Solar power that pays back fast
It couldn’t happen where I live, and maybe not where you do, but the owners of a solar electric company say the arithmetic worked for one of their customers. He is a chief executive with a six-bedroom, five-and-a-half bath Spanish-style hillside home in Fremont, California. Fremont is a stone’s throw from Silicon Valley, and home to many high tech firms.
This executive was paying a monthly electric bill of $3,492 on average, according to solar electric firm SunRun. The company was started by two finance experts who came up with their business model while still students at the Stanford Business School.
SunRun charges a relatively small price to install panels, then owns and services them for the life of the contract — 18 years. SunRun said the Fremont executive paid $1,000 to have the $375,000, 55-kilowatt system installed. So far, it has cut his monthly electric bill to an average of $2,808. SunRun collects $2,163 of that for electricity generated by the sun, while utility Pacific Gas & Electric collects $645 for electricity from its grid, on average. At moments when there is surplus solar electricity, SunRun’s equipment automatically sends it to Pacific Gas & Electric for credit.
“You turn your home into a hybrid,” said Lynn Jurich, president of SunRun, and co-founder with chief executive Edward Fenster. The occasion for her interview was to announce $18 million of additional funds from two big Silicon Valley venture capital firms, Accel Partners and Foundation Capital. They say because SunRun uses independent contractors it can quickly expand its business in California, Arizona and Massachuestts.
It’s not the only game in town. SolarCity does something strikingly similar, working in California, Arizona, and Oregon. Its business model is a bit different. For example, it does all installation with its own employees. Its fee structure is also different.
The United States has lots of houses with roofs that catch rays, so it’s not clear yet if one company will drive the other out of business, or if there is room for both. U.S. Bancorp seems to be betting on both, because it has set up financing — sweetened by government tax breaks — to help each of the companies buy the solar equipment that they install.
Photo Credit: SunRun (A SunRun installation in central California)