Interesting FREE Home Solar System

so us STL people can't get it huh

 

The service is available here in WI! It appears they install the equipment and you pay them a bit less than what you would have paid the electric company. I am tempted to give them a try.

Thanks for the post!

 

Interesting concept. My small local utility is not on the list, but perhaps I'll have to give them a call! Thanks for the info.

 

Quite interesting! Could potentially finally silence the nay-sayers who still think of PV as "too expensive."

 

This is definitely interesting, I'm going to look into the details for it. Thanks for posting.

 

Hmm, the fine print is a little restrictive, and all the details don't work well for us, especially with our HOA and the fact that we finally got rid of our residential line. It's a good idea, but not workable for us right now. Oh well.

 

I received a quote on solar panels and it's far too expensive for us to justify when we need attic insulation, a new furnace and new windows. We figured that we should invest in those items first since they would increase our resale value more than solar panels would. Needless to say, I was excited by the possibility of a free system. I only reviewed up to Page 4 of the terms and conditions and there are costs that the user has to absorb which may make the system cost prohibitive.

If you cancel the contract earlier than your contract allows, they retain your security deposit. They require a land line from which to monitor the system. I, for one, no longer have a land line. It seems that you pay less than your typical electrical rate, only where net metering is available. The customer still has to pay utility taxes. The provider doesn't insure the system and since the customer has to return the system in working order (acts of nature not included), it seems prudent that the customer foot the bill for related insurance costs.

Bummer.

Besides all of the aforementioned, I'm skeptical of this program because nothing is free. How do they make their money? I'm sure it's not from government subsidy. Could it be from the retainage of security deposits that are returned interest free?

 

Did anyone else notice that they write like Europeans?

The 25 year payback period puts this at the edge of plausibility, in my opinion, as to whether or not they can make money. That's slightly shorter than what I figured here, in VA, paying retail for the panels and controller, with net metering, and free (my) labor for installation.

Looking at other sources, they are a startup, their schtick is that they can manufacture thin-film solar cells at half the current price. There are some hazy mentions of building a huge PV factory in Delaware. That seems to be the point of this somewhat opaque post, and is mentioned elsewhere.
http://members.greenpeace.org/blog/citizenre

Some discussion of whether or not this is a scam, here, with mention of a pyramid-type marketing approach:
http://www.treehugger.com/files/2006/11/citizenres_renu.php

This one outright calls it a scam, though the poster is short on facts:
http://boston.craigslist.org/gbs/com/244192078.html

Here's one where somebody ran the numbers and decided they couldn't possibly make money doing this, as well as a European company that does it,but gets by on substantial government subsidy payments:
http://www.peakoil.com/fortopic25095.html

I can see this one of four ways:

One, they are just innovators with an aggressive sales strategy. It's an Amway-meets-the-Jetsons kind of a thing.

Two, although European companies doing this require very large government subsidy to survive, they'll be able to make it without subsidy because ... their costs are expected to be so low.

Three, they really can produce solar cells and systems substantially more cheaply than anyone else, or at least truly believe that they will once their enormous-yet-hazily-identified factory is up and running. And instead of using that cost advantage to sell to the very active large commercial customer market right now, and make some money before somebody else figures out how to make solar cells even more cheaply than they can (which is definitely going to happen), they have instead decided to spend a huge amount of money right now installing these on a thinly dispersed base of individual retail customers' houses, and will wait for the money to trickle in over the next 25 years.

Four, they know they can't do it, and it's just a scam to collect the $500 deposits.

I would love to believe this was viable, but I'm betting on #4. For this all to hang together:
a) they need a huge factory for economies of scale, to get the cost advantage.
b) that means a very large number of installations - can we guess 10,000 per year, to use the output of the factory,
c) at say $10,000 per install, that's $100 million in annual capital requirements, plus the cost of the factory.

That's real money, folks. If they had anything like that kind of financing, they'd have bragged about it and named their backers. At any scale less than that, I can't see how they can produce these cheaply. And it's tough to believe they could attract -- no, its flat impossible to believe they could attract that type of venture capital when at best they are promising a T-bill like rate of return / 25 year payback period.

Nope, sorry, I'd love to believe this, but this seems implausible. They are either very poor businessmen, dreamers, or scammers. They might get a few systems up a la a classic Ponzi, but you definitely don't want to be the 1000th person to sign a contract.

 

Well, I passed this by my "boss" - the guy who owns the company for which I sell PV systems - and his response was thus:

"Seems like a hyped scam. The overall cost of service delivery using that model is substantially more expensive than direct purchase by customer.

The large extra risks to the supplier ultimately has to result in higher prices, at least once the invester money runs dry."

The important part to me is the "overall cost is substantially more than direct purchase." It is interesting that is appears so much more attractive to the consumer since the customer doesn't see the real bill that they'll eventually pay. It is much like leasing an automobile instead of just buying it. Most of the time, it is cheaper to buy the thing, and sell it used when it is time to upgrade. But many folks lease since there seems to be no big up-front charge. That the customer ends up paying MORE for the car is seeming irrelevant.

This whole PV "payback time" crap has always confused me. If you take out a loan to buy your system outright, your payback period is ZERO years, Zero months, Zero days and Zero hours. You are paid back the moment you turn on the system. Or in my case, I was paid about $100 since the day I turned the thing on - but that's because I'm replacing GASOLINE with PV electricity. Not everybody has that advantage, unfortunately.

 

If I'm going to have my own solar system, I'm going to declare Pluto is a planet.

 

There's a lengthy discussion of it here, posted in early Jan 2007:
http://www.blogger.com/comment.g?blogID=20...845073440223551

One poster, who claimed to be the president of the company, mentioned $650M in bank financing -- forthcoming. Half a billion dollars plus, for a startup retail solar panel installation business and/or US based solar cell manufacturing plant. Hmmm.

The company website itself doesn't mention that financing, as far as I could tell.

With no manufacturing facility, no customers, no current revenue stream, a business model that at best yields a T-bill like rate of return over decades, flaky details on where their presumed competitive advantage comes from, some clearly incorrect assumptions on costs, no assets and no equity cushion, they've talked a bank into lending them this amount of money?

I don't think bankers usually work that way. For that amount of money, they'd probably want to see a fair chunk of equity capital in the firm first, so that somebody else loses money before they do.

It's possible these guys are legit, and if so I'll eat my words, but for now, sorry, I still don't buy it.

Tell you the truth, I think their story keeps evolving as they read what's been blogged about them. Until people starting raising the issue of capital requirements, I never saw anything about where their financing comes from. Several posters (not me) ruled out startup equity capital because of the low projected returns, and hey presto, now there's a rumor of half a billion from banks all lined up (but not quite a done deal yet ...), complete with a story as to why bank loans were cheaper than equity financing due to the tested nature of the technology and so on and so forth. Which in fact runs contrary to the prior rumor that their methods were so innovative that they were going to have half the costs of other manufacturers, based on their very own plant (that's not quite been started yet ... ). And on and on. I think these guys are making it up on the fly.

 

That makes sense that it must cost more overall to buy into this program than if you can finance the system yourself, otherwise the company wouldn't make any money. It seems like a reasonable business model. There are other companies already doing this on a commercial scale - like SunEdison, and I don't see why it wouldn't work for residential. It does seem interesting, and could allow many more solar systems to get on line more quickly, which I see as positive overall.

I am still a little skeptical of this company with their vaporous plant, and am taking a "wait and see" approach. I plan to wait two years and if the company is still in operation and has actually installed some systems with satisfied customers and hasn't been reported to the better business bureau, then I might look in to it. Only if I can't front the money for the system myself.

In the meantime, I'll improve my insulation and hopefully get a solar hot water system, and perhaps some tubular skylights.



<div class='quotetop'>QUOTE(darelldd @ Dec 6 2006, 11:23 PM) [snapback]358742[/snapback]</div>

 

<div class='quotetop'>QUOTE(priusblue @ Feb 1 2007, 11:35 AM) [snapback]383905[/snapback]</div>

That's an excellent question and I'll take a crack at answering it and then give a wildly different view for how this ought to evolve.

My answers tend to be long and boring but the boldface at the bottom is the interesting part.

I think the answer is that a) the typical SunEdison system under this monthly-payment arrangement is quite large, and b) large systems have much lower costs per installed peak watt than small systems.

So, here's their list of installed systems. If I read that correctly, only the top part is under the monthly payment scheme:

http://www.sunedison.com/dynamic/install-table.xml

So they've got maybe 100 large customers under this arrangement, with a median installation size of maybe 100 KW (which by industry standards means installed peak watts.) But of course, if you weighted these by revenue, as if you were doing a profit-and-loss statement, the revenue-weighted median would probably be closer to 300 KW. By contrast, typical home systems are in the single KWs -- say 2KW - 6KW. And as somebody else pointed out, they're installing them on nice flat commercial roofs.

So their installations are large.

Now, about cost, all I know is what I see on the internet, but I've been looking at prices pretty closely trying to figure whether PV made sense for me. Far as I can tell, big commercial systems have cost per installed peak KW around $3, where homeowner systems it looks more like $6-$7. I mean, you can check out internet price lists where the panels alone tend to run >$5/watt these days, retail.

So, yeah, at half the price, with not only tax credits for it but accelerated depreciation thrown in to sweeten it, with big stable customers who are going to make their payments, I can see that they could make a go at this. But they're straight up: funding via Goldman Sachs, panels from BP, and so on.

But at small-installation prices, with a widely dispersed retail base, with no ties to a manufacturer (but instead simultaneously taking on manufacture from scratch plus retail installation), no announcement of funding ... that's not so clear that even if these guys are sincere, that they're going to be able to make it.

The arithmetic is not all that hard, so let me lay out what I've calculated for my house. The only unique piece of information is how much sunlight you get, expressed as peak-equivalent hours of light. Plenty of places you can look that up.

In my case, I can count on an annual average of 3.5 hours of peak-equivalent solar energy per day. (Ie, total sushine is equiv to 3.5 hours of noontime sunshine, on average.) VA power charges $0.10 per KWH. So, 1 peak watt of solar, installed, nets me 1 peak watt * 3.5 hours/day * 365 days/year * $0.10 cents per KWH / 1000 watts per KWH = a little less than $0.13 per year.

So, I net a little under 13 cents per year per installed peak watt. That's my revenue stream. No matter what installation I'm considering, that never changes. As long as the electricity I produce displaces what I'd otherwise buy from Va Power and/or VA Power buys the excess a the full retail rate, then that part of the calculation -- my revenue side -- works out to a bit under 13 cents per installed peak watt per year.

That doesn't give me a whole lot of slack to play with, financially speaking.

If I assume the system will last forever maintenance free, that prices are stable, ignore the time value of money, and so on, the payback period is just long division. If my net cost is $6/watt, its >50 years. At $4/watt (say subsidies pick up a third of the cost), its about 30 years. If I can get it for $3/watt, the undiscounted payback period is about 25 years or so.

If I start to discount by some real rate (ie, the T-bill rate less the rate of inflation, call it 2.5%), which would be the minimum proper thing for a for-profit business calculation (I mean, these guys have to pay interest on the money they borrow), then the payback period for the $3/watt panel stretches to about 35 years. You notice that by using the real rate, I've in effect already factored in general inflation. If electricity prices rise in step with general inflation, then that's the proper profit-and-loss calculation.

So what I'm saying is that here, in No Va, if I were a business and had to borrow the money, and was going to compute my payback period from this, if I have to put out $3/installed peak watt, my payback period is about 35 years.

That's a pretty marginal proposition.

But these guys seem to be saying they install panels anywhere there's net metering and the cost of electricity exceeds $0.07/KWH. At 0.07/kwh, the discounted payback period as described above stretches out into centuries.

So it just doesn't add up for me. They can fuzzy this up some with talk about selling the renewable energy credits (green tags) and this and that, but my take on it is that the green tag revenue is minimal (if they can sell them at all), and that the rest of pretty much works out to some level of tax or other subsidy, which I think I've already handled by cutting the price of the consumer system in half.

So I'm back to square 1. I can see this as a large-scale commercial enterprise. Particularly, if you look at the SunEdison list, there are a lot of "green" companies there who are probably willing to pay a premium for the greeness of it -- no surprise that WHole Foods is a big customer. Bet SunEdison does OK. But I don't see it as a good retail application, or at least, not good enough that banks are going to lend them 10x the amount of SunEdison's total capitalization.

Now let me turn this on it's head: The fact that electric utilities will offer a "green" option means that the entire approach of installing one-off, do-it-yourself, unique home systems is fundamentally obsolete and inefficient. (Apology to darelldd, I'm just talking as an economist, and you know those guys are no fun.) So I just signed up for my local utility's green option. Instead of making the green energy myself, and having to have the brains and capital and skills to do that, I can now just buy it from a large-scale manufacturer, then way I buy everything else. The only skill I need to get green electricity is the ability to shop on the internet.

So, all of my window-shopping sytems, calculating costs and sun angles and all that crap is just total wasted effort. I just clicked my mouse for 5 minutes, signed up for energy from some PA wind farms, and hey, I'm done. Carbon-free electricity. Arguably, I don't even need CF lightbulbs any more -- all my electric dollars now go to promote the growth of wind power. Not that I'm going to change, but you can see how this green option from your utility just flips the world on its head.

I laid all this out at the end of my thread on the green electricity option in DC, if you would care to read it. So, at some point, when people figure this out, there will be little point to installing expensive unique homeowner rooftop systems, when instead you can just put a cheaper more efficient PV system out in the desert and buy your electricity from them.

Here's the green electricity thread.

http://priuschat.com/Green-electricity-opt...-VA-t28432.html

 

<div class='quotetop'>QUOTE(chogan @ Feb 1 2007, 12:42 PM) [snapback]384069[/snapback]</div>

One of my best friends has advanced degrees in economics. And you're right!

 

Citizenre was discussed today on NPR:

http://www.npr.org/templates/story/story.php?storyId=8989563

Does this add validity to their claims?