A Disruptive Online Marketplace for Residential Solar Systems
Adopting a solar system can be a research-intensive and complicated process for the average end user. The originally Norwegian company Otovo has capitalized on this market demand for a simplified process, which in turn allowed the company to expand through Europe as families look to go green in the face of skyrocketing energy costs. A further expansion in Latin America remains in the cards for the company.
“We managed to build a market offer completely different from the way business was functioning. Our energy marketplace matches homeowners, who are looking for a trustworthy service with installers, who want to encounter steady work,” said Olivier Aizac, Board Member, Otovo.
Despite its foundation in Norway, where solar radiation is a limited resource, Otovo’s value proposition became a strength during the global pandemic. This allowed it to flawlessly scale and enter an additional six European countries. Providing such a holistic solution proved to be a profitable service in Europe. It has disrupted the photovoltaic solar market and fostered a greater adoption of the technology across the region. Trimming down the complete shopping experience to a couple of clicks allowed Otovo to expand across the entire European continent over the span of three years, during which the company helped install more than 120,000 solar systems.
Otovo is the only pan-European market player with this commercial strategy, summarized best as a marketplace that connects homeowners with solar installers on its own marketplace platform. Otovo’s exponential growth Otovo rests on record-high energy costs, as well as end-user demand to have greater control over energy consumption. The market’s growth is supported by federal entities across the EU, which have provided policy support with the aim to cut carbon emissions and reduce a dependency on energy exports. Examples include a 2022 proposal for a zero percent VAT on solar panels, which could effectively reduce installation costs between 20 and 25 percent.
In comparison to US and Australia, Europe still has a low solar market penetration, thereby pointing toward a greater market potential. The company expects to see its greatest short-term growth in Southern European cities, which have greater sun exposure. Otovo is already planning additional expansions in the region. If it is able to sustain its momentum, the company plans to launch in eight additional European countries by 2023, an potential representing 40 percent of the European market, according Aizac. In the long term, the company looks to exploit the residential density of European countries, which represents a market double that of the United States.
Otovo’s success proves that online marketplace spaces can be a boon to any industrial sector, even the somewhat convoluted energy market. The company’s application created a virtuous cycle that yielded greater transparency for homeowners and raised financial prospects for the installers that receive well-defined projects. This increased market confidence for both sides, as Otovo also handles the money collection and payout. Currently, the company has a network of 500 of installers, although it is confident it can increase this database further.
Looking toward future market opportunities, the company is exploring three main avenues: battery storage development, leasing options and an entry into the Brazilian market. Though a move to the Mexican market is less likely for the time being, Aizac confirmed the company is exploring the option too.
Battery storage technology has become commercially accessible and an attractive addition to people looking to consume more of the energy they produce, while reducing the energy bill and having energy stored in case of emergencies. Aizac said this is becoming increasingly relevant in the face of the world’s interconnected energy dependency, as exposed by the Ukraine crisis. “Batteries are now becoming a relevant investment for homeowners, as you can consume more of the energy you produce, reduce your energy bill and benefit from emergency energy,” summarized Aizac.
Addressing finance, a main barrier to entry for solar energy, the company is working on the development of a leasing service that would allow end users to bypass the full payment option, which proved to be a dealbreaker for many would-be buyers. Otovo said it will collect more data to be able to construct its solar as a service (SaaS) solution.