012 in five Mainland locations: New Orleans, Massachusetts, New York, Connecticut and Central California. It chose the markets based on the cost of power, margins, the friendliness of the local utility toward renewable energy, and tax incentives.
After its first phase is complete, it plans to roll out two more phases of Mainland expansion – all franchises – making it the first Hawaii-based PV company to make the leap across the Pacific Ocean.
Its move beyond the state may signal the start of Hawaii’s industry-leading PV companies expanding to other markets outside of their own backyard, as they look to take advantage of other ‘solar-friendly’ areas across the Mainland.
RevoluSun plans to have 25 franchises in 2013 and 100 more by the end of 2014, spread out across the Mainland. It would not identify possible markets for the franchises.
“We want to get the energy, passion and entrepreneurial effort to people running a franchise,” RevoluSun PrincipalMark Duda said. “We really want to get those kind of people working for themselves on our team.”
The decision not to franchise in phase one is due mainly to the fact that the two-year-old PV company has exceeded its sales projections for this year. It projected sales of between $45 million and $50 million at the beginning of the year, but has generated $80 million so far in 2011, according to Principal Eric Carlson.
Carlson expects sales to reach $160 million in 2012 – more than 20 times the amount generated in the company’s first year, 2009, when it made about $7.5 million. Sales totaled about $25 million in 2010, he said.
As its sales have grown, so too has its work force. Carlson predicts that the company will have 70 employees next year, plus a sales force of between 60 and 90 subcontractors and 80 to 100 subcontractors on the construction side.
“We will probably hire 100 people per location at medium performance, which could mean more jobs if sales are better than that,” Duda said.
In its first phase, Duda said RevoluSun will add 10 to 15 more jobs in Hawaii. It already has operations on Maui and the Big Island and a warehouse in Kona.
RevoluSun is not the first PV company in the U.S. to franchise its operations. California companies such as Yes! Solar and Solar Universe offer franchises, as well as Lighthouse Solar in Colorado.
Duda said the company has hired a franchise consultant to help it through the expansion. He declined to say how much it will cost to open each location during the first phase. Nor would he disclose details of its franchise agreements during phases two and three.
SolarCity, which is spread throughout 12 states and Washington, D.C., including Hawaii, is a veteran when it comes to expansion. The California-based company entered the Hawaii market earlier this year with strong connections to the military, quickly landing a deal with Joint Base Pearl Harbor-Hickam to supply a 4-megawatt power-purchase agreement with military homes at Hickam.
“The business model made sense and we got a good base with the military contracts,” said Pete Cooper, Hawaii regional director for SolarCity.
Cooper would not speculate on RevoluSun’s Mainland expansion plans but did say that the PV industry has lots of room to grow.
California-based REC Solar also has experience when it comes to expansion; it currently serves six states, including Hawaii.
“We’re already scattered throughout the Mainland,” said Drew Bradley, REC Solar Hawaii’s regional manager.
According to PBN research, REC Solar, which does only commercial projects in Hawaii, ranked second in the state’s PV market with $10 million in revenue in 2009. Its noteworthy projects include four Costco locations – Waipio, Kapolei, Lihue and Kona – and the 1.2-megawatt Kapaa Solar Farm on Kauai’s East Side.
“We continually are trying to drive down the cost of PV, so we’re a cost leader,” Bradley said.
He said it’s no surprise that RevoluSun is going through with its Mainland expansion plans.
“There’s no shortage of competition but it’s all about how much experience the competition has when entering the market,” he said.
Leaders of the Solar Energy Industries Association, the national trade association of the U.S. solar energy industry, also aren’t surprised by RevoluSun’s expansion plans.
“The U.S. solar industry employs more than 100,000 Americans at over 5,000 businesses in all 50 states,” said Solar Energy Industries Association President and CEO Rhone Resch. “As solar becomes accessible to more and more Americans every day, there will be opportunities for innovative companies up and down the solar value chain to expand into new markets and create jobs.”