Oakland’s Bid to Become a Solar-Power Hub

The rise of solar-power companies and other solar innovators has created a future-oriented economic sector for the city.

Danny Kennedy, co-founder of Sungevity, holds a copy of his book Rooftop Revolution: How Solar Power Can Save Our Economy--and Planet--From Dirty Energy. 
National Journal
Sophie Quinton
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Sophie Quinton
Oct. 7, 2013, 7:21 p.m.

This art­icle is part of a weeklong Amer­ica 360 series on Oak­land.

OAK­LAND—There are no white lab coats at sol­ar-ser­vice pro­vider Sun­gev­ity’s Oak­land headquar­ters. There are no hard hats, or equip­ment used for cal­ib­rat­ing sol­ar cells. In­stead there are cu­bicles — some dec­or­ated with totally un­ne­ces­sary leaf-shaped um­brel­las — from which some 300 em­ploy­ees ma­nip­u­late soft­ware and charm cus­tom­ers over the phone. Thirty miles north of the shuttered of­fices of sol­ar-pan­el man­u­fac­turer Solyn­dra—which went bank­rupt in 2011 after re­ceiv­ing $535 mil­lion in fed­er­al loan guar­an­tees—Sun­gev­ity’s busi­ness has doubled its sales every year for the past three years.

“We all feel like we’ve been rid­ing a rock­et ship for the past five years, and we’re about to go faster,” says Sun­gev­ity cofounder Danny Kennedy. Kennedy’s Aus­trali­an ac­cent makes him sound laid back, even when he’s rat­tling off stat­ist­ics about the sol­ar sec­tor’s rap­id growth. The price of sol­ar hard­ware is drop­ping “like crazy, pre­cip­it­ously, like noth­ing on Earth,” Kennedy says. The price of a sol­ar pan­el—the key com­pon­ent in a home sol­ar ar­ray—is one-fifth what it was when Sun­gev­ity got star­ted in 2007, ac­cord­ing to Kennedy.

Bay Area en­tre­pren­eurs are fond of call­ing their busi­ness ideas “dis­rupt­ive.” But help­ing to spread dis­trib­uted elec­tri­city gen­er­a­tion ac­tu­ally is. If cur­rent trends con­tin­ue, sol­ar ser­vice pro­viders like Sun­gev­ity and Sol­ar­City could trans­form the util­ity busi­ness in the same way that cell-phone pro­viders trans­formed the land­line tele­phone in­dustry.

Over the past dec­ade, the price of sol­ar hard­ware has plummeted, while con­ven­tion­al res­id­en­tial elec­tri­city has be­come more ex­pens­ive. A re­cent Deutsche Bank re­port found that res­id­en­tial sol­ar is already com­pet­it­ive with con­ven­tion­al elec­tri­city in 10 U.S. states — without ad­di­tion­al state sub­sidies — and pro­jec­ted that 12 ad­di­tion­al states will achieve par­ity in the next 18 months. Pro­jec­tions aren’t guar­an­tees, but Sun­gev­ity is bet­ting that pretty much every­one who puts a sol­ar pan­el on their house will even­tu­ally save money.

The fall­ing price of sol­ar hard­ware helped put Solyn­dra out of busi­ness. But the drop has been great for ser­vice busi­nesses like Sun­gev­ity, which make it cheap­er and easi­er for homeown­ers to get a sol­ar sys­tem. Ac­cord­ing to the Sol­ar En­ergy In­dus­tries As­so­ci­ation, a trade group, the U.S. is in­stalling roughly one sol­ar photo­vol­ta­ic sys­tem every four minutes. The Sol­ar Found­a­tion, a non­profit, cal­cu­lates that the sol­ar in­dustry ad­ded more than 13,000 jobs in 2012, mostly in sales, fin­ance, main­ten­ance, and in­stall­a­tion.

Al­though sol­ar ac­counts for just 1 per­cent of the net elec­tri­city gen­er­ated in the U.S., both res­id­en­tial and util­ity-scale pro­jects are ex­per­i­en­cing rap­id growth. “This busi­ness will not go away. It’s here for the long term, and it will dra­mat­ic­ally change, over time, the en­tire land­scape here in terms of the elec­tric-util­ity busi­ness,” says Cali­for­nia Pub­lic Util­it­ies Com­mis­sion Pres­id­ent Mark Peevey. In 2017, the 30 per­cent fed­er­al tax cred­it for rooftop sol­ar sys­tems will drop to 10 per­cent, but by that point it will be enough to keep sol­ar com­pet­it­ive, he says. 

Util­it­ies in Cali­for­nia are already com­plain­ing that rooftop sol­ar users aren’t pay­ing their fair share of grid main­ten­ance costs. They’ll have much more to com­plain about in years to come, should bat­tery-stor­age tech­no­logy al­low rooftop sol­ar users to totally dis­con­nect from the grid.

Cofounders Kennedy, An­drew Birch (known to all as “Birchy”), and Alec Guettel set up the first Sun­gev­ity of­fice in a friend’s back­yard shed. The three — a former Green­peace act­iv­ist, a fin­an­ci­er, and a so­cial en­tre­pren­eur, re­spect­ively — be­lieved sol­ar had a fu­ture as a non­pol­lut­ing al­tern­at­ive to fossil fuels, but they also knew that most homeown­ers wer­en’t will­ing to pay $30,000 up-front for a sol­ar sys­tem.

So they star­ted leas­ing pan­els as well as selling them. Homeown­ers pay no de­pos­it for pan­els they lease through Sun­gev­ity. A Cali­for­nia cus­tom­er with a pri­or monthly elec­tri­city bill of, say, $150 will pay Sun­gev­ity $70 a month for the pan­el, and will pay the util­ity com­pany a much lower bill—per­haps $50, as the sol­ar pan­el will have cut the amount of power the home needs to pull from the grid, Kennedy says. Thirty dol­lars in monthly sav­ings might seem small, but over a 20-year lease peri­od, the cus­tom­er could save over $10,000. To date, Sun­gev­ity has leased or sold more than 10,000 sol­ar ar­rays. 

A soft­ware-driv­en busi­ness mod­el al­lowed the com­pany to grow rap­idly. Sun­gev­ity em­ploy­ees reach homeown­ers in nine U.S. states, Europe, and Aus­tralia without leav­ing their leaf-shaded cubes. Rather than trav­el­ing la­bor­i­ously to and from homes to design rooftop sys­tems and give cus­tom­ers a quote, Sun­gev­ity’s sol­ar de­sign­ers use satel­lite data from Google Maps, Bing, and else­where to cal­cu­late how much elec­tri­city a sol­ar sys­tem of a cer­tain design, on a cer­tain cus­tom­er’s home, would gen­er­ate over the length of the lease. Rather than send­ing in a con­sult­ant to talk cus­tom­ers through their op­tions, Sun­gev­ity’s em­ploy­ees talk to cus­tom­ers on the phone and provide them with a Web-based es­tim­ate of dol­lar and car­bon sav­ings. And rather than hand­ing over a set of sol­ar pan­els and leav­ing homeown­ers to deal with loc­al per­mit­ting and main­ten­ance, Sun­gev­ity’s pro­ject man­agers help cus­tom­ers through the per­mit­ting pro­cess and co­ordin­ate in­stall­a­tion and main­ten­ance per­formed by some 100 loc­al con­tract­ors.

To spread the word about sol­ar, Sun­gev­ity has partnered with home-im­prove­ment re­tail­er Lowe’s and used so­cial net­works. Cus­tom­ers can share their Sun­gev­ity en­ergy-sav­ings data to Face­book, get a re­fer­ral bo­nus when they per­suade a friend to lease a pan­el, and track the en­ergy and car­bon sav­ings caused by their re­fer­rals. Get­ting a pan­el turns a lot of cus­tom­ers in­to ad­voc­ates. “They come in ra­tion­ally, they go out emo­tion­ally,” Kennedy says.

Sun­gev­ity’s busi­ness mod­el can only work in the 41 U.S. states that al­low net meter­ing—the sale of ex­cess elec­tri­city gen­er­ated by res­id­en­tial sol­ar sys­tems back to the elec­tric grid. Util­ity com­pan­ies can hobble the growth of rooftop sol­ar by get­ting state le­gis­lat­ors to lim­it net meter­ing. Re­cently, a push to do just that failed in Sac­ra­mento.

But the po­ten­tial mar­ket is enorm­ous. Sun­gev­ity is hop­ing to de­vel­op a whole eco­nom­ic sec­tor around sol­ar power. To help grow the next gen­er­a­tion of sol­ar en­tre­pren­eurs, Sun­gev­ity hosts an on-site in­cub­at­or and ac­cel­er­at­or pro­gram. One start-up that leases of­fice space in Sun­gev­ity’s Sfun Cube, Mo­sa­ic, al­lows in­di­vidu­als to in­vest in rooftop sol­ar pro­jects at schools, farms, and U.S. mil­it­ary bases. It’s a little like crowd­fund­ing, ex­cept in­vestors get an an­nu­al re­turn of 4.5 per­cent or more.

Over time, Kennedy hopes, suc­cess­ful Sfun­sters and oth­er sol­ar-ser­vice busi­nesses will set up per­man­ent of­fices near Sun­gev­ity in Oak­land’s Jack Lon­don Square, cre­at­ing a glob­al cam­pus for the sol­ar eco­nomy. Oak­land feels like a nat­ur­al home base, he says — and not just be­cause of the near year-round sun­shine. For a com­pany push­ing for a clean elec­tri­city re­volu­tion, there’s prob­ably no bet­ter place to be than in act­iv­ist Oak­land.

COR­REC­TION: An earli­er ver­sion of this story mis­spelled the name of sol­ar-ser­vice pro­vider Sun­gev­ity.

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