February 5th, 2013


Co-founder and Co-CEO, Sunrun

Managing Director, California Clean Energy Fund

Co-Founder and CEO, SolarCity

From an electricity generation standpoint, solar power’s footprint is miniscule, but when looking at rooftop projects, solar is expanding exponentially. New financing models remove capital barriers, and residential and business owners are reaping the rewards. What’s driving solar power, and what’s the forecast for the future?
According to Edward Fenster, co-founder and co-CEO of Sunrun, the role of solar energy is not on the generation side of the energy market. Rather, solar belongs on a home or business, not in a desert where it has to be transported and distributed to a load center at high cost. “If you were to look at your PG&E bill,” Fenster said, “two thirds of the cost you pay is in getting the energy from the power plant to your home. So by putting a solar system on your home you’re able to compete, not just with the cost of the energy itself, but its delivery.” While solar has been scaling slowly in the generation market, he said, the growth rate of installations on homes and business is running 50-100% year over year, “and you compound that forward, the numbers get big pretty quickly.”
Danny Kennedy, president and founder of Sungevity, said that the new cost model is the key to the fast growth in the residential space. “We’ve created finance structures that allow us to put a power plant on your roof. You get it installed for no money down and it’s paid off through the life of the system. It’s a pay-as-you-go electricity service contract.” Kennedy sees his company as a service provider of electricity. And business has been growing rapidly. According to Kennedy, there was a lot of hype in 2012 about gas going into the grid, “but actually only 50% of new additions in the country were gas; the other 50% were wind and solar,” he said. He compared the introduction of solar to the introduction of the cell phone. “We’ve got a similarly disruptive technology.” 
Speaking of his commercial clients, Marco Krapels, executive vice president of Rabobank, said, “they are owning solar as a future hedge against energy price increases and effectively fixing their energy costs for the life of the system, which is about 30 years.” He added that, because it makes perfect business sense, he has seen zero default rates. Speaking of politics, Krapels said that many of the business owners he serves are Republicans. “They say ‘we like the green that you guys think about in San Francisco, but the kind of green that we really care about is the green that ends up in my pocket.’” Krapels added, “And it turns out, they can have both.” 
In reference to his company’s recent IPO, Lyndon Rive, co-founder and CEO, SolarCity, said that the investment community has been beaten up when it comes to solar, and there is no appetite for risk investments into the solar industry. He had to reposition his company as an energy company, selling electricity. “We need to transform this energy infrastructure that we have. People should not look at us as panel manufacturers, installers, financiers; this is selling electricity.” He sees the business model as transforming the way his company delivers electricity. 
Speaking of the SolarCity IPO, Kennedy said that it proved that the public has a taste for buying into solar, “proving what we know, that the people want this, and smart money is flowing into this like nobody’s business.” He said that Warren Buffet recently put $7B into a solar farm. “Catch a clue, people,” he said. “The Saudi’s are putting a hundred billion dollars into solar.” Kennedy talked about the success of solar project crowd sourcing on the Internet. “That’s an indication that the community is going long on this. They get the dynamics. They know that electricity price is going up and ours is going down.”
Edward Fenster, co-founder and co-CEO of Sunrun
Danny Kennedy, president and founder, Sungevity
Marco Krapels, executive vice president, Rabobank 
Lyndon Rive, co-founder and CEO, SolarCity