The idea of “no down payment” is something you hear in loud car commercials, not the cleantech world. But that’s what startup SolarCity is offering San Francisco homeowners who want to go solar, assuming the political spat at City Hall gives way to the Solar Incentive Rebate Program. “You can go solar and save money from day one,” SolarCity CEO Lyndon Rive told us.
The prospect of solar with no upfront payment — yes, we referred to it as free — is part of SolarCity’s new financing plan, which calls for SolarCity to lease, install and maintain residential solar arrays under 15-year contracts. While that “free” deal requires support from San Francisco’s now-frozen rebate program, even without the city’s backing, SolarLease only requires a $2,000 down payment. That’s much smaller than the cost of buying a system and even less than the $5,000 or so upfront cost installers charge on power purchase agreement installations.
How can SolarCity offer such low installation costs? Rive explains that as a corporate buyer and installer of solar, SolarCity is eligible for tax incentives through the federal investment tax credit (ITC) that individual residences aren’t. This is, however, the same ITC that’s set to expire at the end of this year. “If you’re thinking of going solar you better do it now,” Rive advised. While lease agreements vary, customers’ monthly lease payments should be around the same amount as a “decent” energy bill, Rive said. Oh, and it doesn’t hurt that their financial partner in this endeavor is Morgan Stanley.
SolarCity guarantees a minimum power output and will rebate any shortfalls, while any excess power produced is the customer’s to sell back to the grid. “The return on investment for most customers is anywhere between 15 and 20 percent over a 20-year time period,” Rive told us.
SolarCity claims to have installed more residential solar systems in California than anyone else, and this $2,000 solar (or no down-payment) plan could further solidify SolarCity’s spot as a big player. Last year the company installed 3.5 MW of solar capacity on over 700 homes and created some 200 green-collar jobs, Rive added.
Now Rive tells us that the company is eying an IPO in “maybe in two to three years.” And while he wouldn’t say exactly how many installations the company expects to do in 2008, he did offer this unambiguous tip: “We’re going to do way more than double our installations in the next year.”
At the same time, this isn’t the first time we’ve heard big talk related to solar rental options. Citizenrē, for example, has made promises related to renting solar equipment but has yet to offer a delivery date. “[Our deliver date] is today,” Rive insisted. He estimates that leased panels will be on customers’ roofs within a month. “Maybe in three weeks. We’ve already made some sales; it’s just about getting the permits and getting the panels ready to install.”
The company also expects to double its installation team this year, and has committed to building an academy in San Francisco to train green-collar workers to install their panels. The academy would train 30 employees every two months, and Rive said “They’ll come out as Jedi Knights of [solar] installation.”
SolarCity hopes to expand the SolarLease program into Oregon and Arizona in the next month, he said. The program is an ambitious move that could make solar available to millions more homeowners, but we’ll be convinced when the leased panels start going up in droves. Until then, SolarCity, may the force be with you.