December 26, 2022
An entrepreneurial spirit is what allows Phil Alwitt to be flexible in the ever-changing world of solar energy.
"It is an evolving industry so it's not static in any way. It keeps me on my toes—the politics, policies, finances and employees," Alwitt said. "So, I am really entrepreneurial in the way I run the business."
As CEO of Novato-based SolarCraft, the 56-year-old is tasked with keeping up-to-date with state and federal regulations as the world becomes more electrified in regards to what people drive, the homes they live in and the places they work.
His biggest complaint, though, is with the state.
"The state does not make it easy. It claims to be climate friendly, but at the same time it is union friendly and unions are not friendly to distributed solar," Alwitt said. (Distributed solar in general refers to the panels that sit on rooftops.) "We are getting the brunt of it. We are hit with policies that diminish distributed solar generation, but at the same time big unions can flourish building systems for PG&E."
When not dealing with issues related to the nearly 50-person business, Alwitt burns off stress by hiking the 680 Trail near his home in Marin County or wing foiling on the San Francisco Bay.
The following is a Q&A between the Business Journal and Alwitt that has been edited for space and clarity.
What concerns do you have for your business and industry looking out five years?
The solar industry is constantly changing; from equipment to public policy, financing to code compliance. PG&E, the CPUC and the IBEW labor union are very powerful, self-serving entities that are nervous about the changing electric infrastructure.
If they throw their weight in the wrong direction and discourage the adoption of solar by implementing unjust licensing requirements or taxing solar, the industry could get knocked off its path—as can mitigating climate change.
What one government regulation would you change and why?
AB2143! AB2143 was signed into law in August and requires that virtually all commercial solar installation use prevailing wage labor, a minimum percent of certified electricians, and administrative requirements were defined that burden the customer.
There are not enough certified electricians in the state to satisfy the requirement. By requiring prevailing wage for small commercial projects, the disparity between residential and commercial pay will negatively affect both residential and commercial prices.
Putting the burden on a consumer for a solar contractor's responsibility is unjust and reckless of the state. We need to promote all solar and clean energy options, and stop pandering to special interests and big money.
How will the $739 billion Inflation Reduction Act of 2022 affect your business?
The IRA is a great start to enable people to further realize that the small changes they make can together have a huge effect to mitigate the damaging impacts of climate change.
The IRA provides a number of rebates for electrical upgrades such as changing out electric panels and upgrading to heat pump heating and air conditioning. Customers who install these items will find that their electricity bill will rise and their gas bills will decline. Although they can't generate their own gas, they have the option to generate their own electricity by installing solar. They have the ability to control their costs and save a large amount of money at the same time. So just the electrification movement prompted by the IRA will positively affect SolarCraft.
The nuts and bolts of the IRA are also quite good for SolarCraft and the solar industry. The federal tax credit was set to drop to 22% in 2023. The IRA raised it to 30%. This additional 8 percentage point discount is a huge benefit for our customers—about $2,000 to $5,000 additional savings for typical jobs and a great motivation for people to install solar.
What is your opinion about Net Energy Metering 3.0, the state Public Utilities Commission's ruling this month that changes the monthly energy bill savings for solar customers in California?
NEM 2.0 has been a great stepping stone. It has enabled people to install solar on their homes and businesses at very reasonable costs. In return they are able to save a lot of money for themselves as opposed to paying PG&E to chip away at their wallets year after year. It has allowed the solar Industry to mature.
While NEM 3.0 will not be as generous to consumers, it still allows people to save a substantial amount of money and it promotes a more stable grid. It will encourage more battery storage; a perfect way to separate from PG&E and provide backup power during power outages.
Since it will take a number of months for NEM 3.0 to take effect, we expect to get a rush of customers through March signing up for NEM 2.0.
What goals do you have for the company in the next five years?
We want to prepare for the onset of the electrification of California. More electrical use will lead to more solar. We want to be thoroughly licensed and prepared to install a variety of equipment to address our customers' needs from battery storage and smart panels to EV-to-Home and EV-to-Grid.
What was your involvement with the first solar arrays that floated on water?
Floatovoltaics was conceived by Dan Thompson, the founder of SPG Solar where I worked in the 2000s. The first generation of floating PV systems were 80-280 kW in scale and installed on retention ponds on Napa wineries.
As a product developer by training, I was put in charge of developing a marketable second generation. Over the course of a year we completely redesigned the system and installed a prototype in Petaluma. We had parties all around the world interested in deploying the technology. Developing Floato from engineering through business development was among the most interesting projects of my career.
What aspect about your business keeps you up at night?
SolarCraft is an employee-owned company. So what keeps me up at night should also keep every other employee up too. The reality is that what keeps me up is the concern for our employees well-being and for the environment more than typical business developments.
What is your approach to making tough and important business decisions?
We are a cash flow business and I am a cash hawk. I make changes before cash gets tight.
At the same time, I believe in investing in great people and the tools to make the business operate efficiently. If something does not fit our fundamental values or creates waste, like waste of time and/or money, I make a change to our business operations.
What lesson did you learn early in your career that you now recognize as an important one?
I started my first business when I was 24 and sold it at age 31. I then continued to run my own businesses until I got a job working for others at age 40.
I look back now and "If I knew then what I know now, I'd be a gazillionaire." Time and experience are huge assets that few realize until they age and reflect on their past.
When I was 25, I was much wiser than when I was 18. When I turned 35 I had much greater knowledge than at age 25. When I was 45 I had much more refined emotional intelligence than when I was 35.
In my mid-50s I reflect on my past and can comfortably give back knowledge to others that I was unaware of at a younger age. A person's value comes with age and experience.
How do you motivate people?
By enabling and coaching people. I provide people with the tools and the visibility to succeed. It's then up to them to fail.
Other than money how do you measure success?
We are an employee-owned business. Employee retention is a huge indicator that SolarCraft is doing well. It means we are respecting our employees and paying them well.
What are the benefits and drawbacks to being located in the North Bay?
SolarCraft has operated in the North Bay for 38 years. We are a respected part of the community. The wealthy North Bay is less affected by a shaky economy and is a great location to weather changes that the rest of the country may find untenable.
The biggest drawback is finding great, local employees. This goes for everything from skilled labor to sales people.
How does the national economy impact your business and what are you doing about it?
I have made sure to fortify our rainy-day fund. Besides that, SolarCraft runs a lean operation and we plan to implement additional operational efficiencies. This will enable us to adapt to the business climate with less effect on employees or cash flow.
Most of our customers pay for their systems outright. For the small segment that finance their installations, higher interest rates may affect their decision. That said, solar still typically provides a better ROI than the stock market.
What would you re-do in your career and why?
That's a tough one. I could say that I wish I got my MBA from a top school, but that's not quite true. I would relish in the networking and added knowledge. But I sure never had, and still don't have, the patience to push through two years of schooling.
I developed a number of products back in the 1990s. Zing photography products are still around today.
Among the products I developed and sold was a simple padded neoprene sleeve with a zipper to protect laptops.
At the time laptops were super expensive and people wanted full-on carry bags and cases. I sold it in some big box stores and it did OK, not great. I sold the company in 1997. Fast forward to 2005 and these things were all over the place and are still hot sellers today—of course made by others. Hindsight is 20-20, but I sure wish I held onto that product line.
What was your first job? What was your first career job?
First jobs as a teenager: Local lawn mowing business, pizza maker, rescue boat operator on Lake Michigan.
My first post-college, professional job was working for an industrial design firm in Silicon Valley. That lasted one year before I was granted my first patents and started my first business on a full-time basis.
Is this the job you wanted when you were young? If not, what were your earlier career aspirations?
Yes, I didn't know it at the time, but I always loved planning, starting and operating businesses. It's sort of a hobby of mine. I had a number of small businesses while in college.
They never went very far. It wasn't until I launched Zing Designs at age 24 that I was able to run a "real" business, manufacturing products in Asia, developing distribution around the world, marketing and selling the products, and managing employees.
I absolutely love the challenge, the diversity of job functions, and the energy of starting a running a small business.
After selling Zing, I started my second business that I ran for almost 10 years. Eventually I started working for another company at age 40. And here I am using everything I learned as a young entrepreneur.
What from your childhood was a clear sign you would be in the C-suite?
Nothing. I was always very entrepreneurial but I never considered myself an executive—that wasn't an aspiration. I just want to start and run businesses. To this day I don't aspire to be an executive as much as I aspire to run a great business for myself or for others.
What advice would you give someone just starting his or her career in your industry?
It's the same advice I'd give someone in any industry. Be patient. Remember, you don't know everything. Use this time to fill your toolbox with knowledge and experience so you can apply it later when you're running the show and helping others grow.
