Winners and losers from Victoria’s rooftop solar rebate scheme

While the Solar Victoria solar rebate scheme got off to a very bumpy start, it now appears that the surge in consumer demand is finally starting to ease somewhat, as I write this in November.

The Victorian government can and should be lauded for supporting the uptake of solar. However, one of the consequences of the scheme which has been discussed at length by industry is how it has distorted what was previously an “organic market”.

Previously, market demand was driven by a wide variety of factors and solar businesses found their niche and ploughed on. Naturally, some were successful and some less so.

However, for the introduction of the rebate scheme to be successful a very narrow band of criteria had to be met, not least of which was how to scoop up potential buyers quickly and get them approved even quicker before rebates ran out.

Some companies adapted to this extremely quickly and there has been speculation that some companies rushed into the market purely to chase the rebate honey pot. For those of us who have watched and wondered, it was a great relief to recently be provided with a data set from Solar Victoria which now explains the detail of who got what.

The data set covers July to October 2019 and is expansive; I have done some preliminary analysis on some key statistics to give you a sense of some of the more interesting initial findings.

The spread

All up, the database of solar retailers who received rebates through the scheme numbers 648 companies. On the surface, that’s evidence that a very large number of companies did participate and just like the solar industry in its entirety, there are a small group at the top who dominated and a very long “tail” of companies who got very small numbers of rebates.

Focusing on “how many companies got 50% of monthly sales?”, this indicates a small change. In July, 54 companies got 50% of rebates. In August and September it was 49 and in October it widened slightly to 59 companies. So, although small, there is evidence that the number of companies getting large shares of the market grew slightly over time.

Looked at another way, the top 10 ranked companies snapped up around 20% of total rebates across the period. The top 100 ranked companies got 70% of total rebates, leaving around 30% for the remaining 548 companies across the four months – which is where the pain was really felt and why so many were so critical of the program.

You can draw your own conclusions on that.

Who are they?

The entire database can be found here.

We haven’t analysed who is purely Victorian based but it is evident that as one would expect, a number of interstate companies participated. It is also clear from the trading names that a number of companies operated under a number of trading names and entities. No doubt a number of retailers set up partnerships, some created specific new entities and some used both older and newer trading names. Although I don’t know their strategies, it would appear that some companies were using different brands to leverage different strengths and of course to provide more than one route to a customer.

The big guns

With around 5000 solar companies operating in Australia and in some cases operating under multiple trading names I defy anyone to know exactly what the hell is going on in our market and I’m no different.

However, I spent a bit of time looking at the main players in the Victorian market based on publicly available information. I have been tracking the market for decades and with only two exceptions, I had not come across three of the top five ranked companies.

B. Solar and Origin Energy are known to me and ranked 2nd and 5th respectively scoring 2.2% (456) and 1.7% (346) total rebates over the period.

The number one ranked company is Solar Miner, not a company I’ve heard of before. Their registered address is at a small shopping centre about an hour north west of the Gold Coast and they registered the name on 10th March 2015. A search reveals that this is a trading name and the entity behind Solar Miner is called The Green Miner Pty Ltd, also registered at Jimboomba and registered in January 2015. This company has three trading names but only one is current (Solar Miner). The other two were both cancelled as of July 30th 2019 – one was Green Incentives and the other Milli’s Chilli Indian Grocery and Takeaway.

Solar Miner list two awards on their web site for “Word of Mouth Service”, described with criteria including 1) A minimum number of 4 or 5 star reviews entered during the year from Word of Mouth members; 2) More than 90% of the reviews being positive; and 3) The absence of any unscrupulous activity associated with the business account. They are also listed as a CEC Approved Solar Retailer and Member. Of their 58 Google reviews, 54 are 5 star, 3 are 4 star and 1 is 1 star.

Solar Miner managed to secure 4.5% of all rebates and in July peaked at 7.7% of the month’s rebates. In total they secured 946 rebates, almost double the second ranked b.Solar. For a relatively young Queensland based business to achieve this is quite something and I look forward to learning more about them.

b.solar secured 456 rebates and as much as 2.7% market share.

The company name is somewhat newer having registered in November 2018 in Victoria. They also own the names Solarhouse Victoria and belongenergy. Interestingly, Telstra filed a lawsuit for trademark infringement against belongenergy in March this year.

I couldn’t find much on Solarhouse but did discover b.solar changed their name from Advanced All Energy who were registered in South Australia. A search on this name brings up The Trustee for Foti Vakitsidis Family Trust, active since 09 Jul 2013 and in turn, three trading names B Solar Holdings, Fair Dinkum Solar and advanced all energy.

Delight Solar secured the third top spot with 370 rebates and 1.8% market share, peaking at 2.2% in August. The company was registered in Victoria in 2014 and have a small number of 4 star reviews.

Other than pretty standard Facebook and web pages, I can’t see much more to tell about Delight Solar.

Voxlen were ranked in position 4 with 348 rebates 1.7% market share over the period and a peak of 2.8% in July. They registered in Victoria in April 2016 and also have the name Unified Solar Power registered under their parent entity.

A dig around actually reveals very little promotional activity that I could find under either of those trading names; no web sites, no Facebook no Google reviews. It could be they were trading under another associated name that I couldn’t find or simply that they weren’t advertising directly but instead using databases and direct marketing.

Origin Energy round out the 5 and are obviously well known to us all, being an energy retailing giant.

What can we learn from all this?

There are a few things.

Firstly, although clearly some companies dominated sales, across the four months of data, the number one ranking retailer only achieved 4.5% of total rebates. This is below the peak rate of market power in Australia where one company once had around 9% of total sales, although the current market leader has less share than this.

So, in that sense, although there is concentration of market power, its less than the National average.

Secondly, like the national market share picture there is always a concentration at the top and a very, very long tail of companies doing smaller volumes.

What I don’t know and is perhaps most telling is, if we compared rankings pre and post rebate would the positions of companies look different? My suspicion is yes, simply because rebates attract businesses. So, some companies who may have been ranked much higher in the organic market were more than likely pushed down the rankings by the entrance of new players who were laser focused just on how to win rebates.

Looking at the rankings we can see a number of Victorian companies who were in the top 50, so some managed to find a way through it.

Thirdly, although I dug deep on the top five companies and you could arguably speculate various things based on their other trading names, age or other factors it is purely speculation. Many companies have multiple trading names to service different customer types, markets and services and that is neither a bad thing nor is it uncommon.

If I was (hypothetically) a decade old Victorian solar business and a 1 or 2 year old company stormed my market and gobbled up rebates I would certainly and rightly be annoyed, but unfortunately that’s business.

Fourth, by my analysis 296 companies (43% of them all) got 5 jobs or less in total. One job a month is not enough to sustain much of a business and assuming a proportion of them were doing more than that previously, there is a pretty heavy negative impact on a lot of businesses. 60% of businesses (392) only got two jobs a month, so not much better.

Conclusion

Having rebates to accelerate uptake is wonderful and has helped to build a successful solar industry in Australia. We know from experience that rebates inevitably have unintended consequences and change market concentration.

The market concentration in the Solar Victorian Rebate scheme is lower than the National average which is good, but we should acknowledge that a large proportion of businesses have potentially suffered negative impacts which is not good.

I think the only real finding we can draw is that rebates are great but have an inevitable sting in their tail.