I’d put my money on the sun and solar energy. What a source of power! I hope we don’t have to wait until oil and coal run out before we tackle that.
—THOMAS EDISON, IN CONVERSATION WITH HENRY FORD AND HARVEY FIRESTONE, 1931
SOLAR SCHMOLAR, SAYS OL’ KING CONG—JUST LEAVE WELL enough alone: Pay a small fee when you move into a new home, and we’re ready to serve. Just flip a switch, twist a knob, or press a button, and—voilà—your beer is cold, your shower is hot, and your TV casts its warm glow onto your grateful faces. We’ll take care of your energy needs and your energy future. (Just make sure you get your monthly check into the mail.) Why change? Why even consider that solar mumbo jumbo? It’s impractical, unreliable, unviable, inefficient, unaffordable, and overly subsidized. Plus those solar panels on your roofs would be downright ugly. Maybe there’s something to solar power in the distant future, but if it’s really such a great energy alternative, why hasn’t it caught on in the 50 years or so since the technology was first developed? In any case, don’t worry your pretty little heads about that now—we’re looking into it, and we’ll get back to you. Someday.
This is what the coal, oil, nuke, and gas industries want you to believe, and they’ve embarked on a massive and consistent campaign to instigate fear, uncertainty, and doubt to make their case against solar energy.
Sometimes their message is subtle—for instance, when Dirty Energy proponents call solar an “alternative” energy (in the way a brutish older sibling dismisses the little brother he wants everybody to ignore). Or when they call it “cute”—as Microsoft’s Bill Gates said when attempting to start a nuclear renaissance. Or when they call it a “future” or “emerging” technology, which is often Chevron’s approach. In all these descriptions, “Don’t bother with solar” is the clear subtext.
Sometimes King CONG is more blunt, such as the Koch brothers’ “Solyndra = Failure” campaign ads and when Exxon-Mobil CEO Lee Raymond appeared on PBS’s Charlie Rose show and simply stated, “Solar is not a viable replacement” for oil. Then he went into some complicated claim about how you’d have to cover all of New Jersey with solar panels to produce the energy Exxon gas stations contain. “Do the math,” the oil titan challenged. I found myself jumping up and yelling at the screen. It’s completely feasible to cover an area the size of New Jersey with solar panels! There’s a lot of roof space—plus parking lots, road sidings, and degraded land—in the United States, and it adds up to a lot more than the area of the Garden State. New Jersey is actually quite small, and with only that space we could replace the energy supply of a company that holds the biggest share of the gas market. The truth is, a 1,000-square-mile area of solar panels would provide all of our country’s electricity needs, which is less than 10 percent of the land used by the oil and gas industry today.
And then there are the outrageously sneaky lengths that CONG’s soldiers will go to get into our heads. Take haughty Lord Christopher Monckton—the British politician and climate change denialist—who was caught on tape encouraging members of the Australian mining industry to create a Fox News–style media network and use it to further the mining agenda.
It’s amazing how much fear, uncertainty, and doubt (FUD) these people throw around to make some of it stick—and to fool the world into thinking that clean energy isn’t ready for prime time. The best example of this is how Solyndra has been portrayed in the media: When you compare the onslaught of coverage (fed by CONG’s PR people) surrounding the solar company’s default on its $500 million government loan with the relatively minuscule coverage of the revelation that US taxpayers had lost between $31 billion and $60 billion to waste and fraud by military contractors during the wars in Iraq and Afghanistan, you know you’re up FUD creek.
The congressionally commissioned report that exposed this outrageous waste of taxpayer money was released the same week Solyndra shut down operations. It prompted 11 news articles and less than an hour of television coverage between August 28 and September 23, 2011, even though the reported cost to taxpayers was at least 56 times greater than that of the Solyndra failure. In the time between August 31 (the date Solyndra suspended operations) and September 23, six major print outlets discussed the collapse in 89 news and opinion items. Television networks discussed Solyndra for more than 10 hours—eight of which occurred on Fox News alone. (That’s a ratio of 10 to 1 on TV and almost 2 to 1 in print!) The media-watchdog group Media Matters, which documented this disparity in coverage, reminded its readers that Congress had planned for some failures with the Department of Energy loan guarantee program (which was actually set up before President Obama’s time) because it was a portfolio of risky investments they were making to help launch some new energy companies, and they had set aside $2.4 billion for the cost of defaults. Of more than 40 clean-energy companies that benefited from these loans, Solyndra is the only project that has failed by the spring of 2012.
King CONG is just plain wrong on solar. Solar adoption is practical, reliable, viable, efficient, and affordable. And I’m going to tell you what CONG doesn’t want you to know.
First let’s tackle the misconception (which CONG wants to drill into you, so to speak) that solar power isn’t viable because it’s been around for 50 years and has yet to be fully embraced. The truth is, solar energy has caught on at a faster rate than most other energy sources did. Other game-changing technologies have taken at least that long to be understood for their true potential.
The steam engine, for instance, took more than a hundred years to be recognized as the incredible resource that it is. Around 1690 the steam engine was used underground to pump water out of mines—ironically, coal shafts in northern England that were below the water table. After five decades people realized its value and put it to work aboveground driving pistons for machinery in mills.
And then, a decade or more later, a clever chap named James Watt put it on wheels to create a locomotive that was first used to haul coal out of mine shafts. (It’s from this use that we derive the word horsepower because, ever the creative marketer, Watt was looking for a way to explain the potential of this engine, and he did so by relating it to the amount of coal that a mule could drag out of a mine per hour.)
It wasn’t until 1884 that an engineer by the name of Charles Parsons used his new steam-turbine engine to drive an electrical generator.
A similar tale could be told of the automobile, which, while invented in the late nineteenth century, was not widely adopted as a form of transportation until after World War II. As for the automobile’s fuel system, it wasn’t until 1964 that petroleum became the major source of fuel in the United States—despite the first commercial oil well having been drilled in the 1850s and all those fortunes made in the early 1900s.
History is accelerating in terms of how quickly technology can be commercialized, but given the mind-blowing nature of solar we shouldn’t be surprised that it’s taking some time for solar panels to become the dominant form of electricity generation on the planet.
If solar power takes as long as petroleum (or oil) did, from discovery as a system of energy use to majority share of its market, it could be dominant by the 2020s. We’re right on track for that, but we’ll likely get there sooner due to economic and environmental imperatives for clean energy. King CONG’s suppression of solar power’s adoption goes against the tide of history. And CONG has been so shrill in its opposition to common sense and good economics that it seems to be driven by greed—and by the fear that the rise of a new, competitive industry is going to affect its bottom line.
Which brings us back to those things you’ve heard—about why solar isn’t ready to provide your house’s power. The fossil-fuel industry makes a lot of money for its various executives and shareholders—and making money is fine unless it comes at the expense of others. It’s clear that this is increasingly the case. These interests want everyone to believe that there’s no real option, as this is how they can maintain their wealth and power. The motivation is plain, as greed and fear of losing privilege have long driven people to do things not necessarily in the interest of the greater good. At the very least we should take their views with a grain of salt.
I hate to repeat myself, but how efficient is the steam-based energy system, where you take sunlight that was stored 200 million years ago in some form of plant material, dig it up from where it was buried, truck it somewhere, burn it to boil some water, use the steam pressure to drive a turbine that will lose much of the energy as heat, and then transmit the electricity generated to some point of use many miles away?
With solar energy you take that solar power directly captured by panels, at the point of use, and—presto!—use it as electricity. Just the first step of the process by which we extract stored solar energy from fossil fuels in the steam-based system is less efficient than the photovoltaic effect, which we use in solar systems. Photosynthesis, which was the process by which plants took up the sun’s energy in chemical bonds, works less efficiently than the 15 percent conversion of photons to electrons of the standard solar module. Then there’s a step down in efficiency across every one of the other stages of the steam-based system as a source of electricity.
When comparing these two systems, which would you agree is the more efficient?
Another commonly held misconception that prevents people from investing in solar panels is that they’ll become much more efficient in time, so you shouldn’t buy now. It’s true that solar panels will become increasingly more efficient, but this does not negate the fact that a solar panel is the superior way to get electricity right now.
But hold on, CONG pipes up. What’s the rush? Wait until solar panels produce electricity at 20 percent efficiency in terms of photons to electrons; or wait five years, for 30 percent efficiency; or wait a decade, for 50 percent efficiency. This ignores the fact that at 15 percent efficient conversion of photons to electrons, solar panels make electricity both cleaner and more cost-effective. If we had waited for a car to be as efficient as a solar panel is right now, we’d still be driving around in horse-drawn buggies.
Some of the cleverer solar antagonists are framing solar energy as a “future technology.” You may have seen ads about fossil-fuel companies “investing in solar for tomorrow” to make themselves out as good guys, concerned about the environment but unable to yet use solar power. This was a lot of the content of BP’s Beyond Petroleum marketing campaign, even though it spent a factor of 10 times as much on new oil and gas development than on solar in the decade it ran the ads. And in 2011 it shuttered solar operations altogether.
In other words many fossil-fuel interests are peddling the message that they care, but in truth they’re procrastinating. This “not yet” message cracks me up because they know as well as I do that space travel and satellite technology are all solar powered and have been pretty much since we first went into space. Solar is not a future technology but a technology that’s ready for us now—the people here on Earth who are concerned about bills and our energy future.
Ah, subsidies: King CONG’s favorite fight. And why? Because CONG wants you to believe renewable energy is being overly subsidized. Yet all energy is subsidized, especially the fossil-fuel industry. It is currently estimated that here in the United States oil companies are receiving $7,610 per minute in tax breaks—that’s $4 billion per year. And fossil-fuel subsidies are perverse, while renewable-energy subsidies are broadly working. It’s true that there can be problems when politicians pick favorites, like Solyndra, but the most egregious problems are the now-permanent and accepted subsidies provided to the fossil-fuel industry.
The US government’s $50 billion-plus-per-year outlay for conventional energy sources distorts the US energy sector by subsidizing mature companies whose business models and core technologies work well, are insanely profitable, and in many ways dominate markets that are neither highly volatile nor even competitive. The other way our government supports them is to continue to turn a blind eye to their externalities, or true costs—whether that’s maintaining a military presence in the Middle East (to secure our access to oil) or tolerating the intense impact of conventional energy on human health and ecosystems. We have already mentioned the threat to humans in terms of air quality effects and climate change, but conventional energy also degrades our environment, which has an immediate economic cost in terms of diminished resources (such as water). All of these costs should be added in when we tally up the corporate welfare we give these companies.
You can quibble over numbers, but fossil-fuel subsidies far outweigh those for renewable energy. The Environmental Law Institute reckons that the US government gave more than $70 billion worth of subsidies to fossil-fuel companies between 2002 and 2008. In that time about $2 billion went to the solar industry. US Congressman Earl Blumenauer calculates that the government is committed to spending more than $40 billion to subsidize the fossil-fuel industry from 2011 to 2015, while no more than $10 billion is scheduled to flow into renewable-energy businesses.
The federal government has a long history of investing public dollars in energy via tax credits, subsidies, and other incentives. The agency that tracks such things, the US Energy Information Administration, found that in 2007 subsidies to nuclear were 9.6 times higher than those for solar; natural gas and petroleum subsidies were 11.2 times higher; and coal subsidies were 22.2 times higher. Some people think that this has changed a lot recently due to “Obama-era stimulus spending,” but the American Recovery and Reinvestment Act made only small advances toward equal treatment of the technology. Even in 2010 coal subsidies were still 20 percent higher, nuclear subsidies were 120 percent higher, and natural gas and petroleum were 148 percent higher than solar subsides. More importantly, 93 percent of the fossil-fuel and nuclear subsidies were permanent, whereas almost 70 percent of the solar subsidies were temporary stimulus-bill subsidies, which reduce the certainty that the clean-energy industry needs to attract investors.
A better way to think about these subsidies is in an apples-to-apples comparison of the early phase of each technology’s adoption. Just the first 15 years of investment in each energy sector reveals tremendous discrepancies: $1.8 billion per year (in inflation-adjusted dollars) was spent on subsidies for oil and gas industries in their early days compared with just $400 million for all renewables, including wind and solar. And today, a hundred years later, tens of billions are still spent supporting oil companies each year, even though they’ve clearly established their businesses.
The problem is that, over time, fossil-fuel subsidies have been increasing per unit of energy or jobs created rather than declining as the industry matures. Remember that solar energy creates between three and seven times as many jobs as fossil fuels. As mentioned, many of the fossil-fuel subsidies have also become permanent, such as the tax credits granted to American gas- and oil-drilling industries, which use the money to finance their wildcat and fracking forays; this reduces their innovation drive.
And all the while, the companies behind these efforts have been increasingly profitable: ExxonMobil was the most profitable corporation in history for much of the 2000s. So it’s receiving government money while making exorbitant profit. And since the mid-2000s it’s been shedding jobs; indeed, Big Oil downsized its workforce by more than 10,000 in the second half of this century’s first decade. In 2010 alone the top five oil companies reduced their global workforce by a combined 4,400 employees while making a combined $73 billion in profits—this includes BP, which that year had the infamous spill in the Gulf of Mexico. The coal industry is similarly retrenching its workforce, with the greatest losses soon to come in the Appalachians. So don’t be fooled: King CONG is a part of the problem, destroying American jobs while making gobs of money and disproportionate billions in subsidies.
Renewable-energy subsidies, while smaller, have been declining per unit over time relative to the amount of power they produce. For example, in California, the major market for the Rooftop Revolution so far in the States, rebates have fallen from more than $2 per watt of solar power installed to less than $0.50 in most utility territories. So for the solar industry, we can say that government support programs have been doing their job in terms of creating an incentive for the industry to mature, increasing competition, and decreasing prices. Indeed just in the past couple of years, as the price of oil soared to more than $100 per barrel, prices for the solar consumer have fallen by more than 50 percent.
At the same time, solar businesses have boomed, and we’ve created jobs almost 10 times faster than the national average. Between August 2010 and August 2011, the number of people employed in the US solar industry grew 6.7 percent, to more than 100,000, which is more workers than are employed in the coal-mining industry. We explore the jobs benefits of the Rooftop Revolution in greater detail in chapter 5, but for now note the difference with the fossil-fuel industry; that is, that solar has had a diminishing subsidy over time while its prices have dropped and its employment has grown.
At the end of the day, it’s dubious that renewable-market support payments should even be compared with the corporate welfare that fossil fuels have received. As the IEA writes,
Only a small proportion should be considered subsidies or, rather, learning investments required to bring solar technologies to competitiveness. Their success would provide broad access to an inexhaustible source of energy and help give more than a billion people around the world greater opportunity and economic freedom. By contrast, fossil-fuel subsidies only serve to perpetuate a system that is ultimately not sustainable and distributes energy production and its benefits by chance.
“Unreliable” is a claim made by dinosaur technology when challenged by a superior new competitor. “Don’t get a cell phone,” the telephony industry once said, “because you may not be able to use it to call 9-1-1. Keep a landline just in case, for when you really must have an incoming phone number for your business because that cell phone toy is really not adequate to ensure service.” Sure, you couldn’t compare the reliability of the cell phone then to what it is now, but the benefits “that toy” provided were still life-changing. And now there are more cell phones than land lines in the world, and they work just great. Perhaps the killer factoid is that there are 500 million people who don’t have electricity but do have cell phones, mostly in Africa. Cell phones have overtaken land-line use in less than a decade and are way better at providing the service of telecommunications to more people at less cost than the incumbent technology. Watch out for solar!
Actually, in one of those great “the truth is not what you expected at all” realities, solar-panel penetration into the grid improves reliability. This has been well modeled in New York State, where energy regulators worked out that 5,000 megawatts of solar panels spread around the state would relieve some of the stress on the grid during times of peak demand—for example, in midsummer when air-conditioners are turned up full throttle and the state’s requirement can approach 34,000 megawatts, causing frequent brownouts. Lots of solar-power sources scattered around the grid could relieve local demand and reduce bottlenecks that occur when power can’t move across long distances on the grid quickly enough. When you think about it as a portfolio approach to maintaining uptime or service, it makes sense that this works better than a system limited to a few large plants—it’s a bit like cloud versus mainframe computing.
Reliability issues will be resolved; just as AT&T puts up more cell towers, there are ways we can evolve the grid to accept solar power. There are technical issues around plugging in to solar because, of course, the sun doesn’t shine half the time, but we can make up for that by using energy storage systems, batteries, and other clean-energy generators. This is not easy stuff, but it’s not beyond us. Ours is the country that created the Internet—with bidirectional, multiple input information flows cleverly organized to deliver an answer to your every question in mere seconds. We got this electricity thing!
One of the key changes in relation to reliability is the principle of “flexible and inflexible generation” and how this might replace the concept of base-load energy. For now, when we’re at a tiny percentage of supply, the grid itself serves as the battery for solar power. When the sun goes down, a flexible generating resource can be turned on by the utility to match the load while the solar electricity in the system declines. Electric vehicles, for example, could have the power in their batteries drawn down while parked to meet load in the early evening. This can be technically managed now with up to 50 percent solar-panel penetration, which cannot happen for years to come in most places. After that the plan would be for solar to work with wind and demand-side management techniques—turning off loads when the demand is high—to keep the grid stable. And aside from that, if you had to, you could use a fast-ramping gas power plant to fill in any need not met by the renewable inputs.
In other words, you can have an intelligence layer that manages the various inputs and keeps the lights on, just like data centers juggle the processing power of thousands of computer servers to maintain uptime for websites and Internet service. A new range of technologies built around solar plants that store heat for after the sun goes down will add to the dynamic stability of this sunshine mesh. These colossal batteries or energy storage systems are the equivalent to the new cell towers AT&T had to put in to deal with demand and congestion in its network.
David Mills, founder of the solar-plus-storage company Ausra, has shown that by using storage you can easily correlate more than 90 percent hourly grid load and hourly solar plant performance. In other words, direct solar-thermal electricity solutions that are almost market ready can supply most of the United States’ electricity needs. I bet that’s why Areva—the French nuclear giant—bought Ausra (now called Areva Solar)! The IEA says that solar power with storage is expected to be available to deliver competitive electricity globally by about 2030. This means that the distinction between peak power times and baseline power usage would become less relevant, as stored solar electricity could at all times complement the fixed solar supply each day.
In summary, reliability is really a technical issue related to the grid and to scale, not something innate in solar panels. And this is going to be our challenge. The solar-panel technology works fine; day in and day out, it produces 15 percent efficient electricity from the solar power falling on it, and it’s ready now. What matters is how this technology is distributed to users and how power is stored for those periods when the sun is not shining. We will have to rewire America to make this work, and energy-providing utilities will have to change their stripes—and therein lies the opportunity. While this isn’t easy stuff—making a thousand points of light work together to keep the lights on—America’s best have never before shrugged off something just because it was difficult. On the contrary, we embrace challenges and have been leaders in such revolutionary achievements as organizing the world’s information, beating back fascists, and conquering outer space.
This is why we need the upcoming corps of entrepreneurs to be our century’s New Greatest Generation. Just as electrification was the standout achievement of the twentieth century, according to Time magazine, clean electrification will be a significant achievement in the twenty-first century. The Rural Electrification Administration, which took America from having just 15 percent of homes being electrified in 1935 to 85 percent by 1950, is a model for how we can do it. Low-cost loan support backed by the US government spread electricity across the country (thanks, President Roosevelt!). And therein lies not just the opportunity but also the way that solar energy will become more and more affordable: scale and standardization through deployment supported by positive energy policies like the Renewable Portfolio Standard and net energy metering.
My mother always told me that beauty is in the eye of the beholder, and I think that’s true of the solar modules we install on our roofs. I personally find them lovely because they represent homeowners’ efforts to do the right thing, save money, and achieve their higher selves by exercising their house power. But I also thought the Treo mobile phone was really lovely, and all the way through the Palm’s sad saga I thought the device was just the cutest thing—so I admit that I may not be the best judge, and there may be something to some people’s aesthetic concerns about home solar panels.
The truth is, people who buy them are proud of them, and the good news is there’s a lot that can be done with the form factor of solar modules. Consumer feedback has already brought about changes; for example, most of our company’s modules are now black-on-black because that’s what the Joneses wanted. Most are also set closer to the roof so they’re lower profile and appear less boxy, and some are set into the roof in a shingled design.
As with consumer electronics, there will be traps for young players working in the solar industry as companies try to roll out solar panels that are driven entirely by fashion—for fashion is fickle, as we all know. Look at the early hybrid cars, which many people felt were ugly; as the vehicles became more widespread, their appearance became much better perceived. An even more mundane example is the automatic garage door: most of them are far from things of beauty, but because they’re such a common sight on most streets in America we rarely stop to think about how aesthetically pleasing they are. So it will be for solar panels.
As this is a utilitarian product, the attractiveness of the kit on the roof may become less important to many users than the service and the benefits it provides. As with the garage door, we learn to love it or at least not notice it if the control is simple and elegant. This is where we have focused our efforts at Sungevity: improving the customer experience by working on the user interface. Clever design will help address concerns about aesthetics and will buoy the Rooftop Revolution in the sea of same-same suburban houses that are not yet powered by sunshine.
The World Energy Outlook is an important annual report released by the International Energy Agency. I say “important” because a lot of important (and some self-important) and influential people read it and use it to inform their policymaking. Indeed, the IEA was set up during the oil crisis of the 1970s to help the world’s governments preempt the supply-and-demand imbalances that led to those problems, and it has since fashioned itself as the guide for global policymaking for all forms of energy choices. The IEA is hardly a hotbed of environmentalists pushing ridiculous renewable schemes, so its WEO is considered key reading by Dirty Energy executives and politicians across the spectrum (although I wonder how many members of Congress have ever seen it).
In 2011, separate from the main World Energy Outlook, the IEA presented another study, called Testing the Limits. In it the IEA laid out what I consider a much more likely scenario than the business-as-usual content of the WEO. It looked at what would happen if the world were to make a belated but sharper change in its energy policy to get off fossil fuels by the late 2010s. The report referenced freedom from volatile oil supplies and other economic drivers as much as climate reasons for making the switch increasingly likely.
In this Testing the Limits scenario, the IEA found that solar energy could become the backbone of a largely renewable worldwide energy system. In this case, photovoltaics—solar-panel technology, the key ingredient of the Rooftop Revolution—will provide about 20 percent of the world’s electricity generation in the second half of this century. The report projects 12,000 gigawatts of installed capacity by 2060; to give you some sense of how dramatic that vision is, currently about 50 gigawatts are installed. Solar-thermal and solar fuels will meet or exceed the capacity of solar panels by 2060, as those technologies mature in this forecast.
I know that a model is only a model and that the scenario is unlikely to play out in exactly the same way, but it’s exciting to see a conservative agency projecting such a big jump in solar resources so soon. And while the model proposes fast growth (faster perhaps than one would like to even contemplate when running a business in the space), it reminds me of just how much we’ve surprised ourselves in the past with real, rather than projected, outcomes.
The amount of electricity that Germany generated from the sun, for example, jumped 60 percent from 2010 to 2011. The nation’s solar-power systems collectively generated 18 billion kilowatt-hours of clean electricity during 2011—that’s enough to power 5.1 million households. And over the past decade, forecasts similar to the IEA’s—like The Energy [R]evolution blueprint (released by Greenpeace in conjunction with specialists from the German space agency) and Plan B 4.0: Mobilizing to Save Civilization (published by Lester R. Brown, founder of the Worldwatch Institute)—have underestimated the amount of electricity that the solar industry can provide.
As for the sticker shock that used to go with solar adoption, these forecasts give us new information: First, the total price for solar systems has come way down. And, second, you can now get the solar system financed, which means you “pay as you go.” Financial engineering allows you to pay for your solar panels over time instead of up front, and this is probably the most important innovation in the solar industry in the past decade.
Here’s what it means for you: Forget the notion that you have to pay $30,000 to $50,000 to go solar. Now you pay nothing—nada, zero, zilch. By removing the up-front cost, we’ve made it easier than ever for customers to go solar; and because customers make no investment, they keep all the money that they save against their electricity cost. For example, let’s take a customer of traditional utilities who comes to Sungevity. She currently pays $180 per month for her home’s electricity. But once she takes advantage of our services, she pays $50 to her utility company for monthly services (because she’ll need some service from the grid, at night for example) and approximately $80 to Sungevity to lease our solar equipment. She pockets $50.
This is one person’s experience; 80 percent of our customers have saved on their electricity bills from day one of going solar. We now have thousands of customers in eight states. Our competitors combined have tens of thousands of customers; indeed the solar-leasing market is booming. Most solar systems installed on residential buildings in the United States are now leased or have another third-party finance arrangement known as a power purchase agreement, which charges them for the kilowatt-hours they use from the solar system rather than a flat monthly fee. The key is that this is the future, and most homes going solar in the coming years will benefit from some affordable, pay-as-you-go financial construct.
At the level of the overall electricity market, the IEA, in its 2011 study, adopted the position that the solar-energy industry has long held—that, as with any other energy resource, planning ahead and financing these assets makes all the difference. The example of the leasing arrangement just puts solar electricity on the same footing as coal-fired power coming out of the plug in the wall from the grid. The coal power plant at the other end of the wire was not paid for up front by you or by the company that built it. The utility company used debt and other finance capital to create that energy capacity to sell you the service of power. Now you can buy the service of solar electricity for less than the cost of dirty electricity that you get from the grid.
In acknowledging the importance of new financing mechanisms being applied to solar-power supply, the IEA observes the fundamental competitive advantage of solar, which is having free fuel over fossil fuel. It also says that other solutions fall short, while solar technologies offering “indigenous, inexhaustible resources” are actually more secure, less likely to experience price volatility once the technologies are mature, environmentally sustainable, and “the cheapest known antidote to catastrophic climate change, even if they are or appear to be higher-cost options in other ways.”
So we’re witnessing a sea change in how the establishment industry watchers are reporting solar’s prospects, and even those “other ways” that the IEA flags as possibly costing more may not be that expensive because the up-front cost of solar is coming down so fast. The IEA notes that solar photovoltaics are already competitive with “bulk power” in many areas, particularly islands, off-grid locations, and places where solar-produced electricity is competing with oil.
When faced with these price realities, fossil-fuel execs’ blood should run cold. How long can they possibly compete? What losses will they take? Big banks like HSBC, the “world’s local bank,” are starting to put red circles around a lot of fossil-fuel-based energy infrastructures because they may be stranded assets in the not-too-distant future. This means that their electricity production won’t be able to pay for them in a sea of solar panels that generate electricity for less. HSBC analysts point to legislation in Australia and China that’s likely to force fossil-fuel assets to retire early or operate below capacity. “We expect the reality of stranded assets to become more noticeable as the decade progresses,” said an HSBC report. Forced closures are a scary prospect for bankers, but these will happen, and investors will get burned.
Climate Spectator’s Giles Parkinson, one of my favorite business writers on this stuff, summarized HSBC’s analysis of the speed at which clean energy can provide economic solutions. It notes, in particular, the impending arrival of wholesale prices for electricity from solar panels in India that are at or below the price per kilowatt-hour of coal-based electricity. This is a country that has to import hundreds of millions of metric tons of coal at prices well north of $100 per metric ton. HSBC and anyone else paying attention knows that at that price you can eliminate all subsidies for solar and it will still compete, knocking out a huge market for coal. The game is on as India ramps up its energy production: coal versus solar.
Those in the diesel-based electricity space must already be feeling that the industry’s days are numbered—a bit like the people who purveyed dial-up modems when broadband came around. But so what? You may ask, How much diesel-powered electricity is there? How about almost all of Hawaii. That’s right—more than 90 percent of Hawaii’s electricity comes from burning oil! This is the state where the Obamas go for holidays, and 1 percent of our whole country’s power comes from oil costing more than $100 per barrel! Much of this extremely expensive juice is bought by Hawaii. Worldwide there are even more easy wins to be had replacing more than 10 percent of global electricity currently coming from burning high-cost diesel fuel.
This competitiveness is why renewable electricity is growing rapidly and will continue to grow. The time is fast approaching when energy that comes from no fuel or free fuel will beat fossil fuels. Remember that about 20 percent of global electricity markets are paying more than $0.20 per kilowatt-hour, which is more than it cost Sungevity to serve electricity from a US rooftop in 2011 with a solar lease. I think that history will look back on this period and see that the tide turned in 2010 when fully half of new electric generation coming online globally was renewable. In the United States, renewables were 25 percent of new electric generation.
This sea change won’t come to pass without a Rooftop Revolution, however. It won’t happen magically (although the invisible hand will help out our side of the ledger) because fossil interests will use their power to resist it. And that’s why we need to spawn a new heroic breed of entrepreneurs willing to make it happen—our New Greatest Generation, which will be willing to take up the fight while building businesses at the same time. And we need positive energy policies supported by solar citizens to demand that these changes happen, no matter what King CONG and its cronies say or do.
Solutions exist from A to Z: At Sungevity, for every home we lease solar to in the United States, we set up a solar lighting and charging solution for a family in Zambia so that kids there can read at night. In other examples of what needs to be done, export agencies have developed low-interest-rate programs with more than $100 billion in financing available for solar tech transfer and clean-technology deployment. Microfinancing and crowdfunding services such as Grameen Energy allow people to access these services with financing. Mobile billing and other innovations will extend the reach of sunshine into the lives of the more than 500 million people who have cell phones but no electricity in their homes. That’s why Sungevity sponsors a solar lighting kit that doubles as a cell-phone charger—to get these people connected to the Internet and to the sun, two keys to twenty-first-century living.
The sky is the limit for this kind of technological and business ingenuity now that solar is cost-effective. The year 2012 has been designated by the United Nations as the International Year of Sustainable Energy for All, and the UN called on the world to focus on this opportunity to pull the world’s poorest people from the unsafe and hazardous use of fossil-fuel energy and into a cleaner, better future. There are many great ways to do this; indeed, a world of opportunity exists at “the bottom of the pyramid” for solar entrepreneurs to do well while doing good. Furthermore, solar electricity is one of best anti-poverty measures around because, while energy poverty is only a piece of larger economic poverty, providing electricity is proven to be one of the best ways out of it. Light is education for people, and electricity is economic empowerment. This is truly what we mean by the Solar Ascent.
Why now? Because thanks to the solar industry, it’s more affordable than ever, and you’ll continue to save money on your electricity bill over the coming decades. In fact, going solar by 2015 will be economically rational for two-thirds of the households in the United States.
Forgive me for sounding like a broken record, but a couple of key things have happened recently: The cost of manufacturing the panels has decreased by more than 50 percent since 2010. That reduction in costs is passed on to the consumer in the price you pay today. Just as important is the fact that you can now lease the solar system rather than having to pay for the whole thing up front. As discussed earlier, paying for a solar system all at once is a bit like buying your energy for 25 years or buying a chunk of the coal-fired power plant rather than paying for your service contract with a utility. One of the big changes for the solar industry in recent years has been the third-party financing of our assets, which means we sell a service as well as a product. The solar lease is a real game changer.
The other reason why now is the right time to go solar is that we have made it easier. In the past, if you were interested in going solar, you had to research a local contractor, call him, and get him to come out to your house so he could climb on the roof to design a solar array—and then he would come back to try to sell you a paper-based proposal. There were a lot of scheduling issues and clunky cottage-industry customer experiences with solar in the past. As we’ve scaled, we’ve learned from other industries and made the buying experience much more convenient.
To get a solid quote, Sungevity’s customers fill out a simple online form, which includes identifying their home on a map interface for us. We then use a combination of satellite and aerial photography of the home to build a three-dimensional model and virtualize the deployment of solar panels on the roof. We do this to calculate the electricity production from the panels and thereby generate a firm quote, including the economics, for the installation of the solar panels in real life. Unlike with solar’s mom-and-pop-shop experience of the past, we never have to climb up on your roof to tell you what it will involve to go solar.
With the magic of software combined with satellite and aerial imagery, we can do in a snap what it took human processes hours to complete. Then, as in so many other industries, from the replacement services for travel agencies (think Expedia) to those for video stores (Netflix), we serve up our core product, which is our solar proposal—or, as we call it, the iQuote—over the Internet. We e-mail it to you. Not only does this save us great cost in serving our customers but it’s a scalable model, whereas driving trucks in traffic to serve millions of homes that should go solar is not. In 2011 we started a partnership with a company in the Netherlands, and we’re now providing remote solar-design services for homes in that country, as well, which is a great development for the US solar industry.
I say it’s a great development not just because the company I work for is doing this but because it’s bringing easy and affordable solar to more people. Aside from cost savings and scalability, our online sunshine model, as we call it, creates a better customer experience. Perhaps my favorite story about this comes from our early prospecting in 2008, shortly after we had invented the remote solar-design process. We delivered fully engineered but paper-based iQuotes to homes in the San Francisco Bay Area that were appropriate for solar systems. On the mailer we provided a login and a password for our website that allowed people to learn more or to sign up for a solar system.
We were not expecting much response the week after we delivered these paper-based proposals, but suddenly our customer relationship management database told us that a customer had paid the deposit for a cash purchase. We hadn’t had a phone call or even an e-mail from this person to ask us any questions about our proposal—just an order placed in our system. I was so excited that I had to find out who had just ordered the world’s first online solar solution for his home. I was sure the customer was a savvy digital Gen X-er. When we phoned him, we discovered he was an octogenarian US Air Force veteran who wanted to do the right thing by his kids by going solar. He was happy to pay for it with cash because he felt the benefits were in his legacy. I savored the moment as a reminder to never assume anything; our first customer wasn’t some slick, techie kid but instead one of our elders and betters showing the way.
Aside from that great experience, I’m proud of what we’ve done with remote solar design because it has broken the mold of the quoting process, which is a costly and cumbersome part of the sales cycle in the solar industry. To go back to that vision of two-thirds of American homes saving money by going solar, you start to get a sense of the scale of enterprise that’s required to serve all of these people. Between 40 million and 50 million homes in the United States should go solar if the homeowner acts rationally from an economic point of view. To date, the industry has served approximately 200,000 homes, but this is changing—and what’s now just a revolt is soon to become a revolution.
By making solar adoption easy and affordable, our industry can build trust and the base of reference customers to really grow to scale. As we know, the best indicator of what one consumer might do in the United States is what his or her neighbor is doing. At Sungevity we’re proactively trying to cultivate what we like to call “peer pride.” The good news is that this is relatively easy because going solar is a viral phenomenon, one in which customers are happy to be the contagion.
Two academics at Stanford University showed this virality with solar systems through a study of their installation in different ZIP codes. They concluded that for every 1 percent of new installations in an area, it was 1 percent faster for the next solar system to be installed in the same neighborhood. They attributed this to two causal factors: one was that there was greater customer acceptance of solar as a value proposition because “my neighbor was doing it” rather than “some crazy hippie” and, second, because the clerk down at City Hall would be more familiar with solar installations and would process the construction permit more quickly.
So we have fed what we call the “solar social network” with our tools and incentive systems. These are both monetary incentives and social incentives because people are happy to engage their community in the process of going solar. For example, I have a small nine-panel system on my home, and my next-door neighbor has one, and his other next-door neighbor has one, too—all from Sungevity. Last weekend I received a text from a neighborhood friend who watches my kid. She told me she was going to go solar with Sungevity because she had just gone to our website and found it all so easy and financially attractive. I joked with my friend that I’d pay my daughter a commission for the sale, but she said I didn’t need to—it was just what everyone was doing on the block.
There goes the neighborhood! And this process will sweep suburbia in the coming years. Watch as your neighborhood disregards Dirty Energy’s baloney and goes solar, for this is the home front in the epic struggle against King CONG, and the people are on our side. Now is the time to occupy our rooftops!
What You Can Do as a Rooftop Revolutionary
Help set the record straight by challenging misinformation. Directly question unbalanced and outright negative media reports on the viability of solar power by sending a letter to the editor, demanding accurate and balanced reporting on energy issues.
Educate your network of friends and colleagues about the truth regarding Solyndra’s failure and how it has been blown out of proportion by King CONG and its allies in the media and used to inaccurately depict the entire solar industry as a failure.
Visit the Sungevity blog (blog.sungevity.com) when you need clarity on energy issues. You can also send us your question via our Facebook page (www.facebook.com/sungevity).
Get the most current facts and talking points on the Solar Ascent at www.rooftoprevolutionbook.com.