Adapting to a tough solar market

The restructuring of solar retailer, Carbon Management Solutions, illustrates the difficult but necessary adaptation required to survive a contracting market.

Much like the global PV industry, Australia is starting to show signs of going through a sometimes painful consolidation phase.

With global prices collapsing by 75% or more in the last few years, sales exploded- in conjunction with FITs and strong rebates. But this came at a price, with revenues collapsing at the same rate. However, the cost of sales hasn’t really changed much, and competition is as intense as ever. This is putting most companies under extraordinary margin pressure; we wrote about this back in February 2012.

Although our industry has a head of steam that I remain bullish about, consolidation and belt tightening is inevitable.

Recently I was asked by a client “What’s your view on company XXX’s announcement that they are shedding 20% of their staff ?”

My response was, “I’m sad for the loss, but happy that they have moved fast because it means they are adjusting for the changing market conditions and more likely to survive.”

So when I heard about Carbon Management Solutions restructure, I was also a little relieved. For those of you who don’t know, founders Cameron and Amber Ferguson have a great story to tell including being a former winner of SmartCompany‘s Smart50. They grew their NSW based business into a substantial operation and moved from retailing to wholesaling and even into product development. It was a tough road with some pain along the way. 

But what I saw was two extraordinarily committed people working hard to build a business, employ staff and support the industry’s healthy growth. Hell, they even had their own prime mover for a while!. But being NSW focused, they took a substantial blow at the hand of Barry O’Farrell, when his Government botched the handling of the NSW gross feed-in tariff.

Did they get everything perfect? Nope.

Did they give it a great shot? Absolutely.

So today’s news about their restructure is sad on one hand, but a sign of their maturity on the other.

Carbon Management Solutions and Aussie Solar Installations have been merged into a new single entity, with the original entities wound up.  This will allow the company to focus on the commercial market, instead of residential installations. Ferguson stressed the company is not disappearing through the voluntary administration.  Instead they are forming a new group, Carbon Management Solutions Group, which will trade as Aussie Solar.

Interviewed in SmartCompany, Amber Ferguson was quoted as saying,

“In order to survive, the business has to focus on its most profitable possibility – commercial installations. We need to be able to show businesses we are able to reduce their electricity consumption.”

She noted that many other companies are turning to commercial installations in order to survive. “These new companies are trying to start up business models…whether they will be able to succeed remains to be seen.”

The company has been working on a battery technology for the past two years, which is now ready to be released to the market. Ferguson said, “We’re opening up into different fields as well.  It’s been a huge investment; It’s been quite difficult in trying to make this type of technology consumer friendly, but we think this is definitely something the industry needs.”

The amount of effort Ferguson is putting into revitalising the company is a testament to just how difficult the solar industry has become.