An Unusual Plan for Lowering Solar’s Customer Acquisition Costs: Infomercials

Recent solar and storage entrant Generac believes it can generate sales leads on the cheap through the old-fashioned TV ad.

SALT LAKE CITY — Generac Power Systems, a Fortune 1000 company that sells residential backup power generators, is making a play for the residential solar and storage market.

This spring the Wisconsin-based company, part of stock-listed Generac Holdings Inc., acquired storage manufacturer Pika Energy and home energy management system company Neurio Technology. Relying on those technologies and drawing on the 60-year-old company's experience in fostering markets, Generac will sell home solar and storage systems, to be installed by an army of contractors.

Russ Minick, Generac’s clean energy business leader, said the company sees “a tremendous parallel” to its existing work with home backup generators. “We look at the solar and storage market and we see rapid growth, and we don't see really entrenched leaders in the space."

Generac plans to draw in new customers in part using a multimillion-dollar infomercial campaign. Those leads will then be shuttled to contractors that will sign customers and carry out installations. 

After selling more than 2 million residential backup systems and building a roster of 6,200 contractors, Minick said Generac is well positioned to jump aboard the solar coaster. 

“We have our supply chain, our sourcing, our engineering — all that fits perfect in the solar space,” said Minick. “There are so many synergies here…why not?” 

While Generac will be selling systems from Neurio and Pika, Minick said the company is “panel-agnostic” when it comes to solar and open to whatever product its contractor wants to use.

Generac offers loans through GreenSky and Loanpal on its platform, and will soon add Dividend to its roster. Other financing options, like leases or third-party ownership, may be offered by the contractor as well.

The infomercial route

Generac’s unique infomercial model may allow the company to reach a wider swath of customers in a space where bringing on new consumers is notoriously expensive. Though dropping millions into TV ads isn’t cheap either, Generac expects to get a return on its investment through leads that it can then pass to contractors who would in turn install its systems. 

For that reason, Minick doesn’t see Generac as a threat to more established solar-and-storage companies like Sunrun or Vivint (a Vivint spokesperson told GTM at the show that she’d seen a Generac infomercial just the other day). 

“We wouldn’t compete; they would be customers of ours,” said Minick. “They're interested in our lead generation; we're interested in being [their partner].”

According to Minick, the infomercial model is proven: Over the last 12 months Generac created more than 100,000 annual appointments for product followups, he said. 

And compared to typical customer-acquisition costs that clock in at about $4,550 per customer for a 7-kilowatt solar system, according to Wood Mackenzie Power & Renewables, Minick said Generac can likely bring in appointment leads for less than $150 a pop (Generac’s system sizes start at around 8 kilowatts).  

“No one has unleashed the power of TV on the space,” he said.

Opening the floodgates on that volume could come with drawbacks, though. Generac said it’s already “basically” sold out for 2020 and is working to keep up with demand and make sure product is available. 

“We're used to volume and supply chain,” said Minick. “This one caught us off guard a little bit [in] that the demand has been more overwhelming than we thought it would be.”

Generators still best for long outages

Entering into the clean energy market allows Generac to “future-proof” its business, as more customers look to renewable solutions amid growing concern about climate change. But Minick said its new products are likely to appeal to different customers than those interested in its generators.

While its core market for generators exists in hurricane-prone areas like Florida and the Northeast, Minick said Generac plans to sell storage and solar into states like California, Arizona and Hawaii. Though there’s a “small overlap” for customers — think Puerto Rico, where customers are looking for renewable resiliency solutions and fuel deliveries can be stalled due to weather — the company still views generators as the best option for long power outages. 

“For a long-term power outage, which most people buy [generators] for, this is a far more [effective] machine,” said Minick, pointing to Generac’s generator display at Solar Power International. “Natural gas is dirt-cheap.” 

That opinion will likely make Generac something of an outlier in the clean energy industry, where entrepreneurs peddle solar as a free and consistent resource. But Minick does acknowledge the daily money-saving opportunity offered by solar and batteries. Ultimately, Generac sees those technologies as complementary to its existing portfolio.

“This is a power outage machine that sits there,” said Minick, nodding to the generator. “Most of the time, if all goes well, it never turns on.”

As for storage, Minick said, that’s “power insurance.”

“These products run on a daily basis and save money,” he said, speaking of solar and storage. “They're a planet-saver and a money-saver.”

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Related research: 'U.S. Solar Market Insight' (Wood Mackenzie)