In recent weeks I have seen several proposals for ‘buying groups’ for residential solar energy installations in the UK. The principle is that rather than individuals from the same area each seeking an installer for their solar panels, a buying group involves a number of home-owners clubbing together and seeking a single installer to do all the installations in one go.
There are several benefits to this. The main reason is that it leverages economies of scale, meaning that you should be able to get an overall lower price because the installer is able to source equipment in larger quantities and utilise their staff better by working in a concentrated area. The second big benefit is in administration time. Choosing an installer for your solar installation is time-consuming. You need to get quotes from several firms, who should each give a site-visit before giving their final price. In a buying group, this process is minimised because you have one tender process for the whole group.
A nice thing about buying groups is the community organisation aspect. Installing solar panels is now very profitable, both financially and environmentally so working as a local group is a great way to bring the community together to do something real that makes a difference. So how do you go about setting up a buying group? The best way is to find a group of people that already have some sort of local connection. This could be something like a residents association, a sports club, a church group or even pub regulars. The important thing is to ensure that the process is clearly explained to potential participants. It is also possible to advertise locally, but make sure you are open about whether you plan to make money from doing the organising or not.
Once a reasonable number of people have expressed an interest (I would say 5 or more counts as reasonable but this is not fixed), the group organisers can start to contact installation firms. Make sure to get full quotes and make these available to all participants to make the process as open as possible. It may even be worthwhile inviting the installer to a group meeting in order to give their ‘pitch’ so that everyone can compare the offers.
Something to be aware of is that there are a growing number of people already organising local buying groups. Some of these groups are people doing it out of their own time because of their passion for the community and renewable energy. Other groups however, are trying to make significant amounts of money from being a middle man.
I have seen more than one proposal from buying groups looking to take ten percent of the cost of an installation as commission. This strikes me as a bit unfair since the idea of the buying group is to lower costs for the members.
Organizing a buying group takes a considerable amount of time, and so taking some money is acceptable. Personally, what I don’t like is people pretending to be doing the community a service but actually using it as an easy way to make some quick cash. Ten percent is also a bit steep. The idea of the buying group is to lower costs for everyone, this clearly doesn’t work if all the saved costs are going straight to the organisers of the buying group.
So genuine buying groups are a great idea, just beware the profiteers. If someone approaches you as a buying group be sure to find out how much money they stand to make.