“Install solar. Save money from day one. No upfront investment. And you have a predictable forecast of what your power costs will be for the next 20 years.”
That’s the selling proposition that Solar City, a Foster City, CA-based startup, offers homeowners, businesses and government interested in installing solar photovoltaic panels. It’s working. Big companies like eBay and Walmart, as well as nearly 10,000 homeowners have opted to buy or lease from Solar City, which will provide design, financing, installation and monitoring of solar systems. It’s one-stop shopping for what otherwise could be a complicated business.
Solar City is led by Lyndon Rive, 33, who is the CEO, and his brother Peter Rive, 36, who is chief operating officer. They started the company in 2006 and it’s their second startup; the first, Everdream, a software company, was acquired by Dell. Most likely, neither company would have gotten going were it not for Lyndon’s passion for underwater hockey. More about that in a moment.
I met with Lyndon Rive last week at the Solar Power International conference in L.A. Solar City is one of several companies offering leases of solar equipment; the others include SunRun (See Will rooftop solar go mainstream?) and Sungevity ((See Solar power to the people). All are based in northern California, and for good reason. Lyndon told me that more than half of the estimated 80,000 homes with rooftop solar in the country are located in the area served by PG&E Corp., a solar-friendly utility company. How friendly to solar is the big utility? PG&E has invested in both SunRun and Solar City.
Lyndon says that Solar City does not view SunRun or Sungevity as big competitors. If anything, more solar on roofs, no matter who installs it, should drive the category. “Our primary competitor is the homeowner doing nothing,” he said. “The market is not saturated.” That’s an understatement, given that so few homes have installed solar rooftops.
Why not? Lots of reasons. The upfront costs of installing solar panels are high–about $30,000, on average. Most people have no idea how to shop for panels. Who would they hire to install them? What happens if they break? Or on cloudy days?
Those barriers to adoption were the focus when Lyndon and Peter Rive started Solar City. They’d left the software firm and investigated renewable energy. “Solar is a market that can really scale,” Lyndon says. Other companies were doing manufacturing or researching new technologies, but no one, at that time, was focusing on how the product would be delivered on a big scale. Their goal was to build the first national consumer-focused solar brand.
I asked Lyndon whether there were any models for brand that provides services for the home. Not really, he admitted. (The closest we could come up with were DirectTV, and Terminix and TruGreen, which are units of ServiceMaster.) Undeterred, they set out to make rooftop solar as easy as possible.
So far, Solar City currently operates in five states: California, Colorado, Arizona, Oregon and Texas. The states are chosen because they have generous state subsidies, or plenty of sun, or high utility bills–ideally all of the above. Under the right circumstances, Solar City customers who lease their panels pay little or nothing upfront and immediately begin saving 10 to 15% on their utility bills. About 20% of customers choose to buy their panels.
Two recent announcements put a spotlight on Solar City. The company said last month that it had won a contract to supply thin-film solar panels to 20 to 30 Walmart stores in California and Arizona. Last week, Solar City said it will lease energy efficiency products and services to homeowners along with solar; that’s an excellent idea because it will further lower the costs of using solar power. One of the company’s key advantages is its software, which enables customers to estimate the costs of solar, and now energy efficiency improvements, on Solar City’s website.
Solar City has raised about $101 million in venture capital from such investors as Draper Fisher Jurvetson, Mayfield, DBL Investors (which stands for double bottom line) and Generation Investment Management, the firm started by Al Gore and ex-Goldman exec David Blood. The company has said it may go public by 2013.
As for underwater hockey…well, I’d never heard of it either. It’s played in a pool two meters deep, with six players on a team, slapping around a heavy puck (1.5 kilograms) as they can hold their breath and stay underwater. Why do it? “I love water,” Lyndon said. In any event, he did it well enough to be named to the South African national team, which brought him to the world championships in San Jose in 1998. There he joined with his brother in the software business–and never left.