Guest Post: CitizenRE: Not All That’s Renewable Is Green (Part 1 of 3)
Editor’s note: Today, we’re happy to bring you the first of what we hope will be many guest posts on the Green Options blog. Today’s guest post comes from our friends at Solar Kismet.
Most of us in the Green Blogosphere have followed new company Citizenrē, and its REnU program, with great interest. Mike has been analyzing the company at Solar Kismet, and we asked him to share his thoughts with our readers.
As Green Options launches new features and tools in the coming weeks, you’ll see that we’ll be involved in helping consumers consider their options for solar power. As such, we firmly believe that full transparency is necessary for the solar industry’s continued growth. This author’s thoughts and ideas are his own, and do not necessarily reflect those of Green Options, its management or staff.
Green products come in all shapes and sizes, with many varying claims about their content, performance and cost. Sometimes it’s hard to understand the nuances of something you don’t want to become an expert in - you just want it to be excited about your green choice and have it work. Renewable energy is no exception.
Renewable energy captures everyone’s imagination, much more so than its practical cousin, energy efficiency (those funny-looking lightbulbs really do work). But it’s hard to evaluate what the best renewable energy options are environmentally and economically. You can buy green electricity (but is that really helping anything?), you can install a solar system on your house (but it’s so expensive!), you can get more energy efficiency (so boring!), or you can have a solar system installed on your house for no money down and fix your electricity rates for the next 25 years (really?).
Did you catch that? “No money down” and “solar energy” aren’t two words that normally come together. But they have in the last two months and it’s caught the eye of thousands of people interested in selling and buying these systems. But what’s the catch? Exactly. Here’s a short lesson in “too good to be true”…
I should preface this by saying that I’m a skeptical person. I’m not going to be the one leading the masses with inspiration, so when I first heard of Citizenrē, a new solar energy company and their “no-money down” solar business model, small flags went up. I didn’t think too much of it at first. But when I started to get questions from multiple, non-related sources (consumers, industry, consultants, etc), I realized that Citizenrē had started to gain real marketing traction and decided to look into it a little more…
Citizenrē purportedly offered consumers the best of all solar energy worlds - a solar electric system on your home for no money down, no risk, and insurance against future electricity cost increases. Their goal was to install 100,000 solar systems per year on homes across America and they were recruiting salespeople from all over the internet, as well as pushing press releases, websites, and blogs touting their goals and promises everywhere. (Editor’s note: According to Renewable Energy Access, Citizenrē now plans to install 25,000 systems annually).
Here’s how Citizenrē’s model would theoretically work:
Interested consumers sign a contract with Citizenrē to have a solar system installed in exchange for a monthly solar system rental fee; reportedly, if you signed a 25 year contract, no deposit was required. Homeowners and businesses in more than 35 states would be eligible (those with net metering and a retail electric rate of 7 cents per kilowatt-hour or more). The monthly rental fee would be equal to the amount of electricity the solar system would produce annually multiplied by your cost of electricity (or even less). So instead of paying your electric company $100, you might pay them $50 and Citizenrē $50, if it offset 50% of your electricity use that month. Note that you haven’t saved any money at this point. Theoretically, you could pay Citizenrē a little less, say $45, if your Citizenrē rate was lower than your electricity rate. But the main benefit is that you lock in your electricity prices for the length of the contract and assuming electricity rates go up over time, you started to pocket the difference as personal profit.
A quick example:
- A 3 kilowatt solar electric system installed in Colorado might produce 4000 kilowatt-hours per year;
- If a home uses 8000 kilowatt-hours per year, it will offset 50% of your use;
- If your electricity rate was 9 cents per kilowatt-hour (cents/kWh) and you signed a contract with Citizenrē for the same amount, you pay each $360 per year (save nothing);
- If your electricity rate went up to 10 cents/kWh the next year, you would pay the utility company $400 and Citizenrē $360 (save $40);
- You can move your solar system once at no charge, or reassign the contract to the new homeowner.
What’s in it for Citizenrē? They take your monthly rental fee, the federal solar tax credits, accelerated business depreciation benefits, potentially lower costs from vertical business integration, and potentially the renewable energy credits (if legal).
I should stress that this business model in and of itself is not new. At least three companies (SunEdison, MMA Renewable Ventures, and Solar Power Partners) offer the same concept to companies or utilities installing large solar systems in limited markets where the incentives and policies align. And I suspect the concept will trickle out to more states and smaller solar systems over time. But not now and not Citizenrē.
Unfortunately, Citizenrē has put their marketing cart before their solar panel horse. They have built up a salesforce of thousands and pre-sold thousands of solar systems, but they have nothing to install for at least a year. Not one solar panel.
Next Time: If the business model isn’t new, why does Citizenrē raise so many flags? (part 2 of 3)
Tags: , citizenre, home, Solar
February 20th, 2007 at 4:39 pm
Patrick– First, thanks for chiming in.
There's certainly no hatred of CitizenRE involved in this series — just an analysis of the business model and marketing claims. We'd love to see this model work, for just the reasons you mention. But legitimate questions have come up, and we feel they need to be addressed and discussed.
As far as your comparison to Toyota hybrids — that seems like a faulty parallel, as these cars are actually being produced. The wait period on the Prius and other Toyota hybrids is a matter of demand; with CitizenRE's solar systems, a manufacturing plant hasn't even broken ground.
We are focused on what right and positive — that doesn't mean that we won't ask questions when they're warranted. We've also reached out to CitizenRE for their response, and hope to bring that to you soon.
Again, thanks for your response!
Jeff McIntire-Strasburg
Senior Editor
Green Options
February 21st, 2007 at 7:18 pm
When I say haterade, I'm not implying hatred. Actually I can't say the word without laughing. It sounds better coming out of my mouth (because I laugh when I say it)then it looks in print. I’ll be more cautious of that in the future.
It just seems like there are so many people lining up to take their shot at us before the major info is released. In the coming weeks, if the press releases do not answer all of your questions then by all means, ask questions, but the info is not out yet. I encourage an open dialogue that’s what freedom is all about.
I think that my Toyota comparison is right on, if it’s green people are willing to wait.
You do bring up an interesting point about supply and demand. By simply putting this in the air (the ideal of leasing solar) we are seeing a demand spike across the country. People want solar, it’s just that the major hang up is the cost. Even with great rebates in AZ, CA and Austin, TX, the average buyback is 10 – 20 years on a system, and in some parts of the country upwards to 20 -30 years. Simply by leasing a system we are creating a demand spike, which is healthy for the industry.
Thanks,
Patrick Snider
Austin, TX
March 1st, 2007 at 8:56 pm
I’ve been to the Solar Kismet and I can assure that his so-called analysis of CitizenRe is more a slander filled bashing than honest analysis. Most of the things he posts about the company are either blatantly false or deliberate distortions. I can only conclude that he and his buddies are afraid of this idea. Perhaps, they don’t like the fact that it exposes the truth that the established solar community has offered nothing to those of us that don’t have pockets full of money but unfulfilled promises for over 20 years now. Imagine the hypocrisy of wanting us to listen to tirades against CitizenRe because they might not live up to their promises. Frankly I find the attitude of telling us to buy light bulbs and leave the solar power to the rich and elite insulting.
March 1st, 2007 at 10:34 pm
Patrick– We've heard about this major release of information, too, and will be watching for it. I think I can safely say that our general attitude about CitizenRE is that we'd really like to see it succeed, for just the reasons you mention. Given the information we've got, though, there are legitimate questions about the prospects for success. As Mike has said, if CitizenRE doesn't succeed, that demand you mention could dry up quickly, and that's a problem for the whole industry.
Our attitude is, and will remain, one of healthy skepticism. As David said in his post on the topic, though, if CitizenRE makes us eat our words, we'll do so gladly…
_______________________________________
Jeff McIntire-Strasburg
Senior Editor
Green Options
jeff@greenoptions.com
March 1st, 2007 at 11:16 pm
I stand by Parts 1 and 2 (click here for Part 2) of this series on CitizenRE. I’m trying to have a coherent discussion on what CitizenRE claims they can accomplish. Most consumers don’t have any sense of what is and isn’t possible.
Are their goals realistic? Are their technologies sound? Does information make sense? I don’t see asking and trying to answer those questions as being anything other than sensible.
My problem isn’t with the solar leasing model - I love it and have stated so repeatedly. It’s already happening. I would love nothing more than for a whole new sector of the industry to sprout up and use it. And if CitizenRE is the one to do it and do it well, great.
My problem is with the methods and claims of CitizenRE that raise so many flags on so many fronts - technical, economic, policy, etc. Aim high but aim realistic.
If I told you I had a new car that got 200 miles per gallon, drives on a new unnamed renewable fuel, could hold 10 people, was made from 100% recyclable products, and was completely recyclable when you scrapped it, and I was going to build a factory and open 100,000 car dealerships, would you automatically believe me? No. Why should CitizenRE be held to any different standard?
The impact of their failure on the industry and on consumers would be felt for many years to come. And the industry is far from broken - something approaching 15,000 systems were installed in 2006.
My personal blog is certainly less formal and is tinged with sarcasm at times, but there and here, I have yet to find satisfactory answers to basic questions. Rather than blaming me for being too negative (which I think is unfair but that’s your opinion), try responding to my critiques with credible information and successful action. That’s the surest way to shut me up.
Build a factory. Tell me where the factory will be built. Show me an inverter. Show me where the inverter factory will be. Sign a memorandum of agreement with an existing company. Announce that you have $650 million dollars and this is where the money is coming from. Tell me you got financing from this bank or these investors. Install a system. Show me something tangible - prove me wrong. Hope and words are not evidence.
April 11th, 2007 at 9:10 am
I very much do see the “hostility”…
perhaps it has something to do with promising loads, but not even being able to reply to simple emails…. that… and
http://clean-energy-now.org/news.php?readmore=69