Would you pay $25,000 to $30,000 to put solar panels on your home? If you're like most cash-strapped Americans, you'd balk at that five-figure expense, no matter how green you aspire to be. OK, what if you could do it for $1,000 or $2,000?
SolarCity CEO Lyndon Rive.
SolarCity, based in sunny Silicon Valley, has just launched a new program that will push the upfront costs of a residential solar system down to a grand or two. Under the company's SolarLease financing program, backed by Morgan Stanley, SolarCity will own the solar panels it installs on customers' roofs, and homeowners will pay a monthly lease fee and get the resulting electricity. In many cases, customers' total monthly electricity expenses will go down, and the power they're getting will be green instead of brown.
Launched in 2006 by two brothers, Lyndon and Peter Rive, SolarCity also takes advantage of economies of scale by getting whole neighborhoods to go solar at once -- hence the company's name. In just a year and a half, SolarCity has grown to become the largest residential solar-panel installer in California (though it does commercial installations too), with 235 employees and $30 million in sales last year. The company has expanded into Arizona and Oregon (states which, like California, have serious subsidies for solar), and is planning to be up and running on the East Coast by the end of the year.
SolarCity CEO Lyndon Rive is an intense, earnest 31-year-old who launched two other companies before jumping into the exploding market for renewable energy. I caught up with him at the Aspen Environment Forum, where he represented his company in accepting the first-ever Aspen Institute Energy and Environment Award for Corporate Energy Generation.
What makes SolarCity different from other companies that install solar panels?
There goes the neighborhood ...
We have a unique model. We will go into a local community and educate the community about the benefits of solar, and try to get the entire community to convert to solar. By doing that, we get efficiencies of scale and we offer a discount to everyone who participates, so it's win-win for everyone.
How much does it cost to put solar panels on a home?
About $30,000 [before tax credits and other incentives]. Today the biggest barrier to adoption is the initial cost.
We're launching a new service that's going to revolutionize the adoption of solar. The homeowner will be able to pay for the system out of the savings on their electric bill. There will be a low down payment -- say $1,000 or $2,000 -- and then your monthly fees [to SolarCity] combined with your new electric bill will be less than your old electric bill. We're essentially leasing people the solar systems. We're able to capitalize on the commercial tax credits that residents aren't able to capitalize on.
You told The New York Times that you've been having trouble finding enough workers.
They left out the last sentence of my quote.
What was the last sentence of your quote?
We're building a training academy in a low-income, developing area of San Francisco, the Bayview-Hunters Point area. We're about to open it up -- it'll be another month or so. The academy will allow us to train about 30 or so people every two months, and will allow us to scale up to about 60 people every month -- that will be about a year or two away.
We're trying to improve the [Bayview-Hunters Point] neighborhood. It's been impacted, ironically enough, by an old, dirty, polluting coal power plant right next to it. Now they've shut down that power plant, and the city of San Francisco is trying to replace that with green companies, new innovation from cleantech. So the city is helping us with this.
Who are the workers you have now?
Most of them come from construction, electrical, plumbing, and roofing -- people who are used to working with their hands and are good with tools. Historically they've worked in the trades, and often get treated really badly. We pay a decent wage, give everybody full benefits, equity in the company, coffee and drinks at the warehouse. So for the first time they've been exposed to the same perks that software engineers have. We want to make sure that they are very happy -- they are the most important thing in the company.
They have a sense of being a part of a change -- they know that this person they're installing solar for is reducing their carbon footprint. It's a tremendously fulfilling job.
Do you hear that from your employees?
All the time. This is my third company, and in both companies before this one, I've never heard such enjoyment from the workforce. They're happy with what they're doing.
Do you call yourself an environmentalist?
Definitely -- an environmentalist without compromise. I don't want to live in a cave. I like my toys. But through technology and innovation, we can live the lifestyles we want to live and still be environmentally friendly.
Why won’t Lisa Jackson/Nancy Sutley visit a mountaintop removal site?
Comments
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Andy at Arcwire Posted 2:55 am
11 Apr 2008
When I interviewed Lyndon last week for Arcwire, he mentioned that the Bayview Training Academy may be jeopardized if SF doesn't pass their solar incentive program. Heads up for all you SF voters!
In our interview Lyndon talks about finding the 'Holy Grail' of solar, his prediction that we can have a virtually carbon-free lifestyle in just a few years, and why going solar is like writing yourself a check for $6000.
He also talks about the importance of subsidies for a nascent industry, and "tremendous conflict of interest" facing oil companies investing in renewables.....
You can read it here:
Arcwire Interviews Lyndon Rive, Founder of SolarCity
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Jon Rynn Posted 3:27 am
11 Apr 2008
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disdaniel Posted 3:52 am
11 Apr 2008
On their website they compare a sample solar lease to system purchase. After incentives the purchase/out of pocket price for their 4kw system would be $25k to the homeowner, down from $35-$40k because of CA incentives (I assume). For this analysis the CA incentives are a wash--the homeowner or solarcity get them either way.
SolarCity offers you a 15 yr lease at ~$2,000/yr ($1500 in year one; $2500 in year 15) after charging you $2k down, and an extra $8k to buyout the system at the end of the lease.
Solar City pockets a 30% federal tax credit worth ~$10k (an individual is capped to a $2k federal tax credit). This $10k plus the $2k down covers 50% of their outlay day 1. Solarcity then charges ~$30k over 15 years of lease, plus the $8k residual ($38k altogether).
I think that is pretty cool...$30k in lease payments over 15 years takes the asset from ~$13k value down to ~$8k.
I'm sure SolarCity gets some additional accelerated depreciation benefits...but I can sure see why SolarCity would want to sell this to the whole neighborhood.
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ShastaTodd Posted 11:22 am
11 Apr 2008
Solar PV is very energy intensive to make. With conservation (I know this is a bad word here in 'murica), efficiency upgrades, and solar hot water most homes could reduce the size of PV system needed by an easy 50%. Putting in gigantic systems to compensate for waste and unconscious consumption is more of the same brain dead thinking that has us facing the mess we are.
Now that the days of cheap energy are behind us, clearly there is no value in subsidizing any kind of waste.
Please, lets put the cart behind the horse.
Todd Cory
Mt. Shasta Energy Services
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cwsolar Posted 12:36 pm
11 Apr 2008
A few other issues to consider--
What happens when you want, or need, to sell your house? Will the new owner want the same deal?
Who is responsible for moving the panels in order to replace the shingles that were 15 y.o. when you signed up? Did the installers, who are getting paid flat rate,seal the mounting penetrations properly? What provisions were made to facilitate reroofing?
How will installation details be handled when that 4 KW gets installed on a complicated, multi-slope roofline?
If poor quality control results in failed systems, even just some, the whole 'city' will suffer. Bad news travels faster than good !
It has taken 20 years to get over the shyster installed solar hot water systems done in the early 80's. Even ' good corporate citizen's ' can take advantage of naive people wanting to do the right thing. Here in Richmond ,VA we had few shysters, but when the tax credits were obviously set to expire, Reynolds Solar decided to move their large inventory by hiring 'condo salesmen' and with mass mailings, seminars, free cheap camera's and a roll of Reynolds Wrap, they sold solar hot water systems for 8-10 thousand dollars that their own dealers were selling in other markets for $4500.
Also, for the rest of the solar industry, a little history. Abuse of the 'too good to be sustainable' tax credits of the early 80's led to the perfect excuse for the Reagan administration to let them expire, suddenly, precipitously, and disastrously for the solar industry and the country, it is now apparent !
There is a huge need for non-profit , educational groups like the American Solar Energy Society--ASES--and their local, state, and regional Chapters, to provide education for the public. I believe experienced solar professionals also will find it in their self interest to be involved with this effort.
Ken Schaal
CommonWealth Solar,LLC
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Delay And Deny Posted 5:44 am
13 Apr 2008
More and more people are choosing to live in rented apartments for financial and lifestyle reasons. I know that I prefer the convenience of my apartment complex.
It would seem to me that instead of trying to get real estate owners to invest in solar panels, why not go all the way and build solar powered apartment complexes. In other words, I think more alternative energy providers should consider creating vertical markets rather than trying to sell a raw technology horizontally.
I bet that if the initial cost forces up rents by, say $100 per month, there are going to be people who would be willing to take on the cost in order to reduce their CO2 footprint and be part of the Green Evolution.
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Lhogue Posted 10:50 am
14 Apr 2008
The company is starting with 47 townhomes in the Pacific Station development in Encinitas, Ca, and works exclusively with homeowners associations, avoiding some of the messy legal and financial issues Ken raised. The company's CEO said his personal goal is to have 50,000 meters under contract in five years (sounds ambitious!). See more coverage at http://www.signonsandiego.com/news/business/20080401-9999 ....
And ShastaTodd's right: energy efficiency and personal conservation have to come first. What are we saving if we just use all those solar panels to run our new 60" plasma TVs (or have people stopped buying those since the recession hit?).
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Pangolin Posted 4:40 pm
18 Apr 2008
The method of funding is utility bills
The installations are in large (block sized) lots
This increases market demand for PV production
They are grid tied and reduce loads on natural gas peaker plants
The installation company is training it's installers from the local population
Yes it's important that we get conservation measures in place. Yes it's important that quality systems are installed. Leases of units should ensure that
Yes we need to expand availablility to the 40% of Californians that rent.
But, once these units are installed they will produce power and that will be excess power if the homeowner takes due diligance steps to reduce utility bills.
And, the utility bill tie-in once established can be used as a model for financing other conservation methods like geo-exchange thermal management.
And, the "sell-the-whole-block" model is even better for geo-exchange thermal systems as a limited number of deep wells works as well as many shallow wells. Since much of the cost is hourly trenching or drill-rig fees bunching a blocks worth of ground loops is the best way to make the financials work.
I say this is a great idea.
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Biodiversivist Posted 4:27 am
20 Apr 2008
"The arrangement is gaining popularity in California and other states, where private solar installers own the solar panels on a customer's rooftop and sell the power to the property owner, bypassing the local electric utility.
The solar panels are in essence a rooftop power plant scaled to serve a single customer. The customer contracts to buy 20 years of electricity at a set price, hedging against future price increases."
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