Once you and your organization have decided to move forward with a solar installation you will need to choose a solar contractor. This article addresses the key issues you should consider in choosing a solar contractor.
In addition to helping achieve competitive pricing the process of choosing a solar contractor is critical for several reasons:
Not all buyers are required to conduct an open auction process known as an RFP or request for proposals. However, an RFP can help flush out competitive bids in a way that facilitates a meaningful comparison.
In an RFP, buyers solicit bids from contractors. The RFP is a document that requests that interested contractors address not only price issues but also answer questions regarding their proposals for specific solar panels, their ideas on how much solar power can be produced by the project, their experience and qualifications, and many other factors that are relevant to a decision.
In order to reap the benefits of an RFP a buyer will want to receive multiple bids. To assure this the RFP document must be distributed to prospective bidders. Some buyers send the RFP directly; others use third party consultants or law firms to prepare and distribute their RFPs.
Most third party consultants and lawyers will charge fees to prepare the RFP and review the inbound bids. If you use a third party make sure they understand solar construction and financing. We have seen many RFP documents prepared or negotiated by law firms that miss important details. In the interests of full disclosure, we at Solomon Energy provide this service but unlike most advisors we do not charge for our RFP services. We are paid only if our client decides to proceed with a project.
The quality of responses to an RFP will depend upon the care used in choosing the contractors to receive it. Use your search engine, e.g., Google, to look for lists of the “Best Solar Contractors” or the “Top 20 Solar Contractors.” You could also narrow your search by specifying your geographic region, e.g., “Best Solar Contractors in New York.” These lists should help you identify contractors with a national or regional presence.
Whether or not you choose to conduct an RFP for your solar contractor, don’t limit your search to the biggest contractors or the ones who advertise the most: Smaller contractors may be better suited to work with local Town zoning and tax commissions as well as building departments who issue the permits required to build. They may have better relationships with local utilities who must connect the project to the grid. And they may have local crews that are available to complete your project in a timely manner.
To find these local contractors ask other building owners and facilities managers. You probably have seen from a local highway a rooftop solar installation on a factory of commercial building. Call the owner and ask who they used.
Whether or not you conduct an RFP, you should ask bidders to perform a minimal amount of due diligence on the project and answer a number of detailed questions. Don’t be concerned that the contractor is spinning its wheels. Solar contractors are thrilled when motivated customers contact them and show they have given their project some thought. Moreover, many of the things you are asking for they have prepared for other prospective clients before.
Here are some questions you should cover. If you distribute an RFP you should ask for these in writing. Remember that if you miss some questions or learn something new you can always supplement the RFP with another email blast to the original list:
There are several important factors to evaluate in choosing your contractor. Some of these can prove to be more important than the cost of the solar project or the PPA price.
If you send out an RFP you will set a deadline for submissions. That deadline is within the control of the building owner and its advisors; it can be extended if need be. But to be fair to all of the contractors who are submitting bids, a deadline is a deadline. Once the deadline is passed – assuming it is not extended – it should be honored. Any submissions received after the deadline should not be accepted.
Prior to the deadline you should not open any bids. This will avoid any allegations by contractors that you shared the proprietary information in their bids with other contractors and thereby gave those other bidders a leg up. You can answer questions of bidders prior to the deadline. But all answers should be circulated to all of the contractors who have been solicited. This ensures that everybody has the same information when they bid.
Prior to the deadline, any bidder should be allowed to withdraw their bids and to resubmit or modify them. Once the deadline passes no amendments should be permitted. However, in the course of clarifying questions about bids or negotiating contracts with the solar contractors you choose the contractors should be allowed to improve their bids.
Now is the time for you to review the offers you receive from solar contractors and compare them.
This process is not as easy as it seems. Even if asked very specific questions, every contractor responds differently. Sometimes contractors do not answer all of the questions. This could be an omission on their part which might reflect negatively on their bid. But it could also be an honest misunderstanding that can result from an ambiguous or complex question.
Even if the contractors you solicit answer all of your questions in detail there will be many challenges. How do you compare, for example, two different solar panel specifications? Or two different configurations, one of which delivers 450 kilowatts and the other 550 kW?
To rank your bids in order of desirability you will need to do an apples-to-apples comparison. A spread sheet should be prepared with your bidders listed on the left, for example, and your criteria specified at the top of your columns.
Key criteria for evaluation will fall into two categories: System specific and contractor specific. System specific items may include:
Contractor specific items may include:
After completing your apples-to-apples review the most attractive solar contractor will probably appear. However, in case negotiations do not go well, try to narrow your selection down to two or three solar contractors, not just one. This will not only give you a fall back in the event that negotiations with your top choice do not work out. By keeping competitors in the wings you will increase your chances of striking a beneficial deal with your top contender.
Before making your final selection you will want to review detailed contracts and determine whether the final proposed terms of the deal are satisfactory. Contracts should be negotiable and you should not finalize your decision until you are satisfied that you have a deal that protects you.
There are several issues that you should review carefully with a view to negotiating better terms from solar contractors:
Supervision of Solar Contractor
Once selected, your solar contractor will get to work. Make sure that you have the staff, resources and experience to evaluate the contractor’s work. Here, too, you may wish to turn to an expert that can see your project through to completion.
Specifically you or your advisors will want to watch for a number of issues:
After reviewing these topics you may find these other articles of interest: