How the Power of Collective Bargaining Can Reduce Solar Costs

logoA growing San Francisco-based solar energy initiative called 1 Block Off the Grid couples do-gooder motivation with a drive for profit and scalability that you might say could only have born in the City by the Bay.  The initiative aims to lower the cost of residential solar systems and simplify their selection by aggregating customers by neighborhoods and then collectively bargaining with installers on their behalf. Currently active in six U.S. cities including San Francisco, Los Angeles, and San Diego, on Monday the initiative officially launched in the Colorado cities of Denver and Boulder, with REC Solar as the partnering installer.

So far about 230 residences totaling nearly 1 megawatt of power have contracted for solar systems through the initiative, and plans are afoot to expand into Palm Dessert, Calif., Phoenix, Ariz., and Austin, Texas, by the end of the year. Co-founder Dave Llorens tells us that he believes 1BOG could be contracting 1 MW of solar power per city, per year, by 2010. Part of the attraction is the cost savings — 1BOG has negotiated discounts of 10-15 percent from installers — but Llorens says it’s also that the initiative helps simplify the process for customers by providing free information, such as through webinars, and giving them confidence that the deal they’re getting from installers has been vetted.

Llorens also wants to simplify the marketing effort currently undertaken by solar installers, which would then pass on those savings to 1BOG participants. As part of the marketing push, 1BOG is developing instructional videos about solar installations that could be shown at neighborhood house parties organized through social media. 1BOG also enlists volunteers to put up signs and spread the word about the initiative, with the hope that the good cause of reducing carbon emissions will attract people to donate their time.

1BOG is one of several projects organized by San Francisco-based Virgance, a Quest Venture Partners-backed startup that tries to align for-profit motives with socially-minded initiatives. 1BOG generates revenue by charging installers a referral fee of 25 cents/watt of contracted system. While to date, homeowners associations and others have leveraged group purchasing to reduce solar system costs, typically in onetime deals, Llorens said he believes 1BOG is the first in the country to repeat the process in a given city while expanding into others.

1BOG is the latest example of a creative initiative to make solar energy more affordable and accessible. Innovative financing schemes like power purchase agreements have become increasingly popular in recent years — Borrego Solar Systems announced an initiative on Monday — and 1BOG’s group purchasing model, or another like it, could become similarly common. If the initiative can find sustainable ways for driving down marketing costs — relying on volunteers for what is a for-profit venture probably isn’t one of them — 1BOG might be paving the way for significantly cheaper solar systems in the future.C