An environmental activist and two business executives walk into a bar…and they start a solar power company. While this may not make your favorite jokes list, it serves as an interesting background story for an innovative residential solar startup.
“The solar power industry is at an inflection point,” and with low cost cells produced in China and elsewhere, companies like Sungevity are on the cusp of putting solar everywhere – “it’s becoming ubiquitous,” the company’s President and founder Danny Kennedy recently told Breaking Energy.
Not a traditional “energy guy,” Kennedy ran Greenpeace’s California Clean Energy Campaign in 2001, and more recently served as Campaigns Manager for Greenpeace Australia Pacific. He shared a vision of easy and affordable solar energy with former BP Solar executive Andrew Birch and co-founder of Axiom Law Alec Guettel, who collaborated to form Sungevity.
Kennedy compared the current state of the solar industry to the nascent computer chip industry twenty or thirty years ago when technological innovation leapt forward, shrinking chips and increasing computing power at an exponential rate.
In order to realize the highest value from residential solar installations, three uptake barriers need to be overcome; prohibitive up-front costs, the “hassle factor” associated with system design/installation and public mistrust of solar power’s true costs.
Clouds and Sun
Kennedy believes his company has addressed these issues through the use of its “Sunshine Online” concept, a remote solar design tool that uses Google Earth and Microsoft Bing technology to provide customers quotes for installing systems on their houses without conducting a physical site visit.
The proprietary software leverages satellite imagery and local power pricing data contained in cloud networks to analyze the roof azimuths, shadow angles and cost information needed to generate residential solar system specifications customized for individual homeowners. Sungevity also provides customers with an option to lease a solar system, helping reduce up-front costs and easing financing.
The system is more streamlined, efficient and easier from the customer’s perspective, claims Kennedy. Significant cost savings is achieved by eliminating the need to maintain a fleet of vehicles – with no fuel costs, maintenance costs or time spent in transit and traffic – quotes are cheaper and the customer gets a better experience, he said.
Given the company’s internet-driven business model, some might expect a younger core demographic, but Kennedy said most customers are cost conscious consumers over 50.
Sungevity’s offering is geographically limited for now, with the company currently operating in only eight US states. There are up to a dozen states where it is not possible to access Sungevity’s services, though new markets are opening all the time, said Kennedy. The company is also expanding overseas with a partnership in the Netherlands and an Australian joint venture kicking off this month.
To read a recent Breaking Energy article about financing leased residential solar systems, click here.
A Grassroots Approach
A viral model is needed to be successful. Kennedy sees a clustering of solar adoption in communities and says 70% of his company’s business is generated by word of mouth. He thinks 40 million homes would be a rational size for a profitable US residential solar marketplace.
The country currently has only 400,000 homes with solar installations and the company claims that in order to effectively mitigate the effects of climate change, the 40 million threshold would need to be reached in 10 years. With such an ambitious goal, it’s not surprising that Kennedy sees growth as Sungevity’s biggest challenge.
“A major limiting factor [to the growth of clean energy] is a lack of entrepreneurs – you need to fill so many niches and spaces within the solar space, you need to start so many new businesses,” he said.
With regard to the prospect of a Sungevity initial public stock offering, Kennedy said: “When the time is right.” He went on to say that while they are a good IPO candidate, the company is focusing on execution and customer service right now.
