SolarPro Magazine’s Q&A with Bob and Maria about SEM and the solar industry.
Click here to read the entire article on SolarPro’s website.
Southern Energy Management (SEM) is headquartered in Morrisville, North Carolina, with offices in Charlotte and Wilmington, as well as in Greenville, South Carolina. In some ways, SEM’s business trajectory mirrors that of many solar integration firms. The 11-year-old company successfully navigated the challenges associated with rapid growth, geographical expansion and the ebb and flow of financial incentives. However, several aspects of the business set it apart. First, Maria and Bob Kingery, the company’s co-founders, honed their business acumen in an industry far removed from solar — both were part of the core team that transformed Burt’s Bees personal care products from a Maine-based cottage industry to a multi-million-dollar international brand. Secondly, unlike many integrators, SEM has a strong business focus on efficiency services and building performance rating, in addition to PV and solar heating. To date, SEM has installed over 20 MW of PV including residential, commercial, utility and military systems. Maria earned a BA in English literature from North Carolina State University and currently serves as the company’s president. Bob is SEM’s CEO and holds a degree in mechanical engineering from North Carolina State University.
SP: SEM was founded in 2001 and now has approximately 120 full-time employees. What were some of the key business initiatives that enabled this rapid growth?
BK: We had a spike in hiring around 2007, initially driven by building performance and residential solar services, mostly solar water heating. Energy Star certification became a big seller as production builders started coming into the fold wanting to differentiate their offerings, so by the end of 2008 we were working with more than 300 builder clients. On the solar side, the North Carolina market grew tremendously in a short time. In 2007, we worked on the state’s largest system to date, and it was just 30 kW. That same year, North Carolina adopted a Renewable Energy and Energy Efficiency Portfolio Standard, which helped create an in-state market for our services. As we all know, policy is critical to our success as an industry.
We work with utilities and commercial clients on multimegawatt projects, in addition to continuing our relationships with builders and residential customers. Balancing the various client and service types is certainly not simple, but we believe it allows us to provide the best value for our customers. So far, it’s paid off. We see more and more opportunity for our team across all our lines of business and in expanding geographies, both on the solar side and with our commercial building performance team, which travels all over the country.
SP: Promoting sustainability is a cornerstone of SEM’s business. How are these core values integrated into your company?
MK: Sustainability is the foundation of everything we do at SEM, and the integration starts with the hiring process. We’re building a world-class team of smart, passionate people who don’t just want to take home a paycheck — they want to have a positive impact on the world. That’s who we want on our team. As a business tool, this focus on both what we do and how we do it has helped us find not just great team members, but also business partners who appreciate the long-range view that SEM has planned. Operating sustainably also helps us save on costs. We have a fleet of hybrid vehicles, and we also do a lot of little things like composting, buying gently used furniture as much as possible and being vigilant about our own energy use. Done right, sustainability should add to the bottom line, not detract from it.
SP: SEM promotes a balanced work environment for its team members. What does this environment look like for your employees?
MK: We try not to take ourselves too seriously! We celebrate accomplishments, both big and small, by ringing a gong that the entire office can hear. Instead of vending machines in the break room, we have a “sustainable snack” program, and team members have input on what kinds of snacks are provided. We have a generous holiday policy to allow our team members to have time to enjoy their lives outside of work. While we work really, really hard, we do our best to enjoy our work and each other along the way. Fostering a cooperative work environment is advantageous because it allows us to attract the best people to help us achieve our mission, and that separates us from our competition.
SP: In 2009 SEM became a Certified B Corporation. Is this certification primarily used as a metric to guide internal company decisions or does it have external marketing benefits?
MK: B Corp certification is a very big deal for us. Anyone can write a mission statement that sounds nice, but B Corps have to go through a thirdparty certification process confirming that they’re actually doing what they say. For us, that means we’re putting an emphasis on things other than the financial bottom line. We provide a benefit to the environment and society while still working as a for-profit business. We have a B Corp Declaration of Interdependence up on the wall that everyone has signed, stating that we envision a new type of business model that “harnesses the power of private enterprise to create public benefit.”
Being a B Corp is something that we talk about quite a bit both internally and externally. It’s impacting everything from SEM’s selection of local vendors to community service — 85% of the team spent at least 4 hours doing volunteer work in 2011, for example. And yes, it does offer some marketing benefits and partnerships, too. B Corps are well aware of each other’s presence, and we do what we can to support each other. With more than 500 B Corps nationwide so far, that’s a lot of opportunity.
SP: SEM offers a suite of efficiency services, including Energy Star verification for homes, and performance testing and benchmarking for commercial buildings. Are these services a profitable arm of SEM’s business?
BK: Building performance certainly isn’t our cash cow, but it is profitable on its own merits and it’s been a lot of fun to watch that team evolve over the years. In fact, its margins are more dependable at times than solar’s, since it doesn’t have to worry about “solar coaster” sales cycles. I understand why some companies might not see the value, but we view building performance and solar as complementary.
SP: SEM has been acknowledged as an Energy Star Partner of the Year for six years (2007-12), and in 2011 and 2012 received the Energy Star Award for Sustained Excellence. Which of your company’s efforts put you in the running for this recognition?
BK: That’s all due to a part of the building performance team that works primarily with builders. Earlier this year, we surpassed 10,000 Energy Star home ratings, which was a great achievement. The whole Energy Star program has become more mainstream in the last few years, because builders recognize that buyers want a house that’s efficient, and they’re increasingly savvy about energy use. Energy Star certification is usually the first step in certifying energy efficiency, and has often laid the groundwork for more jobs like a LEED certification or a residential solar installation.
SP: SEM is very engaged in social media marketing strategies. How are these efforts managed internally and how effective are they in terms of client acquisition?
MK: We like being able to engage with customers and partners, and social media has been great for that. We have a smart team that has worked to establish and build our online presence across various platforms. Currently, one person on our marketing and communications team oversees our daily interactions in the social media space. But he’s not out there on his own; he works closely with every team member who submits a blog post (more than 25 of us so far!). It can be tough to quantify sometimes, but there is definitely value from this level of engagement. When potential customers read about our PV safety white paper on Facebook or see a detailed blog post on net-zero construction projects, it solidifies our credibility as dedicated experts and adds value for our industry as well as for our company. SEM has never been interested in being the lowest bid for every job; we pride ourselves on quality work, so having that solid reputation and being part of a sustainable industry is vital.
SP: SEM publishes a newsletter, “Builders Digest,” that is distributed to a network of professional home builders. Has working directly with home builders been a productive avenue for sales?
BK: We’ve always been intentional about adding value for our homebuilder partners. We offer Energy Star verification services, green building verification through a variety of programs — such as LEED and the National Association of Home Builders’ Green Building program, which we helped pioneer — and both solar heating and PV services.
Like anyone else, builders want to work with partners they know and trust, especially when they don’t have experience with new offerings. We do our best to make it easy for them to choose the programs and products that are right for them, and we place a lot of emphasis on education.
The recent changes in the Energy Star program (it transitioned from version 2.0 to 2.5 to 3.0 in the span of a year) are a perfect example of that. It was fairly complicated, so our team held training sessions to help builders prepare for the new guidelines. Builders appreciate and benefit from our expertise, and that helps us retain customers in an increasingly competitive market. It also opens doors to providing additional services for builders who want to take the next step in differentiating their products.
SP: SEM installs both PV and solar heating systems. With the recent decreases in natural gas prices, residential solar water heating systems have become less cost effective in many regions. What are your perspectives on the state of solar hot water for homes?
BK: We do believe that currently PV presents the greatest opportunity, but there’s still a place for solar heating. The advantage of grid-tied PV is that it has an infinite amount of storage capacity and an infinite amount of demand, so it works for everyone. Solar water heating is more complex because it requires you to calculate production, storage and demand to optimize value. As for natural gas, while prices are currently low, it is still a finite resource with potentially volatile price swings. Solar heating fixes energy prices for 15-20 years, so it makes a lot of sense for customers with high demand over the long term, and in the short term if it’s replacing electricity or propane as a heating source.
SP: What strategic advice do you have for integrators who are considering expanding into new sales regions?
MK: When looking to expand, look for opportunities that build on existing relationships and take advantage of market conditions that will be sustainable over time. We work with utilities and project developers who want a reliable partner to build quality systems that will last 20-30 years, and that work takes us up and down the East Coast. But we also concentrate considerable effort within our region to allow us to maintain a strong presence in our own backyard. Strategically, we are focused on building a strong company that our customers can depend on long after our race-to-the-bottom competitors have moved on from the industry.
SP: If you could offer a small integrator striving to become larger a single piece of advice, what would it be?
MK: Build strong relationships and think long-term (which I realize is two, but they are closely interrelated and one won’t work without the other). Our industry is changing rapidly, and there are a lot of companies out there that are just looking for the next big project or the latest hot market. While that may look like an attractive way to rapidly expand your business, it also has the potential to backfire if you’re not strategic about why you are pursuing opportunities and how they will help you drive profitable revenue over the long term. What our industry needs is strong players who have a long-term view — be one of those and you will create success for yourself and others.
[Immediately prior to publication, Southern Energy Management announced the sale of its industrial and large commercial solar services business to PowerSecure International, which will operate the business as a separate subsidiary. SEM will retain a 10% ownership in the new company in the near term. PowerSecure has the option to increase its ownership to 100% beginning in June 2014. SEM will shift its primary focus back to residential and small commercial solar projects and efficiency services. Bob Kingery states, “We want to grow SEM into a bigger, better version of how we started off. There’s a myth that solar power and energy efficiency are out of reach for most homeowners and small businesses. That’s not true. It is absolutely achievable, and we can’t wait to throw all our effort into helping those types of customers make smart energy choices.”]
