How can a home furnishing company succeed in solar? – Ikea interview

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pv magazine: Why did Ikea decide to enter the solar space?

Signe Antvorskov Krag: We want to take a leadership role in the energy transformation. Ikea has always been engaged in sustainable energy. Already in the 1970’s, back in the oil crisis, we put up our first windmill in Copenhagen. We have continued that journey to use renewables for our own production and consumption. Having benefitted on our own turf, we wanted to bring this opportunity to our customers.

 What are sales like?

While we don’t share sales figures, it is important to say that we’re serious about this. A new business like this does take time to incubate, but in general, we see good results and strong customer interest. We want to excel, increasing the market share and increasing our volumes in existing and new markets. We’re doing this, because it’s good for us as a business. Sales are really important to us, but we have also launched this, because strategically we know in the long run, it will pay off.

What’s the biggest challenge?

The biggest challenge we’re facing is spreading the word. This goes back to the fact that it’s very new to most customers that a furniture company is moving into green energy solutions. That’s something we hear quite often: ‘How can a home furnishing company succeed in solar?’ Our answer to that is that, ‘Yes, we know it is brand new for us, but we are a leader in life at home with a vision to create a better everyday life for the many. There is a lot Ikea can bring to the table to make clean energy more affordable and available. We are also very much aware that we can’t do this alone and that’s why we have chosen the partnership business model we have.

Talk to me about your business model

We have partnered with EPC companies in the markets we are offering solar in – the U.K., Switzerland, the Netherlands, Poland and Belgium – to deliver a turnkey solution that can handle the complexity of installing and designing systems for our customers’ roofs.

In terms of equipment suppliers, we want to be technology agnostic. So we are constantly sweeping the market together with our partners on the best deals. We have different suppliers in different markets, and we constantly evaluate them.

We also have a set of requirements together with our business partners: All suppliers have to be Tier 1, and they have to comply with IWAY – an Ikea defined set of ways of working, from sourcing to manufacturing, in terms of child labor, the environment, health and safety, etc.

 Storage was introduced into your product offering last year. How was this received?

We launched in the U.K. in August 2017. That same week, the government announced they were going to invest into battery technologies as a reaction to the dramatic increase in prices in the U.K. This was a really great fit for us. Storage is a really good value proposition in the U.K.

The price is about 50% of the price increase in terms of a solar system without storage. You also have a couple of more years in terms of payback times. But you also have a much larger gain in terms of your investment down the line.

In terms of how much we sell, and how it’s going for storage, we can say for the U.K., pretty much every second or third solar system is sold with storage. For markets like the Netherlands, which still have net metering, storage does not make sense.

Ikea wants to create energy communities. How do you intend to achieve this?

The first step is for us to create this virtual community, where we can start to put in different value propositions for customers, so that even if they don’t have a roof for solar, they can still benefit. The low hanging fruit on that is to get a clean energy subscription with 100% green power. In the U.K., we have entered into this already, where we have partnered up with the Big Clean Switch, an NGO that is sweeping the market and tendering different 100% clean energy tariffs, and are picking the lowest one. We are also looking into power purchase agreements (PPAs) as an instrument for us to deliver attractive value propositions to our customers in a holistic manner.

It’s difficult to say though when we’ll be at the stage where we have a concept that we’d like to expand at scale. That’s due to the still very fragmented regulatory frameworks that exist in each of the markets, especially for this sharing community. In some markets, it’s easier than others. It’s a step-by-step approach, and we’re working closely with the industry.

The biggest barrier we see right now, is to really inspire people and let them know about this opportunity.

You said during a presentation at Intersolar Europe 2018 that the biggest barriers to consumer uptake are the beliefs that solar is complicated and expensive. How do you address these misconceptions?

When customers say it is really complicated, we say, ‘Well we want to make it simple!’ The first step is to be transparent about our offer. Often, customers have to supply their full contact details to find out costs. We want to package the value propositions into very simple bundles that customers can identify with.

The next element we are working on is digital. Most of us, as retail customers, get our information from our mobile phones. There are many different online platforms, and we want to be there, telling people about this opportunity in a very simple manner.

What we have seen is that all these great new innovations – they’re made by engineers specifically for engineers. The communication, the design, it is still so technical. So that gap in the market – between the products and the customer communication – is where Ikea comes in.

Read the full interview in the upcoming edition of pv magazine, out soon.