Solar as a Service

Citizenre and Recurrent Energy are providing innovation in the green building sector by attacking the economics of solar energy rather than the technology itself.

Here’s the basic problem with home solar: you spend $30,000 for a 3,000 3.0 kilowatt system, which when federal and state rebates are taken into account is about $20,000 out of your pocket. State rebates are the larger rebate component and vary by state with California, Colorado and New Jersey leading the rest of the country, so the net cost may be quite a bit higher considering the federal tax credit is only $2k.

That 3,000 3.0 kilowatt system, which generates 25 amps at 120 volts, supplies just a portion of your household use but not all, meaning you still have to buy power from your local utility. You will get credit for electricity you are pushing out to the grid, but it’s impossible to calculate what that amount will be, so let’s assume you will zero it out every month for the purposes of our math here.

My house uses about 1,000 Kwh of electricity per month, a little more in the winter when the days are shorter and a little less in the summer when the days are longer. That 1,000 Kwh costs me about $120 a month, which reflects a sliding rate scale pegged to baseline usage, so again let’s average out to .13 cents per Kwh.

That net $20,000 solar system is going to take 14 years to pay for itself. For me it was a non-starter, I don’t expect to be in our house for 14 years and the resale data doesn’t support the notion that you can recover the cost at sale.

This is where Citizenre caught my attention. For a modest deposit, about $500, they will install the solar system and make it operational, in exchange for a long term contract whereby you agree to purchase the electricity being generated by your solar system at a locked in rate of 12.5 cents per kilwatt hour, which is competitive with PG&E’s baseline rate.

Recurrent Energy has the same business model but is focused on commercial customers as opposed to homeowners.

Personally, I really like the idea, from an environmental perspective, of generating my own power. Where typical solar economics would prevent me and, most likely, the overwhelming majority of the market from investing in a solar system, the solar-as-a-service business model that Citizenre and Recurrent Energy are offering will definitely overcome the price objection.

UPDATE: be sure to read the comment thread on this post. I have referred to this as a consumption pricing model but it’s really not, in the purest sense, that. Because of net-metering laws you will offset your bought power with generated power but you are paying for generation capacity rather than just what you use, and the balance is applied to your utility bill.