Problem Definition
HelioRidge Solar is a residential solar installer based in Phoenix, Arizona. It designs, sells and installs rooftop solar systems for homeowners and completed about 2,000 installations in 2025. Its average system is about 13.5 kW sold at about $2.25 per watt (about $30,400 per system), giving revenue of about $61 million.
About 70% of HelioRidge's customers paid in cash or with a loan and relied on the 30% federal Residential Clean Energy Credit (Section 25D). That credit ended for systems installed after December 31, 2025. Since January 2026, HelioRidge's Arizona bookings are down about 30%. Arizona also has some of the lowest residential electricity prices in the country, which makes the savings from solar harder to sell without the tax credit.
The founder and CEO believes HelioRidge's strength (fast, well-reviewed installations and an efficient sales process) could work in a state where solar economics are stronger. She has shortlisted Illinois, Pennsylvania and North Carolina and asked you: Which state should HelioRidge enter, and is the entry worth it?
Additional InformationAsk for dataInterviewer’s data
If asked, please share that:
- HelioRidge has $5 million of cash available for expansion and wants the new state to be profitable within two years
- It has no licences, crews, warehouses or brand awareness outside Arizona today
- HelioRidge sells only systems that customers buy (cash or loan); it has never offered leases or power purchase agreements (PPAs)
- A national lease/PPA provider has approached HelioRidge about installing systems that the provider would own; under the 2025 federal law, systems owned by a third party can still claim a business tax credit (Section 48E) through 2027
- The CEO's personal preference is North Carolina because "systems there are bigger, so each sale is worth more"
Question 1Structuring
How would you structure the decision about which state HelioRidge should enter?
Hint · Structuring
Build 3–4 branches that are specific to this client and question, not a generic framework. Check they don't overlap and together cover the problem.
Additional InformationAsk for dataInterviewer’s data
Share if the candidate asks for market context:
- US residential solar installations were about 4.6 GW (4,647 MWdc) in 2025, down about 2% from 2024, despite a rush to install before the 25D credit ended
- In Q1 2026 the residential segment installed about 1.2 GW (1,179 MWdc), up about 6% year over year
- SEIA and Wood Mackenzie expect distributed solar to decline in 2026 and residential to return to growth from 2027, driven mainly by third-party-owned (lease and PPA) systems
- The US average residential electricity price was about 18.3 cents per kWh in July 2026, up from about 17.5 cents a year earlier
Try it first, then checkCheck my answerModel answer
A strong structure has four branches:
1. Customer economics (will homeowners buy?)
- a) Residential electricity price and how fast it is rising
- b) Net metering: what homeowners are paid for power they send to the grid
- c) State and utility incentives (rebates, solar renewable energy credits)
- d) Installed cost per watt and resulting payback period
2. Market size and competition
- a) Annual residential installations in the state and growth
- b) Number and concentration of installers; typical prices
- c) Share of customers buying versus leasing
3. HelioRidge's ability to win
- a) Can its sales process and installation speed be copied in a new climate and housing stock?
- b) Licensing, permitting and utility connection timelines
- c) Hiring crews and building a local brand
4. Financials and risk
- a) Entry investment against the $5M budget
- b) Contribution per installation and breakeven volume
- c) Policy risk (net metering changes, incentive budgets running out)
What the interviewer is looking forInterviewer’s viewInterviewer’s view
A good candidate structures around what makes a state attractive for residential solar (customer economics, market size and competition) and around HelioRidge's ability to win and profit there. A strong candidate recognises that, without the federal credit, the homeowner's payback period decides demand, so electricity prices and state policy (net metering and incentives) matter most. An excellent candidate also raises the business model question: in 2026, lease and PPA products still carry a tax credit, so HelioRidge's cash-and-loan-only model may need to change wherever it goes.
If the candidate starts listing generic market-entry buckets, ask: "What single number would tell you whether a homeowner in that state will buy solar without a federal tax credit?" (Answer: the payback period, or the savings relative to cost.)
So What? cascade:
- Level 1: some states are more attractive for solar than others
- Level 2: with the 25D credit gone, customer economics (electricity price, net metering, state incentives) drive demand far more than before
- Level 3: HelioRidge must choose both a state and a business model; the best state for cash buyers may differ from the best state for lease/PPA partners
Question 2Judgement & Insights
Exhibit 1 compares the three states with Arizona. Exhibit 2 shows HelioRidge's own market estimates. Which state looks most attractive, and what do you make of the CEO's preference for North Carolina?
Hint · Judgement & Insights
Read the exhibit title, axes and units first. Lead with the ‘so what’, then back it with one or two numbers.
Exhibit 1Residential Solar Economics by State, 2026
| Metric | Arizona (home market) | Illinois | Pennsylvania | North Carolina |
|---|---|---|---|---|
| Residential electricity price, July 2026 (cents/kWh) | 15.4 | 19.2 | 21.7 | 15.2 |
| Residential electricity price, July 2025 (cents/kWh) | 15.3 | 17.2 | 19.5 | 13.4 |
| Average installed cost per watt | $2.27 | $2.96 | $2.59 | $2.44 |
| Average system size (kW) | 13.5 | 11.6 | 12.8 | 14.3 |
| Average system cost before incentives | $30,745 | $34,304 | $33,094 | $34,932 |
| Typical payback period (years) | 13.3 | 12.5 | 9.5 | 15.7 |
| Estimated 25-year savings | $35,465 | $33,153 | $72,288 | $31,610 |
| Net metering for new customers | Not shown | Supply-only net metering since January 2025 (less valuable than full retail) | Credits at the full retail rate; excess at the lower "price to compare" | Duke Energy no longer accepts new net metering customers |
| Main state incentives | Not shown | Illinois Shines: upfront payment for 15 years of solar renewable energy credits (about $7,000 on average) plus a utility rebate of $300 per kW | Solar renewable energy credits worth about $300-400 | Duke PowerPair rebate of up to $9,000 for solar paired with a battery |
Source: U.S. Energy Information Administration, Electric Power Monthly (September 2026); EnergySage state solar cost and incentive data (September 2026). Payback and savings are EnergySage estimates for an average system.
Source: HelioRidge Solar case file
Exhibit 2HelioRidge Market Estimates
| Metric | Illinois | Pennsylvania | North Carolina |
|---|---|---|---|
| Estimated residential installations per year | 14,000 | 9,000 | 7,000 |
| Share held by the top three installers | 45% | 30% | 50% |
| Months to obtain licences and set up operations | 6 | 5 | 5 |
Source: HelioRidge business development team estimates.
Source: HelioRidge Solar case file
Try it first, then checkCheck my answerModel answer
Pennsylvania is the most attractive state.
| Factor | Illinois | Pennsylvania | North Carolina |
|---|---|---|---|
| Electricity price change, July 2025 to July 2026 | 19.22 / 17.22 = +11.6% | 21.72 / 19.51 = +11.3% | 15.16 / 13.37 = +13.4% |
| Payback | 12.5 years | 9.5 years | 15.7 years |
| 25-year savings / system cost | $33,153 / $34,304 = 0.97x | $72,288 / $33,094 = 2.18x | $31,610 / $34,932 = 0.90x |
| Net metering | Weakened (supply-only) | Full retail rate | Closed to new Duke customers |
| Top-3 installer share | 45% | 30% | 50% |
- Best customer economics. Pennsylvania homeowners face the highest electricity price of the three (about 21.7 cents per kWh, up about 11% in a year) and still receive retail-rate net metering. Their payback is about 9.5 years, and the 25-year savings are more than twice the system cost.
- Most open competition. The top three installers hold about 30% of the market, compared with 45-50% elsewhere, so a new entrant has more room.
- Lower price, but a good fit. Pennsylvania's average $2.59 per watt is below Illinois ($2.96), which squeezes installer margins somewhat, but HelioRidge already operates at $2.25 per watt in Arizona and is used to competing on cost.
On North Carolina: the CEO is right that systems are larger (14.3 kW and about $34,900), but this is the weakest market for customers: payback of about 16 years, no net metering for new Duke customers and the most concentrated competition. The only strong incentive (PowerPair) requires a battery, which HelioRidge does not sell today.
Illinois is a sensible second state: it is the largest market (about 14,000 installations a year), and its state incentives (about $7,000 + $300 x 11.6 kW = about $10,500, or roughly 30% of a $34,300 system) replace much of the lost federal credit. However, weaker net metering and more concentrated competition put it behind Pennsylvania.
What the interviewer is looking forInterviewer’s viewInterviewer’s view
The candidate should focus on customer economics first. Pennsylvania stands out on almost every customer metric: the highest electricity price of the three, retail-rate net metering, the shortest payback (9.5 years) and more than twice the 25-year savings of any other state. A strong candidate will also calculate that electricity prices rose about 11-13% in a year in all three target states, compared with almost no change in Arizona.
The trap is the CEO's North Carolina argument. North Carolina has the largest systems and the lowest cost per watt, so each sale is indeed worth slightly more, but customers there have the weakest economics: the lowest electricity price of the three, no net metering for new Duke customers and a payback of about 16 years. A bigger ticket does not help if fewer homeowners want to buy.
An excellent candidate notes that Illinois is the largest market and that its state incentives, about $7,000 plus $300 per kW (about $3,500 for an average 11.6 kW system), are worth about 30% of the average system cost, similar to the federal credit that expired. Illinois is the clear second choice.
So What? cascade:
- Level 1: Pennsylvania has the best payback and savings
- Level 2: without a federal credit, payback drives demand, so Pennsylvania's customers are the easiest to sell to; Pennsylvania also has the least concentrated competition
- Level 3: North Carolina's larger systems are a seller's view of attractiveness; the customer's view (payback of about 16 years) is what determines volume
Question 3Numeracy
Let's test whether Pennsylvania is worth it. Using the data below, how many installations per year does HelioRidge need to break even in Pennsylvania, and when would the state become profitable?
Hint · Numeracy
Write the formula before you plug in numbers, keep units and zeros explicit, and sanity-check the order of magnitude at the end.
Exhibit 3HelioRidge Pennsylvania Branch Plan
| Item | Value |
|---|---|
| Average system size | 12.8 kW |
| Average selling price | $2.60 per watt |
| Variable cost | $2.10 per watt ($0.95 + $0.55 + $0.60) |
| Fixed branch cost | $3.2M per year |
| Planned installations | Year 1: 300; Year 2: 700 |
| Estimated Pennsylvania market | 9,000 installations per year |
Source: HelioRidge finance team estimates; average system size and price rounded from EnergySage Pennsylvania data.
Source: HelioRidge Solar case file
Additional InformationAsk for dataInterviewer’s data
- Average Pennsylvania system: 12.8 kW sold at $2.60 per watt
- HelioRidge's variable costs per watt: equipment $0.95, installation labour and permits $0.55, sales commission and lead costs $0.60
- Fixed annual costs of a Pennsylvania branch: warehouse and office $0.6M, management and operations staff $1.4M, licences, insurance and vehicles $0.5M, launch marketing $0.7M
- HelioRidge expects to complete 300 installations in year 1 and 700 in year 2
Try it first, then checkCheck my answerModel answer
Step 1: Contribution per installation
| Line | Per watt | Per 12.8 kW system |
|---|---|---|
| Price | $2.60 | $33,280 |
| Equipment | -$0.95 | -$12,160 |
| Labour and permits | -$0.55 | -$7,040 |
| Sales and leads | -$0.60 | -$7,680 |
| Contribution | $0.50 | $6,400 |
Step 2: Breakeven volume
- Fixed cost: $0.6M + $1.4M + $0.5M + $0.7M = $3.2M
- Breakeven: $3,200,000 / $6,400 = 500 installations per year (500 x 12.8 kW = 6.4 MW)
- Market share needed: 500 / 9,000 = about 5.6%
Step 3: Two-year profit
| Year | Installations | Contribution | Fixed cost | Profit |
|---|---|---|---|---|
| Year 1 | 300 | 300 x $6,400 = $1.92M | $3.2M | -$1.28M |
| Year 2 | 700 | 700 x $6,400 = $4.48M | $3.2M | +$1.28M |
| Cumulative | $0 |
Interpretation: the branch breaks even over two years, meeting the CEO's target with no margin for error. The year-1 loss of about $1.3M is well within the $5M budget. The key sensitivity is volume: each 100 installations above or below plan changes profit by $640,000.
Sanity check against the national market: US residential installations were about 4,647 MW in 2025. At about 12 kW per system that is roughly 387,000 systems, worth about 4,647 MW x $2.60 per watt = approximately $12 billion. An estimate of 9,000 Pennsylvania installations a year is about 2.3% of the national total, which is plausible for a mid-size solar state.
What the interviewer is looking forInterviewer’s viewInterviewer’s view
The candidate should calculate contribution per installation first, then breakeven volume, then check that volume against the market. A strong candidate converts breakeven into market share (about 5.6%) and judges whether that is realistic. An excellent candidate calculates cumulative profit and sees that the branch recovers its year-1 loss by the end of year 2, meeting the CEO's two-year target, and checks that the year-1 loss fits inside the $5M budget.
If the candidate works in total revenue rather than per watt, that is fine as long as the numbers agree.
So What? cascade:
- Level 1: breakeven is 500 installations a year
- Level 2: that is about 5.6% of the Pennsylvania market, which is realistic for an efficient installer in a market where the top three hold only 30%
- Level 3: the branch loses about $1.3M in year 1 and makes about $1.3M in year 2, so it is cumulatively break-even after two years, but only if the 700-installation target is hit
Question 4Synthesis
The CEO asks for your final recommendation. What do you tell her?
Hint · Synthesis
Answer first: the recommendation, two or three reasons with numbers, then risks and next steps.
Try it first, then checkCheck my answerModel answer
Recommendation: enter Pennsylvania in the next 5-6 months, and add a lease/PPA option through the national partner from day one.
Why:
- Homeowners there can justify solar without a federal credit. Electricity costs about 21.7 cents per kWh (up about 11% in a year), net metering is still at the retail rate, payback is about 9.5 years and 25-year savings are about 2.2 times the system cost.
- The competition is beatable. The top three installers hold only about 30% of the market.
- The numbers work. Each installation contributes about $6,400. Breakeven is 500 installations a year (about 5.6% of the market), and the plan of 300 then 700 installations recovers the year-1 loss of about $1.3M by the end of year 2, well within the $5M budget.
On North Carolina: larger systems do not make up for a payback of about 16 years and closed net metering. Illinois, with strong state incentives and the largest market, is the best option for a second expansion once Pennsylvania is profitable.
Risks and mitigations:
- Volume shortfall: every 100 installations below plan costs $640,000; offer leases/PPAs, which still carry a federal credit through 2027, to widen the customer base
- Policy change: Pennsylvania's retail-rate net metering could be revised, as happened in Illinois and North Carolina; track the regulatory calendar and sell on bill savings from rising electricity prices, not on incentives alone
- Execution: transfer an experienced Arizona crew lead and sales manager to set up the branch, and adapt installation methods for snow loads and older roofs
Next steps: start licensing and hiring now, sign the lease/PPA partnership, and set a gate at month 9: at least 250 contracts signed before committing the year-2 budget.
What the interviewer is looking forInterviewer’s viewInterviewer’s view
Look for a clear answer (which state and whether to enter), the two or three numbers that support it, a response to the CEO's North Carolina preference, and risks with mitigations. An excellent candidate adds the business-model point: offering a lease/PPA option through the partner protects volume in a market where cash buyers no longer get a federal credit.
So What? cascade:
- Level 1: enter Pennsylvania
- Level 2: Pennsylvania's customer economics work without the federal credit, and the branch breaks even within two years
- Level 3: the entry should be paired with a lease/PPA offer so HelioRidge is not relying only on cash and loan buyers during a market downturn
Data Sources
HelioRidge Solar is fictional; its revenue, costs, volumes and market estimates (Exhibit 2 and Exhibit 3) are invented. Market facts come from the public sources below; figures are rounded for interview math.
- US residential solar installations approximately 4,647 MWdc in 2025, down about 2% from 2024 despite the 25D installation rush -> SEIA and Wood Mackenzie, "Solar Market Insight Report 2025 Year in Review", 2026, https://seia.org/research-resources/solar-market-insight-report-2025-year-in-review/
- Residential segment installed approximately 1,179 MWdc in Q1 2026, up about 6% year over year; distributed segments forecast to decline in 2026; residential to return to growth from 2027 driven by third-party ownership -> SEIA and Wood Mackenzie, "Solar Market Insight Report Q2 2026", 2026, https://seia.org/research-resources/solar-market-insight-report-q2-2026/
- Section 25D homeowner solar credit ended for systems after December 31, 2025; third-party-owned (lease/PPA) systems can claim the Section 48E credit through 2027 -> SEIA, "EXPLAINED: The Clean Energy Provisions in the One Big Beautiful Bill", 2025, https://seia.org/research-resources/clean-energy-provisions-big-beautiful-bill/ and Solar.com, "Trump and the Fate of the 30% Solar Tax Credit", 2025, https://www.solar.com/learn/trump-and-the-fate-of-the-30-solar-tax-credit/
- Residential electricity prices, July 2026 and July 2025 (Arizona, Illinois, Pennsylvania, North Carolina, US average approximately 18.3 and 17.5 cents per kWh) -> U.S. Energy Information Administration, "Electric Power Monthly, Table 5.6.A Average Price of Electricity to Ultimate Customers by End-Use Sector, by State", September 2026, https://www.eia.gov/electricity/monthly/epm_table_grapher.php?t=epmt_5_6_a
- Illinois average cost $2.96 per watt, 11.57 kW system, $34,304, payback about 12.5 years, 25-year savings $33,153 -> EnergySage, "Illinois Solar Panel Cost", September 2026, https://www.energysage.com/local-data/solar-panel-cost/il/
- Pennsylvania average cost $2.59 per watt, 12.78 kW system, $33,094, payback about 9.5 years, 25-year savings $72,288 -> EnergySage, "Pennsylvania Solar Panel Cost", September 2026, https://www.energysage.com/local-data/solar-panel-cost/pa/
- North Carolina average cost $2.44 per watt, 14.33 kW system, $34,932, payback about 15.7 years, 25-year savings $31,610 -> EnergySage, "North Carolina Solar Panel Cost", September 2026, https://www.energysage.com/local-data/solar-panel-cost/nc/
- Arizona average cost $2.27 per watt, 13.52 kW system, $30,745, payback about 13.3 years, 25-year savings $35,465 -> EnergySage, "Arizona Solar Panel Cost", September 2026, https://www.energysage.com/local-data/solar-panel-cost/az/
- Illinois supply-only net metering for new systems since January 1, 2025; Illinois Shines upfront SREC payment averaging about $7,000; utility rebate of $300 per kW -> EnergySage, "Illinois Solar Panel Installations: 2026 Pricing & Savings", 2026, https://www.energysage.com/local-data/solar/il/
- Pennsylvania retail-rate net metering with excess credited at the "price to compare"; SRECs worth about $300-400 -> EnergySage, "Pennsylvania Solar Panel Installations", 2026, https://www.energysage.com/local-data/solar/pa/
- Duke Energy no longer accepts new net metering customers in North Carolina; PowerPair rebate up to $9,000 for solar plus battery -> EnergySage, "North Carolina Solar Panel Installations", 2026, https://www.energysage.com/local-data/solar/nc/
Free in the DrillCase case library · Editorial policy