The Solar Revolution is Finally Here by Peter Johnson
"Solar Technology is Commercial. This technology right here is going to help us change the way we live in our homes. " --President George W. Bush, Feb. 20, 2006
The amount of solar energy intercepted by the Earth every minute is greater than the amount of energy the world uses in fossil fuels each year. Currently, solar power provides less than 1% of US energy production, and a tidal wave of change has begun--this may be the first you've heard of it. Switching to solar now not only makes environmental sense, but there is also a large financial incentive for homeowners.
I have discovered and begun working with a new company that is investing $425 million to build the world's largest solar photovoltaic (PV) manufacturing facility, and production is slated to begin in September--people started standing in line last fall.
Why haven't we adopted solar yet? Three reasons: 1) There's a huge up-front investment (easily $40-50,000 for the average home--I know people that have been quoted over $100,000), 2) The homeowner was responsible for all monitoring, maintenance and repairs, and 3) When all was said and done, there was a benefit to the environment, but the electricity ended up costing the homeowner about four times more than coal or natural gas, so it had never been the most cost-effective option.
Until now. They are offering to install a professionally engineered solar PV system on your home to meet 100% of your needs with zero upfront investment. Your obligation is to pay for the electricity that the system produces, and we will lock that rate in for you for 25 years. That's right; your electricity rate will be locked in at a fixed price per Kw/h for 25 years. The rate that you can lock in today is the same rate you pay your utility. Imagine if you were paying for your gasoline at 80's rates. Imagine you were paying 1980's rates for anything!
How can they do this? Vertical supply-chain integration. They design, manufacture, and service everything from crystallization and wafering to the final walk through inspection at the home upon commissioning of the system. They use poly-crystalline under glass technology that has been proven in the field to last over 25 years.
They manufacture every component specifically to integrate with the others, unlike in the past where you could easily have 3, 4, 5, or more different manufacturers whose components are not specifically designed to work together which resulted in higher costs and energy inefficiencies.
Also, when you own the entire supply chain, your costs are lower. These days, if you were going to buy a system, it'd cost you around $8/watt at retail from a contractor. They figure their costs are around $4.50/watt, which (at least in Colorado) would be covered completely by Xcel's rebate. Corporations can deduct 30% of the production cost right away, and are not limited to the $2000 that homeowners are. Also, since they are a business, they can accelerate the depreciation of the systems, giving themselves another huge tax credit. And, if they can get a higher return on your deposit than they agree to pay you, that's another potential revenue stream. Not to mention the revenues they get monthly from their customers, which by my calculations will come close to being pure profit. I can't believe this model hasn't been used yet.
On their website, they have a Solar Savings Calculator. I spend about $200/month with Xcel on average for my Aurora, CO home, and I entered this information and it told me I'd save $17,862.12 over 25 years by locking in today's gross rate of 9.2c/Kw/h (which includes taxes and surcharges--your real cost). My signing up and switching to solar will also eliminate over 1.3 million pounds of pollutants and greenhouse gases which is the equivalent of taking 115 cars off the road or planting 1,926 trees. And if I refer new customers, they will credit my monthly bill with 5% of my referral's monthly bill, so I figure if I find 20 people in my neighborhood with similar sized power bills that see the same value in this that I do, I can eliminate my power bill for 25 years--or forever if everyone keeps renewing.
They monitor the system in real-time online (you need a phone line or VoIP), and if any problem is detected, they will issue a work order to the technician that services your region immediately, and the work will be carried out by professionals with zero cost to you. They not only have a customer service incentive here, but a financial one as well because the customer only pays for the power that is produced by the system. If the system produces nothing, the customer pays nothing. It's that simple.
They show how many people have switched to solar with them on their website. As I write this, they report 15,841 customers. I mention their website again because it is one of the best designed sites on the web, if you ask me.
On the website I went to (www.qcimarketing.com), I just hit "Reserve Your System Here" (after surfing around for a while--saw a cool video with Ed Begley Jr. that explained a lot, too--I suggest watching that first), filled out my contact info and answered a few questions about my utility, power usage, etc. It was easy--took me about a minute. No credit cards or SS#'s or anything I felt uncomfortable giving to them.
Here's the catch: there's a refundable deposit required after you agree to the AutoCAD generated design for your home. The deposit is $500-1000, depending on the size of the system you need. They'll even pay you interest on it. I was fine with that since they are making a huge investment to help me go green.
What if I move? They move it for me at no cost one time during the agreement, after that it's my dime. This is so new--what if they go bankrupt? The systems are financed through project financing. Therefore, if Citizenre goes bankrupt, the systems will not be affected. The special purpose vehicle (or a legal company incorporated to do one thing, and that is rent systems to a pool of customers) will continue to rent the systems to the customers. The assets have a very low debt-to-equity ratio, as well as a high debt service coverage ratio, not to mention a debt service reserve account. So it is unlikely that the SPV will go bankrupt itself. It would require nearly 50% of the rental pool to stop paying their bills for over six months - all at once. The worst that could happen is that the solar system would sit on my roof for an extended period of time without charge or penalty--in effect giving me energy for free. In this scenario, I do see the bankruptcy court selling off the assets to another owner for pennies on the dollar. It would then be the obligation of the new owner to either recover the system or negotiate a new deal with me.
Recently, the president of the company, Rob Styler, told me a story--a true analogy. When the refrigerator was invented, everyone used an icebox. The economy wasn't all that strong, and there wasn't a lot of disposable income floating around, and the refrigerator manufacturer had an idea. They would give people the refrigerator with no upfront costs. The customer would simply "rent" the system for the same payments they made to the ice-man (sound familiar?). They were shocked that only 25% of the people took their offer (numbers rounded for simplicity). If could freeze food. It had a light. It was a better product for the same price--so why didn't everybody immediately sign the contract? They went back and interviewed the 75% that said "no". Twenty-five percent of those did not understand the offer, so "no" seemed to be the safest response. Once it was explained to them, they signed the contract. The second 25% said, "Ma never had one, Grandma never had one, so I sure as heck don't need one." These are called late adopters. To them a VCR is the height of modern technology today. The last 25% were simply close-minded, negative skeptics. They're out there, but how many iceboxes do you see today?
As far as I can tell, there's no risk on my part. Calculating my $17,862.12 divided over 25 years gives me an average monthly savings of $59.54, and I like that. I like knowing I can be 100% green in my electricity consumption at home. I've been told I can cancel the agreement at any time for any reason, and I like that too, so I'm in.
About the Author
Peter Johnson lives in Aurora, Colorado and is a veteran entrepreneur, former floor trader, marketing consultant, and believes so deeply in the Solar Mission that he has recently added residential Solar PV systems to his sales repertoire.
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