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November 24th, 2009
It seems like there are renewable energy companies getting started everyday. Barriers to entry are relatively low and government incentives are creating an almost wild west like feel in the industry, anything goes and gurus are popping up everywhere. I wanted to learn about a company that is on the cutting edge of the clean energy industry and see what I could learn from a seasoned industry professional. Finding experienced clean energy professionals with years of experience is a rare and difficult to do, very few of them exist in such a nascent industry. Two months ago, I interviewed Job Abe, VP of Business Development for Nexamp, to learn more about the clean energy industry from his perspective. It was a great interview, I learned a ton about Nexamp, their story, what is happening in the industry and where the opportunities are for growth.
Nexamp is “a full service clean energy solutions company. Nexamp analyzes, designs, finances, builds and maintains clean energy projects that reduce energy costs and carbon emissions for businesses, governments, and homeowners. Our solutions include renewable energy, energy efficiency, and energy management.”
There are plenty of renewable energy companies around Massachusetts; Alteris Inc, GroSolar, Sunlight Solar Energy to name a few of the larger ones. In my opinion, Nexamp has one of the most robust business models in the clean energy industry. No, I do not work for Nexamp, nor am I getting paid for saying this. But I do think that their approach to the industry, focus on technical exellence and having a sound business model is on the cutting edge.
I was first introduced to Jon when I worked at the NEXUS Green Building Resource Center in downtown Boston. Over the past two years, I’ve seen him speak at Babson College, and the yearly NESEA conference in Boston. Jon is very friendly and knowledgeable and he is well versed about the clean energy, electric, and renewable energy industries.
Who is Jon Abe?
Jon is a vice president of Nexamp in charge of business development. Prior to joining Nexamp, he worked at the Massachusetts Technology Collaborative Renewable Energy Trust where he managed the $68 million Commonwealth Solar program. He also was responsible for the Small Renewables and Large Onsite Renewables Initiatives which support development of distributed wind, hydro, and biomass combined heat and power projects. He has worked as a project manager and senior consultant at KEMA and XENERGY, where he was responsible for business development and management of renewable energy project development and distributed energy resource consulting projects. He serves on the Board of the Green Roundtable, Policy Committee of the New England Clean Energy Council, and Cambridge Climate Protection Action Committee. Jon received his bachelor of arts from Cornell University where he was an IBM Watson Scholar.
In the interview we talked about a number of things.
- How Jon got involved in clean energy.
- Nexamp’s business model. What makes them so special and how are the different from the rest of the companies.
- How they deal with increased competition from the traditional trades.
- How they created their vision and what their development plan is.
- What clean energy solutions currently have the best return on investment for their customers.
- What the obstacles for industry growth are, and insights into the future of the industry.
- Jon discusses his journey and how he ended up in the renewable energy industry
- Jon discuss Nexamp’s business model and how it compares to other renewable energy companies. Like I said, there are many renewable energy installers and energy efficiency companies and more entering the market every day, so I wanted to learn how Nexamp competes. Jon discusses how Nexamp competes with more specialized renewable energy installers and how their clients are looking for a one stop shop for all their clean energy needs including renewable energy, energy efficiency, financing, planning, and IT.
- I learned that central to Nexamp’s business model is their clean energy road map. I asked Jon to describe what it is, how it works, and why it’s a key differentiator for them.
- From my work at HeatSpring, I know that there is a huge influx of companies from the traditional trades entering the clean energy industry as they have a lot of the technical skills and needed licensing to compete in the industry. I wanted to see what Nexamp feels about the increased competition and how they stack up.
- Currently Nexamp operate their integration services mainly out of New Englad, but I wanted to learn how they plan to grow their business beyond this region.
- Vision is one of the most important pieces of culture for small companies. I wanted to find out how Nexamp’s vision was created and established.
- The industry is growing by leaps and bounds but there will surely be issues. Jon weighs in on what he sees as any potential problems.
- Jon discusses what options have the best ROI these days for their commercial clients.
- Everyday there’s a new news article about the development of thin film, organic PV cells, and various other technologies. I wanted to hear from Jon if any of these technologies will become commercially viable, if they transform the industry and what his insights into the future are.
Why Nexamp has the best business model in clean energy
- Stickiness with the customer: More specialized renewable energy companies have very little stickiness with their customers. Their business models are similar to many other construction subcontractors – roofers, plumbers, flooring specialists, etc – in that after the job is completed they move on to the next customer and never see them again. They make money by doing more projects, faster, and don’t have a source of recurring revenue. Nexamp’s Clean Energy Roadmap creates a multiple year relationship with their clients that can extend ten years or more. So when a sale is made they will be profiting from it many years down the road.
- Clean focus on return on investment: All companies will say this but rarely do they offer the services to back it up. The reality is that customers don’t care about the technology that is being used, they care about reducing their costs (electricity usage) and being moral (carbon reduction), and because Nexamp’s business model offers a portfolio of services including energy efficiency, renewable installations, and energy management, they can offer the services that reduce costs most effectively. A company that only installs solar PV systems cannot do this, because energy efficiency will almost always be more profitable first.
- Morally responsible. In my opinion, companies that just focus on solar PV or wind are slightly irresponsible in the sense that these technologies are very expensive and energy efficiency should be invested in before renewables are installed. Nexamp’s business model allows them to decrease energy usage in the most cost effective means regardless of the technology being used.
- One stop shop. The rapid growth of the clean energy industry is creating a lot of mis-information and muddiness in the industry. Everyone is saying different things and it sometimes can be hard to find a straight answer. By delivering all the services in one place Nexamp will make the process much easiesr for their customers.
A Place to Improve?
There are many benefits to offering a host of clean energy solutions. I believe, like Jon Abe that it delivers maximize value for property owners and also the environment, but it also has some implications for branding and sticking out from the crowd. I decided to do an informal survey with homeowners and other strangers around Boston. I wanted to find out if Nexamp was a household name. I surveyed 16 people (granted a small sample size) and only one had heard of Nexamp. However, 9 had heard of GroSolar, Alteris, and Solar City (which doesn’t even do business in Massachusetts). It might be possible that Nexamp isn’t targeting homeowners as heavily as commercial clients but homeowners do go to work during the day. It raises the question how do you stand out when you do everything?
Out of the whole interview the quote that resonated with me the greatest was Jon’s insight into the future of the industry. He said “is the way that energy gets delivered to the home going to drastically change? Probably not, what will change is the business models of how energy gets delivers.” Clearly, Nexamp is creating a new business model in the clean energy space, but I think this is good advice for other industries. There are many more opportunities in new business models then new technologies. After all, technology does not matter if people will not adopt it, and the good business models figure out how to change peoples behaviors.
Did you like the interview?
What do you think about Nexamp’s business model?
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