What Are the Real Reasons Behind Low Adoption of Commercial Solar?

Solar Parking Structure, Fremont, CA

Solar Parking Structure, Fremont, CA

When I talk to sustainability managers at medium-sized businesses about whether they plan to install solar photovoltaics for their building, many say they don’t own the building so they can’t. This raises an interesting question for those of us who want to see widespread adoption of net zero energy buildings with solar photovoltaics. After all, we will not reach California’s goal to reduce greenhouse gas emissions 80% by 2050 without solar panels on every possible rooftop or parking canopy.

From a Community-Based Social Marketing perspective, identifying the root cause barriers to commercial solar adoption allows development of effective solutions. We need to dig deeper into the reasons why so few medium-sized businesses have solar panels when the prices have fallen precipitously and financing options are plentiful.

Concerns Voiced

When trying to figure out the root cause barriers to commercial solar adoption, look beyond the many medium-sized businesses that rent their office, warehouse or factory space. Management of the building is often in other hands: the commercial property owner and property manager.

The non-profit Clean Coalition has done a great job laying out the perceived barriers and solutions to commercial solar in their Solar Solutions Guide. The most common concerns commercial property owners and property managers have about solar include:

1.      Initial cost (if purchased up front)

2.      Lien on property (if financed through property taxes)

3.      Rooftop integrity (risk of rainwater leakage)

4.      Return on investment relative to normal business operations

5.      Outside core business area (described as a "complicated distraction")

6.      Reliability of system (workmanship, project management)

7.      Wanting to wait because solar technology efficiency and cost are constantly improving

8.      Effort to gain permits and approvals

Solutions

According to some commercial property owners I’ve talked to, if their tenants asked for solar, they would do it. From the tenant’s perspective, if they are interested in seeing their building have solar, they should express interest with their landlord. In terms of the property owner’s perspective, their concerns have been addressed by others in these ways.

·        Financing - Choose the financing method that best meets your needs (solar leasing, finance through property taxes, or bank financing if buying the system)

·        Solar installer – Choose a solar developer and installer with a long track record of successful project development

·        Turnkey solutions – A solar developer can act as sole liable party for insurance, repair and replacement of roof, and can take care of permitting, paperwork, rebates and fees

Top 5 Ways a Sustainability Program Can Help Your Company Act More Like a StartUp

Last month at a conference for startups in Silicon Valley, I met several people who work at large corporations and institutions. I wondered why people from WalMart, NASA and the company that makes waterproof fabric GoreTex were attending a conference for budding entrepreneurs. Each said they wanted to help their organization be more innovative.

More than a popular buzzword, innovation is the essence of a startup. Steve Blank, the co-author of The Startup Owner's Manual, defines a startup as an organization that "works to solve a problem where the solution is not obvious and success is not guaranteed."

Several years ago I worked at a green social media startup called Greenwala. Our team was excited about the possibility of making a big impact but also knew we would probably need to launch before we were ready. The project felt like taxiing down a runway while we were still bolting wings on a plane. Still, the experience was fun because everyone on the team was so engaged and committed.

Companies that are more established can generate the energy and employee commitment that startups enjoy even if they have already developed a product or service they are happy with. This is where expanding the company’s sustainability program comes in.

Sustainability adds value to the company while using fewer resources. Think about energy efficiency, water conservation, waste prevention, green building and alternative commuting. Sustainability projects not only require employee engagement to successfully implement, they also result in increased employee engagement. Benefits include not only saving money for the company, but improving employee health and increasing employee productivity.

Here are several examples of medium-sized companies that understand the connection between corporate environmental sustainability projects and the best qualities of startups.

1)      Sustainability is about innovation

Robert Jones, Marketing Manager at National Raisin near Fresno, CA, believes that his company’s sustainability program is part of what makes them special. He explained:

“Our production process is fairly straightforward. We grow grapes, we dry grapes, we package raisins and we ship raisins. There’s not much that’s innovative about it. But you should have seen our employees when Pacific Gas & Electric came to present a $200,000 rebate check for our 12 million gallon methane digester. Between that and our 3.53 MW of solar, our employees were so proud.”

Robert believes that their sustainability projects are their innovation and help make them “one of the elite companies in Fresno.”

2)      Sustainability helps organizations operate better cross-functionally

Startups are generally non-hierarchical, networked organizations that encourage employees from various departments to work together. The open floor plans of startup offices facilitate cross-functional collaboration. Traditionally businesses segregate office functions by department which creates a silo effect and restricts interdepartmental communication. Employee involvement in sustainability projects helps to overcome the silo effect.

A construction company in Austin, TX, started a green team for environmental reasons but ended up enjoying an unexpected separate benefit. Karen Heet, the Sustainability Manager at Journeyman Construction, said:

“One thing that came out of the green team that you wouldn’t think had anything to do with green or sustainability is because we were all in different parts of the company, operations and accounting and such. One of the things we realized, talking to each other on a monthly basis, was that there was no communication across departments.”

Green teams with members from each department also end up operating better cross-functionally because employees with different job functions get to know the challenges and concerns of each other. This results in more empathy and effective problem-solving among colleagues.

3)      Sustainability helps retain top talent

For companies that are growing and want to retain their top talent, sustainability projects provide key support. Dave Stuart, a technical services manager at Ghirardelli Chocolate in San Leandro, CA, explains that losing a valued employee is expensive. On-boarding a new person costs about $60,000 including recruiting, relocation costs, lost productivity and training, according to Dave. Ghirardelli is currently making investments in their main manufacturing building and offices because they want to keep the high quality employees they have happy and productive. Many of these upgrades are also measures that green their operations.

What’s interesting about Ghirardelli is that they have a LEED green building, have several electric car chargers, encourage alternative commuting, have switched to reusable transportation packaging and are about to install a large solar system. Yet they don’t mention these sustainability projects on their website. Their sustainability web page talks about the West African farmers from whom they purchase cocoa beans.

4)      Sustainability attracts top talent

Thinking beyond the talent a company already has to the talent a company wants to attract, sustainability programs assist here as well. Baby Boomers are starting to retire in large numbers. Many top level managers are struggling to replace them. In order to attract top talent from the Millennial generation, one key differentiator involves sustainability. According to the Journal of Sustainability Education, between 92 and 96 percent of Millennials want to work for environmentally conscious organizations. Recruiting the next generation of workers will be easier for businesses that have already greened their operations.

Zero waste sorting at organic produce distributor Veritable Vegetable

Zero waste sorting at organic produce distributor Veritable Vegetable

Sustainability is a journey, not a destination. Companies do not need to achieve ambitious goals of net zero energy and zero waste right away. Consider Auris Surgical, a startup that develops surgical robots. Given the sophisticated technical work the company does, this fast-growing company has an extensive and rigorous hiring process to find top talent. Their employees, mostly in their 20s and 30s, expect the basic green amenities they’ve grown up with: a comprehensive recycling program, bulk snacks that minimize packaging, and bicycle racks for the large number of employees who bike to work. Auris doesn’t call the projects a sustainability program. They consider them the bare minimum Millennial employees demand.

5)      Sustainability engages employees

When trying to recruit or retain employees, one goal of Human Resources is to engage employees so they are happy and productive at work. Unfortunately, an annual Gallup poll found that less than one-third of U.S. employees are engaged at work. This number has held steady for the past decade.

While about 30 percent of employees are emotionally committed to their work and their company, 50 percent are not engaged and 17 percent are disengaged according to the Gallup poll. Clearly there is room for improvement and sustainability programs can help.

Susan Hunt Stevens, the founder of WeSpire, a technology company that focuses on employee engagement with sustainability, has found that:

“Employees who engage in the company’s sustainability and corporate social responsibility initiatives have statistically significant increases in their overall engagement rate.”

Evidence of this can be found at American Licorice, a zero waste candy manufacturer in Union City, CA. Joaquin Almaguer, the Safety and Sustainability Coach, credits the company’s employee engagement program as a major reason turnover at the company is so low. Each month the company randomly chooses one employee who takes mass transit to work and gives him or her a $25 gift card. Even small efforts can make a big difference to employees.

Employees who feel appreciated, listened to and engaged are at the heart of successful companies. One element that engages them is a sense of purpose. Sustainability projects lend meaning and help employees feel part of something larger than themselves. The energy and sense of purpose that are alive in startups can be embedded in more established companies through expanded sustainability programs.

One company that particularly understands this connection is Rainin, a lab supply company in the San Francisco Bay Area that makes pipettes for university labs and biotech. David Greenwood, the manager of Quality Assurance and Sustainability, pulls it all together. He explains:

“We consider ourselves fairly green already. It’s one of several things you can do as a package to attract Millennials. One of them is your green message. Another thing is your general work environment. Is it collaborative in the way the furniture is designed and laid out? Do you have conversation areas? Being a green company is definitely a piece of it. My boss and I are planning to take down the cubicle walls to have more of an open office space and bring in a touch of Silicon Valley.”

Companies that are larger and more established than startups are borrowing elements of Silicon Valley’s organizational culture of innovation when they expand their sustainability programs. The benefits these larger companies realize stretches way beyond environmental benefits. David Greenwood from Rainin sums up what they're trying to accomplish when he says "A happy employee does a better job."

Attracting the Next Generation of Workers

Business forums throughout California are discussing how businesses can attract Millennials. Now that Baby Boomers are starting to retire, companies need to be able to hire younger workers. The challenge for business managers is that Millennials want to work for green companies.

A 2010 study by Johnson Controls found that 96% of Millennials, those born between 1981 and 2000, are highly concerned about the environment and expect that employers will take steps towards becoming more sustainable. The study also found that:

·        57% said they want their employers to perform well above minimum compliance

·        70.3% want access to recycling bins

·        47.4% want water-saving devices

·        71.6% want to share office printers

·        47% want solar panels on site

Clearly there is some work to be done at many businesses. Implementing energy efficiency and water conservation projects, installing solar panels and electric vehicle chargers, and expanding recycling programs will not only reduce operating costs but help with employee recruitment and retention.

Calculating Benefits

While cost-benefit analysis, net present value and internal rate of return calculations are valuable tools to sell a business on a sustainability project, other factors should be used when discussing the value proposition.

Author Bob Willard, The Sustainability Advantage, has done interesting research to calculate bottom-line benefits to businesses that implement sustainability projects. Employee recruitment, attrition and productivity factor into the calculus. So do market share and insurance costs. 

  • Reduced recruiting cost (-1%)
  • Reduced attrition cost (-2%)
  • Increased employee productivity (+10%)
  • Eco-efficiencies in manufacturing (-5%)
  • Eco-efficiencies at commercial sites (-20%)
  • Increased revenues/market share (+5%)
  • Lower insurance and borrowing costs (-5%)

In the aggregate, Willard argues that these benefits offer a profit increase of at least 38%. Add to this calculus the difficult to quantify, but nonetheless meaningful, spiritual benefit of being a good steward of our environment for future generations. 

For those who try to motivate business managers to implement sustainability projects, broaden the conversation beyond operational cost savings. Some of the benefits listed above may resonate with your target audience and inspire her/him to agree to implement your proposed sustainability project. 

Photo courtesy of Tecnowey

Benefits Besides Cost Savings

In 2003, Metro Portland’s government set out to study the barriers and benefits of donating surplus prepared food. The metropolitan area was throwing away 360 million pounds of food annually. While their overall recycling rate was 57 percent, the diversion rate for food waste was much lower. The solid waste agency wondered what factors motivated restaurants, cafeterias, grocery stores and schools to donate food; and what factors hindered them.

At the same time garbage trucks full of food waste were headed to the landfill, the Oregon Food Bank was struggling to find sources of nutritious food. This was when Oregon had one of the nation’s highest rates of food insecurity. 

As the solid waste agency studied the barriers to food donation for their "Fork It Over" food diversion program, they learned that businesses had many concerns. 

·        Will we be liable if someone becomes ill after eating this food?
·        How will we ensure the food will stay in the safe zones (<40 degrees or >140 degrees) until it can be consumed?  
·        How much additional time and labor will my staff need to spend?
·        Can someone come pick this up for us?

The most surprising point about this story has to do with the perceived benefits, though. When asked what motivated them to donate excess prepared foods, the staff at the restaurants and grocery stores did not say “avoided cost of disposal” or “tax write-off.” Those were attractive benefits Metro Portland had mentioned but not the businesses' main motivation. Most stated that they joined the program because “it’s the right thing to do.” Food service staff disliked throwing away whole pans of lasagna, platters of baked chicken and bowls of salad when they knew many people in the region did not have reliable access to affordable, nutritious food.

For those of us who work with businesses to implement energy efficiency, water conservation and waste prevention projects, it is interesting to hear that more than just operational cost savings motivate business leaders.  

No-Cost Efficiency Projects

A few years ago an accounting firm with 80 employees was using office paper at a rate of 200 tons per year. One of the senior managers thought the company could reduce this number and rolled out a comprehensive paper reduction program to all employees. She promised to throw a special party for all employees if the firm reduced paper use by 10% per year. By the next year the firm’s paper use had dropped 40%. 

No upfront investment was needed for the accounting firm’s paper reduction program; yet for the project to be successful, the business needed someone embedded in the company to shepherd employees through the change process.  The project manager worked with their green team to roll out one paper reduction strategy at a time. She tried to keep communications about the project interesting and fun.

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