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)