Summary:

Big box stores have tried to market solar electric equipment and installation services for years, but they haven’t seen good results. Lowe’s is hoping to change that by offering services from Sungevity and investing in Sungevity.

Lowe's

Big box retailers have tried to market solar electric equipment and services for years, but they haven’t seen good results for two key reasons: they aren’t very good at either educating consumers or helping them finance the installation. Lowe’s is hoping to change that by offering services from Sungevity and investing in Sungevity, the retailer said Monday.

California-based Sungevity provides marketing, sales and solar system installation services to homeowners. It uses its own software and satellite images from other sources to develop an online process that it says serves customers more efficiently, from giving a price quote to designing an array of solar panels with the right orientation and other designs for a rooftop. Sungevity’s employees then follow up with phone calls to hopefully close the deal. The process differs from other installers that send sales people out for home visits, an approach that can prove expensive because those sales calls often don’t turn into signed contracts.

What sets Sungevity apart from some other solar service companies is its offer of financing options — leases of solar panels and related equipment. Solar electric systems are expensive purchases like cars are, even when factoring in state and federal incentives. Companies that can raise funds to finance leases and other options can attract more buyers than those that will require consumers to get loans on their own. A crop of solar service companies that have grown as a result of their financing muscle include SolarCity and SunRun. Some utilities also have gotten into the game, too, and Green Mountain Energy in Texas recently started a leasing program.

Financing options vary, of course. Some contracts require an upfront fee but set a monthly charge that is lower than the homeowners would pay for the same amount of electricity from the grid. Some companies use “zero down” to entice takers. All of them require long-term contracts in which the fees generally go up overtime. Whether consumers actually save money by going solar depends on their service agreements and how long they keep the equipment around.

Lowe’s wants to set up kiosks in its stores to provide that same online experience from Sungevity. The retailer will first offer the Sungevity services in 30 California stories in mid-July and then expand them to other states served by Sungevity later this year, said Danny Kennedy, Sungevity’s founder. Sungevity serves eight states: Arizona, California, Colorado, Delaware, Maryland, Massachusetts, New Jersey and New York.

The home improvement store also made an undisclosed investment in Sungevity. The startup raised a C round of $15 million late last year, and at the time Kennedy said he hadn’t closed the round yet. The company was to use that money to expand its services to the East Coast. It also added a few executives since then, including the chief financial officer and a chief marketing officer. The CMO, Patrick Crane, is responsible for using tools such as social media to promote the Sungevity brand and services.

Lowe’s will generate revenues from the Sungevity deal by getting a referral fee for each customer, Kennedy said. Perhaps Lowe’s also can make money by selling solar panels and other equipment and construction tools to installers contracted by Sungevity to erect the rooftop systems. Lowe’s arch rival, Home Depot, offers solar installation services through partnerships with companies such as BP Solar,  SolarCity and SunRun.

The deal isn’t the first in solar for Lowe’s, which announced a plan to sell solar electric systems from Akeena Solar in 2009. The pitch then was that Akeena had developed a partly-assembled system that would make installation faster and cheaper. A completely unassembled system would come with solar panels, cables, racks, inverters, fasteners and other little parts. Technicians would have to put them together and mount them on a rooftop. In recent years, equipment makers have been experimenting with designs that would pre-assemble an increasing number of parts.

The experiment with Akeena seemed to have fizzled for Lowe’s however. Lowe’s website doesn’t feature Akeena’s products (Akeena began doing business under the name Westinghouse Solar last year). The home improvement retailer does sell solar panels from companies such as Sharp and Sunforce.

Photo courtesy of Lowe’s

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