Business Model Deconstruction for Solar Photovoltaic

(PV) Panels

Assessment 1

Industry Sector: Clean & Renewable Energy

Submitted by Mohammed Abdul Munaim Nabeel

Student ID: 12084238
Contents
Executive Summary .............................................................................................................. 3
Introduction ........................................................................................................................... 4
Business Model..................................................................................................................... 5
Building Blocks .................................................................................................................. 5
1. Customer Segments ............................................................................................... 5
2. Key Partners ........................................................................................................... 5
3. Value Proposition .................................................................................................... 5
4. Key Activities .......................................................................................................... 5
5. Channels ................................................................................................................ 5
6. Revenue Streams ................................................................................................... 5
7. Cost Structure ......................................................................................................... 6
8. Key Resources ....................................................................................................... 6
9. Customer Relationships .......................................................................................... 6
Interrelationships ............................................................................................................... 6
Critical Success Factors .................................................................................................... 6
Downside risks .................................................................................................................. 7
Business Model changes ................................................................................................... 7
Conclusion ........................................................................................................................ 7
Recommendations............................................................................................................. 7
References ........................................................................................................................... 8
Appendix ............................................................................................................................... 9
Osterwalder & Pigneur’s Business Model Canvas (Table 1) .............................................. 9
Solaray Energy Value Proposition Map Table 2............................................................... 10
Executive Summary
In present rapid technological developing world, energy has become crucial necessity and
with depletion of existing sources, researchers are coming up with newer and more
sophisticated alternative sources of energy.

In view and consideration of innovative source to provide clean energy, the topic for
Renewable Energy was considered which was further scaled to Solar Panels for
deconstruction of Business Model as part of the curricular assignment.

Although there exists various energy providers in Australian market, a case study was
considered for a Medium Sized Australian Company “SOLARAY” which is considered as one
of the leading solar panel company in Sydney. In absence of company’s financial statements
and historical performance, the study was restrained to make financial projections and
forecasts.

The business model can help the company in repositioning itself in acquiring greater market
share and create avenues in venturing into larger projects.

The following are the recommended alternatives for the future growth of company:

 Horizontal diversification from Solar Panel Installer to leading energy provider

 Generation of revenues through sustained growth by venturing into other renewable
energy sources
 Develop Research & Development for new innovative products for different customer
segmentation
Introduction
According to Renewable Energy Index Report, March 2018, published by Green Energy
Markets, 18,237 small scale solar systems were installed across Australia in March 2018 out
of which 5,117 (28%) installations were in New South Wales, 4,381 (24%) in Queensland,
3,452 (19%) in Victoria,2,837 (16%) in Western Australia, 2,011(11%) in South Australia
while Tasmania and Northern Territory have installed 241 (1.3%) and 162 (0.1%)
respectively; thereby bringing rooftop solar installation to power 36,710 homes3. This has
resulted in bill savings of $225 million thereby providing employment opportunities for 18,182
people.

Market Size
It is estimated that the Australia solar PV market size for residential and commercial sectors
is estimated to exceed 5 million units by 2030 with over 16 GW additions till 2030 1. The
government is providing support and has taken initiatives by designing the policies in
increasing demand for solar systems primarily in residential applications. Decreasing costs
of solar systems and energy storage devices is forecasted to offer huge potential opportunity
to the demand growth during forecasted period2.

Solaray has taken a strategic decision to position itself as a provider of smart energy
management technology entity that offers smart solar power systems and battery storage
solutions.
Business Model
Solaray offers smart energy solution through web portal, it provides free consultancy service,
installation estimation service for the enquiries received through the portal. In addition, the
company provides full service warranty with 10-year workmanship guarantee.

Building Blocks
Osterwalder & Pigneur’s nine building blocks approach is listed in Appendix

1. Customer Segments
The company offers smart energy solutions to the clients which can be classified as
individuals and non-individuals/business entities.

 Individual customer segment includes house owners, real estate owners,

agricultural farm owners, architects involved in designing the housing facilities
 Non-Individual customer segment includes commercial entities who are either
end-users or producers of renewable power; this segment includes entities
engaged in manufacturing, financial services, IT solutions providers,
telecommunication etc.

2. Key Partners
The key partners are clients who have contacted the company through their website,
emails and by new client referrals from existing customers and/or business partners’
leads

3. Value Proposition
The company has positioned itself in the market as a
a. Affordable smart renewable energy generation solution provider
b. Comprehensive energy solutions by offering best quality products and services
c. Sustained Growth through customer satisfaction

4. Key Activities
The company offers customized energy solution to individuals and commercial
establishment through its web based customer contact form.

5. Channels
The company offers its services through direct mailing channels, queries on responses
received from direct mailers to its potential client base through email. It doesn’t has any
retail outlets, however, they has office located in strategic locations in Sydney

6. Revenue Streams
The major revenue stream for the company is from the sales of energy solutions and the
battery components offered to individual and commercial segments. From individual
segments, the revenue is generated from the sales of solar panels and batteries while for
non-individual/commercial customer segment; the revenue is generated from the
execution of turnkey based projects.
7. Cost Structure
The cost structures constitute inventory built up cost, administrative and operating costs.
Operating cost include expenses incurred for offering technical services.

8. Key Resources
Responses from segment based mailing lists with customizing option requirements to
match the customer’s requirement generated from web portal, client referrals and leads
from business partners.

9. Customer Relationships
The company reaches its customers through emails, sending product update sheets to
educate/inform/engage the clients on the latest products & services offered, new product
launches, conduction of seminars/symposiums on advancement of renewable energy
technology and accomplishment made by the company in energy industry.

Interrelationships
Solaray reaches its clients through information blogs published in its News & Information on
web portal and by sending email to its potential client base.

The value proposition of the company “Innovate affordable smart energy solutions” links the
customer to take advantage of the reducing cost resulted due to subsidies offered by the
government. Offering smart energy solutions which ancillary products backed by affordable
price and high quality performance also links with cost and revenue though profit margins.

The company has its strategic presence in Sydney (Gordon), Western Sydney
(Glendenning), Blue Mountains Southern Highlands Central Coast to cater and meet the
customer requirement and demands5. The flexibility for customizing the customer
requirement and providing high quality standard products helps the company in increasing
its revenues.

In order to meet the client requirements, the company maintains optimum inventory levels for
solar panels and battery components to serve its customer segments. This is primarily done
in view of:
 Keeping obsolescence cost at minimum.
 Meet working capital requirement for business
 Avoid offering rebates on redundant/obsolete items

Critical Success Factors

The critical factor for success of Solaray can be summarized as:
 Energy market attributes and latest technology introduction
 Support from funding bodies
 Involvement of third parties
 Energy bundles provided by different providers
Solaray has strategically positioned its products as “affordable” which was backed by
product & service guarantees which enable in building consumer confidence. Technical
support and customer service provides an extended arm which helps in retaining existing
customers and new customer acquisition.

Downside risks
The downside risk can be mitigated by implementing certain controls. The risk which may
arise can be classified as under:
 New Entrants into the market
 Substandard products sold through web portals
 Reputational and Financial/Investment risk
 Operational risks and hazards
It was observed that the company has controlled the risk moderately; this can be assessed
from the customer feedback and execution of the projects.

Business Model changes

It was observed that the increasing cost in energy bills has made the customers cost
conscious. Nonetheless, there exists customer reluctance to adapt the new technology due
to lack of awareness among customers. Solaray, through its web-portal information section
and customer service has ensured in building consumer confidence. Transparency in
pricing, after sales services and consultancy has helped in strengthening the client
relationship.

Conclusion
For the above case study, it can be concluded that as a medium size company which is fairly
new in the market with strong technical backup has huge scope to expand its operations
across Australian cities. Offering customized solutions has helped the company in creating a
niche in the market whilst the technical support and consultancy services helped them in
brand building.

Recommendations
 In order to achieve sustained growth, the company can explore innovate distribution
channels to serve different geographic area rather than confining to Sydney
 Create Special Service Vehicle (SPV) for syndicate and turnkey projects
 Tie-ups with reputed departmental stores in promoting its products and service
 Active participation and representation in seminars and exhibitions in related
customer segments
References
1. Australia Solar Photovoltaic (PV) Market Size, Industry Analysis Report, Regional
Outlook, Global Market Insight Report published in January 2018
2. Australian Renewable Energy Agency (ARENA) Annual Report 2016-17
3. Renewable Energy Index December 2017 published by Green Energy Markets,
January 2018
4. The Business Of Renewables, A Report Into Renewable Energy Take-Up By Large
Corporates In Australia
5. Solaray Energy website https://solaray.com.au/
Appendix
Osterwalder & Pigneur’s Business Model Canvas (Table 1) Solaray Energy Business Model Canvas
Key Partners Key Activities 4 Value Proposition Customer Relationships Customer Segments
9
2 3 1
1. Energy generation Emails and dedicated
products and solution 1. Innovative & affordable customer service line 1. House Owners
1. Enquiries from Web to suit customer smart renewable 2. Commercial
portal and emails requirement energy solution Establishments
2. Logistic Providers 2. Develop Strategic provider 3. Agricultural Farm
3. Payment Partners platform to increase Owners
(Banks) revenue 2. Offer best quality
4. Client Referrals products and services

3. Sustained Growth
Key Resources 8 through customer Channels 5
satisfaction.
Customer segment based Web portal and customer
mailing lists; orders from helpline
web portal, client referral
and leads from business
partners

Cost Structure 7 Revenue Streams 6

IT, Inventory, administration & technical support 1. Product sales from individuals users
2. Commercial turnkey projects
3. Execution of government contracts
Solaray Energy Value Proposition Map Table 2

Gain Creator

1. Savings on energy bills

2. Return on investment through sale of power
generated
3. High quality product & services

Product & Services

Residential solar systems

Power Storage equipment

Pain Reliever
1. Tailor made energy solutions
2. Pioneering products from reputed
companies
3. Technical advisory and consultancy
4. Dedicated customer service
5. Minimum regulatory requirements
6. Extended guarantee on products