The iSolar Exchange online marketplace is designed to create a secure site that connects the entire supply, manufacture, and delivery channels for solar and renewable energy products and services - worldwide. That's all we do - that's all we focus on.
Creating a new eCommerce B2B Global Solar and Renewable Energy Marketplace
Michael Gumm | iSolar Exchange Inc.
There was a time not too long ago, when the solar industry was small and we only had a handful of solar companies to deal with. Even by 2000, global sales of solar modules, cells and equipment sales had only inched up to 2.5 billion dollars worldwide.
Beginning with the introduction of feed-in-tariffs in Germany and Europe and with the California’s solar million roof program in 2006 and the enactment of better federal incentives in the United States, the solar photovoltaic industry grew rapidly from a small, specialized niche industry and in a span of 10-years, global sales of solar had reached 71.5 billion dollars in 2010 as the industry experienced year to year growth in excess of 40%. Those handful of early solar manufacturers for solar panels, cells and balance of systems today has grown into over 6,000 companies worldwide.
Because of the demand in renewable energy and the high margins experienced during the past 10-to- 12 years of high growth, many companies worldwide have jumped into the solar industry. China and a number of countries in Europe encouraged the rapid growth of new solar industries and technologies by making large capital investments and giving generous government incentives and loans.
The rapid expansion of silicon production, cells and module manufacturing in time started to drive down the cost of solar products, driven by the increased demand, global competition and expanded global manufacturing capacity. Now after six years of rapid growth, the solar marketplace is experiencing a slow down due to the cooling of financial markets across the USA, Europe and Asia and the reduction of over-generous feed-in-tariffs and rebate incentives by nations that once encouraged the rapid growth of renewable energy.
Starting by mid-2011, the selling price of solar modules fell by over 60% and continues to drop. This rapid drop in solar pricing is completely reshaping the renewable energy industry. Solar PV modules, until recently in short supply as a high value and specialized products have become low cost global commodities with razor thin margins, if any. Many companies now find themselves stuck with increasingly large stocks of inventory which continue to lose value every day they sit in the warehouse.
Estimates today, indicate the industry may have up to two-years of supply locked up in existing inventories, while at the same time a number of solar companies continue to expand their production capacity, all but guaranteeing the continuing drop in solar module, cell and silicon pricing and company margins.
So today with the excess solar manufacturing capacity, we have too many solar companies with the same basic commodity solar modules chasing the same regional markets. At the same time, rapid changing sales environments in a number of European and Asia markets and the high cost of entry to set up, create and expand sales in new countries and markets prevents many solar companies from growing sales.
For example if you are a solar manufacturing company in China or Germany.
- How do you enter new global markets outside of the traditional lucrative European markets of Germany, France, Spain, Greece and Italy?
- In America, where individual state laws and incentives means basically you are dealing with fifty (50) separate markets coupled with a young and highly fragmented solar distribution sales channel?
- How do you gain entry and compete with the other 200 to 300 companies making a similar strategic move from Europe to the USA, India or Asian markets?
- How many brands of solar modules can be carried by distribution and have an impact on the market?
- How do you reach the some 8,000 solar installers in the US or the thousands in other countries?
By the same token, if you are solar distributor, or a solar developers or a Solar EPC, how do you get the best pricing, with the lowest cost of procurement?
If you are a solar module, cell or solar equipment manufacturer.
- How do you reduce the cost of components?
- How do you get your existing supply chain vendors to reduce cost?
- How do you identify and expand your supply channel partners?
- With pricing pressure up and down the supply chain to drive down cost while at the same time trying to improve margins, how do you do this in a cost effective way?
- How do you better organize and streamline the solar purchasing process?
- How do you improve the methods Buyers and Sellers of renewable energy can connect with each other?
If you are a solar contractor or developer or just a business owner wanting solar.
- How do you find and price different solar panels and balance of system components?
- How do you find project financing?
- How do you reduce system, procurement and operational overhead cost?
With large distributors located only in major cities, most the time, products you purchased have to be shipped in from the distributor or from the manufacturer direct to you, so having products shipped to you, is a common practice anyway, so buying online will in most cases, not slow the project development and startup time.
Buying & Selling Today
Solar PV system buying and selling is still largely done the old fashion way, you call someone, you negotiate a price, you buy the product, it may be direct with a manufacturer, it may be with a distributor or dealer.
Other purchasing methods include using Peer-to-Peer broker/distributor companies such as Sologico or Solarbroker, here you have sales people or brokers who will negotiate the deal between you the Buyer and a product Seller. You are depending on their connections, supply channel agreements and relationships to find what you hope is a great deal.
The solar, wind and bio-energy industries are as a whole suffering financially, as we see once great top tier solar companies become insolvent and collapse into bankruptcy. While other leading solar manufacturers try to stave off the possibility of a similar fate as companies run to explore new business models from complete vertical integration to merging with other competing companies to survive in today’s rapid changing global markets and shifting market conditions.
As one of the founders of SunPods Inc, which assembles a factory built, ship to site, plug-n-play ground solar array, I am constantly bombarded with new and unknown companies trying to sell me solar components and services. As a manufacturer I am under constant pressure to drive down the cost of our products and to expand into new markets and I thought there had to be a better way.
The renewable global market is huge, today worldwide over 300,000 companies and individuals are engaged in the renewable energy industry. The solar industry is sales and distribution chain is highly fragment with considerable disconnect between the top of the supply chain the bottom of the supply chain.
The question I kept asking, is how do we provide a fast and cost effective method to connect these companies with one another? How do we connect these companies with more customers and Buyers?
If you look at other larger and more mature industries and companies, you will find many companies such as General Electric, Target, General Motors and Boeing have long ago developed a B2B eCommerce procurement and supply platform. Peer-to-Peer eCommerce on the internet greatly speeds up the procurement process, while reducing transaction cost and can lower component and service cost by up to 20%. eCommerce improves market transparency throughout the entire supply chain as you get suppliers and vendors to compete with each other in real-time.
An idea popped up, we need an internet based global marketplace, where Buyers and Sellers can easily access a worldwide market and make informed choices. With this in mind the iSolar Exchange was created.
The Idea & Solution – iSolar Exchange
A Global Connected Renewable Energy Marketplace on the Internet
The iSolar Exchange marketplace enables Buyers and Sellers of solar and renewable energy products and services to come together in an online environment and access a global marketplace.
The objective of the iSolar Exchange is to move the solar and renewable industry purchasing cycle online, where transactions happen instantaneously, with far better financial results for both Buyers and Sellers and improved market transparency.
As an open supply channel, all members can participate and engage with other channel members up or down the supply chain.
iSolar Exchange consists of three different but related marketplaces:
Standard Auctions
The Standard Auction marketplace is a basic forward auction environment for selling anything via the auction process to the highest bidder.
The iSolar Exchange Standard Auctions is based on the eBay Auction model and has all the same features. The Exchange uses PayPal for secure credit card & check transactions. We do not store any credit card information. We offer the same type of Capital Finance & Leasing and Escrow Services as eBay. Use the Standard Auction Portal to sell materials, products, equipment, services to the highest bidder.
You set up an auction, set the pricing low to get everyone’s attention, set a reserve price as your minimum price point. You can offer retail pricing using “Buy Now” feature and can even negotiate with Buyers using the “Name Your Own Price” feature.
You can offer Public Auctions, offered to all or you can create Private Auctions, and invite select, pre-qualify Buyers and not be viewed in the public domain.
RFP / Procurement
While the Standard Auctions are created by Sellers, the "Request for Procurement (RFP)" is created by Buyers.
The Procurement Module offers purchasing professionals two distinct procurement formats, the classic "Competitive Sealed Bid" and the new dynamic purchasing model, the "Reverse Auction".
There are a number of differences between the two systems. The Procurement / RFP (Request for Procurement) Marketplace is designed to allow Buyers to obtain multiple quotes from numerous qualified vendors and provides Sellers the opportunity to submit prices on new business opportunities.
The Procurement Module is a fast and effective method for online purchases of solar and renewable energy products, raw materials, and production and installation equipment and contractor installation services.
Buyers using the Competitive Sealed Bid and Reverse Auction can choose either the Public Bid viewed by the general public or a Private closed RFP, where only select, pre-qualified suppliers are invited and able to bid on the project.
With the Private Sealed Bid or the Private Reverse Auction, the Buyer has the ability to pre-qualify suppliers or to choose a set of existing suppliers before sending an invitation, and then create a Private Business Network.
The Sealed Bid
The "Competitive Sealed Bid" is the traditional competitive low sealed bid system most us of have used on school, institutional, corporate and government projects.
- The system is simple; a Buyer creates a RFP with scope of work, project or product specifications, drawing, details, photos and contract documents.
- Suppliers or contractors can submit one bid which is sealed until after the bid closing time and in most cases the bid is awarded to the lowest bidder.
- The Competitive Sealed Bid system on iSolar Exchange is no different, just faster and more efficient.
- The advantage of the online system is speed and the ability to reach out to more suppliers or contractors regionally, nationally and global.
- The Buyer publishes his RFP's plans, specifications and other attachments online and these can be downloaded and printed out by Sellers (vendors). This alone saves the cost of printing and distributing plans and documents.
- The Buyer creates and posts the RFP for a review period and sets up a time period for bid starting and closing. Bid times can be modified and addendum can be published.
- Questions and answers can be published in a RFP specific forum for communications between suppliers and Buyers.
- Suppliers can submit "one" bid, and the online procurement system will award the project to the low bidder.
The Reverse Auction
The "Reverse Auction" is different; the closest real world analogy to the Reverse Auctions is a form of real time price negotiations between many suppliers and a Buyer.
A real life example would be several EPC contractors negotiating a large new solar Array project with a Solar Developer. All EPC's start out with a preliminary price and with some EPC's more resourceful than others, some may be aware of their bid position, and the apparent low number.
Many times there will be several rounds of quoting and adapting to the various wants or needs of the Solar Developer. The rounds of bidding may take days or weeks. This is reverse price bidding.
In the "Reverse Auction", the Buyer creates a Reverse Auction RFP, and uploads all the information and specifications.
- The Buyer also creates a maximum price ceiling on the "Reverse Auction" and this is the maximum price he will pay for the RFP.
- The ceiling price is typically based on preliminary pricing, or other current market pricing.
- The "Reverse Auction" is in effect a buyout Request for Procurement.
- Suppliers find the price point to start their bidding under the Buyer's ceiling price.
- All suppliers pricing is viewed by all bidders, and the prices go down until the low price point is reached at which time the Procurement system awards the bid to the low bidder.
iSolar Exchange has incorporated a number of new advanced Reverse Auction features. Besides the RFP price ceiling point, suppliers can bid up or below the low bidder, giving suppliers the ability to use bid strategy in the early auction stages. At the auction closing time, only the lowest bid counts.
The Exchange’s "Reverse Auction" system is designed to prevent substitutions, alternates, and value engineering, only a dollar value can be submitted and with all pricing visible among bidder in real time, a fair and level playing field is created.
Bid sniping is avoided in the "Reverse Auction" by the system automatically extending the bid closing time an additional ten minutes if any new bid is submitted in the final five minutes of the RFP closing time. This will continue until there are no bids in the last five minutes of the RFP, thus ensuring all final bids are not affected by the speed of bidder’s computers or the internet.
Classifieds
The Classifieds marketplace is free for all registered iSolarExchange users. Whether you are a consumer or business recruiting or seeking solar- and renewable-related job opportunities, buying or selling parts and equipment or services; the Classifieds make it easy to expand your options to a larger marketplace.
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Standard Auctions
The Standard Auction marketplace is a basic forward auction environment for selling anything via the auction process to the highest bidder. The Standard Auctions is based on the eBay Auction model and has all the same features. Use the Standard Auction Portal to sell materials, products, equipment, services to the highest bidder. Sign up for alerts to track the merchandise you are looking for or keep informed of popular or competing product trends in the solar and renewable markets. Buy Now & Name-Your-Price Buyer options. |
Request for Procurement
The RFP / Procurement marketplace is designed to allow Buyers and procurement professionals obtain multiple quotes from qualified vendors. Sellers have the opportunity to submit prices on new business opportunities. Two Systems for Buying and Selling: "Competitive Sealed Bid" or the "Reverse Auction". In each system, the Buyer can publish zipped PDF and graphic files for contract documents, boilerplate, specifications, plans, details and photos for suppliers and providers to download and review. Both systems can do public or private view transactions. Sealed Bids are compliant with government purchasing requirements and procedures. |
Free Classified Ads
The Classifieds marketplace is free for all registered iSolarExchange.com users. Whether you are a consumer or business recruiting or seeking solar- and renewable-related job opportunities, buying or selling parts and equipment or services; the Classifieds make it easy to expand your options to a larger marketplace. The Classifieds section is an ideal place to post your ad and provide a link to your target Buyers to view your listing(s). www.iSolarExchange.com provides you with an easy buying process via PayPal to complete transactions quickly. |
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How the Marketplace Works
Not just a basic eBay type auction site, the iSolar Exchange offers a number of advanced buying and selling features including the ability to create open public view or private trading transaction events.
Private trading events features the ability for Buyers or Sellers to create their own private business network exchange. Here the transaction is not open to the general public and only pre-qualified and invited Buyers and Sellers can participate, insuring complete privacy and secrecy for both Buyers and Sellers.
Let’s say for example, you are a solar manufacturer with a large excess of solar panel inventory and you need to unload the inventory to free up capital. Now instead of announcing to the world, you are dumping inventory. You can in complete privacy, not in the public view, invite pre-qualified distributors, wholesalers and developers to bid in a standard type auction against each other in real time, all with a minimum bid and reserve pricing. Basic non-disclosures prevent these participates from revealing pricing in these transactions, and in turn helps to stabilize global markets.
Another option, a solar manufacturer can invite key suppliers and vendors to bid in private for your business, now using advanced reverse auction technology, you can have pre-qualified suppliers bid in real time for your purchases. Here you can set a maximum price you will pay and during the reverse auction time frame, Sellers will bid lower and lower against each other based on your own performance specifications.
The iSolar Exchange online marketplace is designed to create a secure site that connects the entire supply, manufacture, and delivery channels for solar and renewable energy products and services - worldwide. That's all we do - that's all we focus on.
Below are highlights of each marketplace and how the "Invitation Only" features can work for buying and selling to a selected audience or in a completely private environment.
By Invitation Only: Public and Private Auctions
The invitation only feature provides both Buyers and Sellers with a powerful tool to manage who bids and views their auctions and projects. See the chart below for a quick overview of the best option for your auction or project.
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Standard Auction Sellers posts auction item(s) |
RFP/Procurement Buyers posts projects for bid |
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Private, Invitation Only |
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|
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Public, Invitation Only |
Only invited bidders can bid but the Public can view the auction but not bid |
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Private, Sealed Bid |
N/A |
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Public, Sealed Bid |
N/A |
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Who uses Invitation Only, Public and Private Auctions?
- Solar Developer and EPC contractors can get pricing for a specific project from a number of invited manufacturers, or distributors.
- Distributors can use RFP/Procurement (reverse auctions) to negotiate pricing and even do backside deals with a number of manufacturers for regional, national global or annual purchases.
- Manufacturers and distributors can sell off and liquidate excess inventory to a select list of preferred and pre-qualified Buyers in complete privacy protecting their public market pricing and margins.
- Manufacturers can invite a list of select distributors to sell or make purchases from a list of specific suppliers.
- Owners and developers can buy and sell Solar Renewable Credits and Carbon Credits online with a select list of Buyers or Sellers
- Wholesalers & Distributors use the Exchange to sell returns, open boxes, odd lots, seconds and outdated inventory.
- Manufacturers use the Exchange to sell off seconds, returns and discontinued inventory and equipment.
- Manufacturers – Distributors needing to downsize or liquidate can sell off assets, equipment, inventory and property.
Buyers and Solar eCommerce
- Safe and secure transactions – Sellers and Buyers can grade and post their transaction experience and rate the Seller.
- Reach and investigate different solar and renewable energy products from anywhere in the world.
Currently we have the three standard eCommerce portals on iSolar Exchange in v1.0. While we have categories for Wind and Bio-Energy. The new v2.0 is already in development. The iSolar Exchange website v2.0 will expand and add additional eCommerce portals for Wind (iWind Exchange), Bio-Energy (iBio Power Exchange) and Finance Portals (iPower Finance Exchange) offering a number of financial sources and partners for project PPA’s, Equipment leases, Commercial Leases, Escrow, and order processing to facilitate sales between buyers and Sellers.
iSolar Exchange, Inc.
343 Soquel Ave, Suite 320
Santa Cruz, CA 95062
831.621.7944
http://www.iSolarexchange.com
info@iSolarexchange.com
About the author
Michael Gumm is a serial entrepreneur managing several companies in the solar and roofing industries
His latest company is the iSolar Exchange, an ecommerce marketplace founded to enable Buyers and Sellers of solar and renewable energy products and services to come together in an online environment where they have access to a global marketplace.
Michael is the Co-Founder and a Managing Partner at SunPods and he is behind the development of SunPods “Solar Smart Technologies™”. His primary focus is business development and strategic planning and he is the Chairman of the Board.
He is the founder of SolarPower Restoration Systems Inc. and the creator of SolarSeal Technologies™ focused on developing technologies combining photovoltaics with traditional building products known today as Building Integrated Photovoltaics (BIPV).
Michael is a building integrated photovoltaic (BIPV) pioneer with twelve patents and pending patents covering a number of solar technologies combining conventional building products with photovoltaic systems, creating new building envelope surfaces that both weatherproof and generate renewable energy.
Michael has been actively involved in the roofing industry for the past 25 years. Over this time, he has worked in manufacturing, contracting and consulting. Since 1996, he has been the president of Corporate Roof Consultants, involved in both commercial roofing design and forensic roof failure investigations and solar array design.
He is a member of Solar Tech Org, ASTM’s D-08 and E-44 technical committees and task force, Solar ABC- Solar American Board for Codes and Standards. He is an author, educator and speaker on solar and roofing technologies...
The content & opinions in this article are the author’s and do not necessarily represent the views of AltEnergyMag
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