Why Is There Friction Between Solar Sales Reps And Lease Providers?
Takeaway: Contractors and lease providers are often skeptical of one another as Contractors decry what they believe to be arbitrary delays or clawbacks while lease providers think Contractors cut corners to maximize profit. However, drones and mobile apps smooth out this friction—Contractors can affordably collect perfectly accurate data throughout the project’s development, making lease contract reviews and approvals more transparent at each milestone.
As homeowners look for new ways to finance their arrays, due to high interest rates, many are turning to leasing rather than loans.
While leasing can be a less expensive option for homeowners (i.e. no upfront capital outlay), friction exists between lease providers (also called Third Party Owners—TPO) and Contractors.
Contractors are skeptical of financiers, assuming TPOs are intentionally partial in their reviews and look for any reason to reject, re-reject, or even claw back funds. In the industry, financiers are also known for arbitrary payment delays, leading Contractors to not trust the review process.
TPOs, in turn, are skeptical of the data they receive from Contractors, often assuming Sales Reps are cutting corners to maximize offset and production—and therefore commissions.
As a result, both TPOs and Contractors feel they are stuck in a tense transaction where you source the best price, deal with the friction, and move on rather than partner for growth.
While each party's feelings are valid, the different actors are not necessarily to blame here. The real cause of friction has historically been a misalignment of incentives resulting in subjective, expensive-to-confirm data—a friction that new technologies now fix.
Understanding Everyone’s Reality
TPOs actually own the array, rather than the homeowner. Their pools of capital come from investors who expect a reasonable return. Their economic model depending on accuracy and the assumption that Contractors will cut corners leads to a dogged focus on finding errors.
Solar Contractors, on the other hand, submit jobs for financing after closing a contract with a homeowner. This submission can come from the Contractor themselves or a member of the Sales team.
At this stage, Contractors typically rely on blurry remote imagery and subjective shade analysis. They also occasionally cut corners in a lease submission, sometimes intentionally to maximize production estimates and, therefore, profit, and other times simply because the individual is less informed about TPO requirements or PV system design in general.
Regardless of intention, the result of remote imagery and cut corners is inaccurate data that leaves room for debate and needs to be trued up. This can lead to delays caused by debates over subjective data or what Contractors view as arbitrary reasons for rejection or re-rejection.
Subjective Data, Not Personality, Causes Friction
The lease financing process has three milestones to it:
Initial agreement based on production estimates and site plan
Notice To Proceed (NTP) after installation (80-90% of array value paid to Contractor)
Proceed To Operate (PTO) after array commissioning (Remaining value paid)
Contractors using remote imagery at Milestone 1 is where subjectivity creeps in.
Remote imagery is less accurate because it’s outdated, might contain incomplete LiDAR data, or is blurry. These issues force Designers to manually extrude and plot property elements based on best guesses, including tree heights, roof pitch, or the impact of nearby buildings and topography.
The data needs to be trued up by Milestone 2 is completed, which can potentially lead to three unpleasant scenarios:
Delays or rejections: A TPO reviewer disagrees with the Designer’s best-guess estimates, leading to deal delays or rejections while the data is trued up. A reviewer might also reject a plan based on missing details that a Contractor will need to provide.
Re-rejections: A TPO might have a team of reviewers; one reviewer may disagree with the Designer on data point X, but approve once it has been trued up. However, if a second reviewer comes on shift, they might disagree with another measurement—the result is a re-rejection where the Contractor now has to true up the other data point.
As-built issues: Around one-third of arrays modeled with satellite imagery had a 10%+ delta between estimated and actual production. A delta this big could require an install-day change order. When that happens, the lease contract is re-scoped at Milestone 2 based on the installed array.
Sales Reps often feel the brunt of this friction. They collect data based on the tools and resources they have, yet it’s their paycheck on the line when delays, rejections, and true-ups change the contract value. While TPOs and Contractors also have financial skin in the game, Sales Reps feel the impact most personally in terms of delayed (and/or reduced) personal earnings.
A New Way to Collaborate
Sales Reps, Contractors, and TPOs don’t debate objectively measured data—it’s only remote estimates that cause friction.
The challenge is getting to objectively accurate measurement that meets multiple criteria:
Collected in a way everyone agrees is objective
Measurement methods are low-cost for Contractors
The process is quick and easy for everyone involved
New technology and processes make this possible.
1. Use drones for site measurements: Rather than relying on remote-only imagery, use drones to collect objectively accurate roof measurements and site context. The upfront investment will not only result in true accuracy that eliminates revisions, but you’ll also save money from insurance redesignations.
For immediate-need projects, you can consider outsourcing to a third party drone pilot if you don’t have the skills in-house yet.
2. Use mobile apps to centralize internal data collection: Collecting electrical and structural data is critical to ensuring the planned array can be safely installed.
Using a mobile app means you can collect all data in an easy-to-use, centralized location so Designers can quickly get to work. Adding a digital checklist ensures you don’t forget anything.
This two-step process means Milestone data is based on high-quality, completely accurate information—eliminating the friction in the current TPO process.
Trust in Data & Technology
TPOs want Contractors to deliver accurate measurements from the start because their economic model has very little margin for error.
From a Contractor perspective, it’s easy to view that demand as unreasonable, given the cost of a full survey or the risk of investing in a lost deal.
The real issues, though, have always been subjectivity and the cost of getting accurate data—issues that new technology can fix.
With data collected from drones and mobile apps, everyone gets objective data upfront. This empowers a quicker review process with no re-rejections, minimal cost outlays, and higher confidence that the planned array will be installed.
