Eventually, Kennedy took me himself. We walked out of Sungevity’s main offices and across the cobbled street to an abandoned Barnes & Noble. When he opened the doors, I understood why he wanted me to see it: there before me, in one great room under a vaulted ceiling, were row after row of headset-wearing Sungevity employees tapping away at banks of high-resolution computer screens. Sungevity’s massive installation, interconnection and service teams — what Kennedy calls “project management,” meaning everything that has to be done once the solar system has been ordered — worked here. Though they have since moved into a different office space, as of January there were about a hundred people working in that abandoned bookstore, nearly as many as there were in all of Sungevity’s vast headquarters across the street.
The operation demands this many people because the permits required to put a solar array on your roof vary from city to city, even within California. “Some agencies want an AutoCAD drawing of the proposed installation as a digital file,” Kennedy said, pointing at the various people at work at their monitors. “Others want a single line electrical drawing as a piece of paper in a folder somewhere. And somebody’s got to do all that.”
When I asked Lyndon Rive if SolarCity had a similar operation, he said: “There’s a lot of complexity with permitting and everything else. We’re trying to hide the customer from that pain.” Lynn Jurich at Sunrun told me that the work it takes to arrange permits for an installation adds $2,500 to the cost of each system. Looking out at the Sungevity work force in that former bookstore, it wasn’t hard to believe. It was a living, moving picture of the inefficiencies created by fragmented policy — but it was also a lot of jobs. I kept trying to move farther and farther back, just to get some sense of the scale. As we walked out, Kennedy said: “This business is a baby growing up so fast, forget childhood. It’s straight into adolescence and beyond.” (...)
The reason that the residential solar industry has begun to buck this general trend is because, instead of appealing to our heartstrings, it has begun to appeal to our checkbooks. The innovation that made this possible — selling solar services instead of solar panels — was pioneered in the commercial market by Jigar Shah. Though Shah was trained as a mechanical engineer, his most important bit of engineering was financial: in 2003, he started a company called SunEdison, which offered something called a solar-power purchase agreement (P.P.A.) to commercial customers.
Instead of having to pay all of the money for a solar installation up front and then having to carry that payment as a debt on their balance sheets, which no publicly traded company wants to do, companies like Whole Foods and Staples contracted with SunEdison to have solar panels put up at no initial cost. SunEdison then charged the companies for the amount of energy that the panels produced at a fixed rate for a period of 20 years — a rate that was less than what the companies were already paying the utilities, and that would ultimately save them even more money as energy prices inevitably rose over time. The bold stroke was that they were selling the power, not the hardware. (...)
Lyndon Rive, the head of SolarCity, said: “People don’t buy gas stations. People don’t buy utilities. Why are we having them buy solar equipment?” The premise of the lease is simple. You go online to one of the installers and enter basic information about your location and your previous year’s energy usage. The installer then uses satellite and aerial imagery to assess how viable your rooftop is for solar use — too many trees are a problem, southward-facing roofs have the most exposure to sunlight over the course of the day — and whether they can put enough of a system on your roof to make it worthwhile.
If they can, the basic value proposition is this: Say you have been paying your utility, on average, $100 a month. The solar company installs solar panels on your roof, maintains them, monitors them and repairs them for the life of the lease. The output will reduce your utility bill to roughly $20 a month, and you pay around $65 a month to lease the equipment (and the power the equipment produces, along with maintenance). You’re now paying $85 a month total, 15 percent less than you were, the installer has a revenue stream that it can use for cash flow or sell off to an investor and everybody is playing his part in reducing the burning of fossil fuels.
“The most frequent question I get,” Kennedy says, “is: ‘What’s the sting? Where’s the trap?’ ” Lyndon Rive says he still goes to dinner parties, where people know all about SolarCity and what he does, and at the end of his pitch about the solar lease, somebody will say: “So how much does this cost again? What’s the payback period?”
“‘You haven’t heard me!”’ he shouted to me, over the telephone, spelling out his frustration with those kinds of questions. “You get cheaper electricity! Full stop!’ ”
by Jeff Himmelman, NY Times | Read more:
Photo: Stephen Lewis
