Sungevity Founder Danny Kennedy
By Barbara Grady
Once this pesky presidential election gets behind us, politicians will again talk about renewable energy and climate change, predicts the founder and president of Oakland-based Sungevity, Danny Kennedy.
"The consumer market will force them to," he predicts, because for the past two years, consumers have been turning to solar power in droves, with rooftop installations up 426 percent industry wide since 2010.
Moreover, Hurricane Sandy has made clear that the harm to the planet from burning fossil fuels will soon be an intolerable trade off.
"Sandy cast her vote early and in doing so ended the long silence of mass media and our politicians around climate change," he said in a recent email. In demolishing houses, taking lives and leaving thousands of people stranded on the Atlantic seaboard, "Sandy has provided us with a stark reminder that we need to upgrade our energy supply to sources that are clean and that do not harm what has become a fragile environment."
Kennedy was in a conversation about his new book "Rooftop Revolution: How Solar Power Can Save Our Economy – and Our Planet – from Dirty Energy," released this fall.
The book is a solar power manifesto. It argues that solar power is poised to be a change agent in how we live and work, similar in impact to the railroad or search engines. With rooftop installations of solar photovoltaic systems growing exponentially - propelled by a steep drop in hardware costs and a change in how systems are sold so that homeowners lease solar panels instead of buy them - solar is finally accepted in mainstream America as a good choice for electricity. He said the time is ripe for entrepreneurs to see and act on opportunities with this widely available, free energy source to put solar power into other applications.
Sungevity's experience would seem to affirm that theory. The four-year-old company has had phenomenal growth, doubling revenues year after year such that it went from $2 million to $10 million in two years and adding staff just as fast. It started with three people and now has 250 employees.
Falling hardware prices and new leasing models have certainly helped a lot. But what Kennedy says is the "secret sauce" behind Sungevity's success - and behind solar energy's opportunities as a change agent in the world - is the confluence of web technologies with solar technologies.
Sungevity uses satellite images from Google Earth and Microsoft along with a proprietary software it developed to size up a potential customer's roof for solar. It's all done online from Sungevity's Oakland office. That eliminates the need for a lot of trucks out roaming neighborhoods and sales people asking customers if they can climb up on their roof and assess conditions for going solar.
"Satellite views are the secret sauce or the operation, if you will. Our algorithm combines a top down satellite view with an oblique view, from there you find the angles you need," Kennedy explained. "Instead of someone knocking at your door and asking for three hours on your roof and coming back the next day, here it is at your convenience online."
The sale and designing of a customer's rooftop solar system is all done online, with perhaps a phone call if the customer wants. But the savings on travel and trucks and house calls takes about 10 percent off the cost of going solar, Kennedy estimates.
In Sungevity's headquarters at Jack London Square, an entire room is devoted to this process of fitting systems to rooftops remotely. About 18 people sit behind two computer monitors each, looking at one monitor with an aerial view of a home rooftop and another monitor with a different view ... and a lot of numbers.
Reveling in his success as a new entrepreneur, Kennedy talks in his book about solar energy's adoption and influence.
But is Kennedy right about solar or has Sungevity merely been lucky and Kennedy optimistic? Solar supplies only 1 percent of the electricity market, after all.
As an investment sector, solar has been in the doldrums ever since Solyndra, the Fremont-based manufacturer of solar panels, went out of business and filed for bankruptcy last year, taking a $500 million government loan down with it. Two other U.S. solar panel manufacturers, Evergreen Solar and SpectraWatt, also closed their doors. Venture capital investment in the broad clean technology sector fell 20 percent in the third quarter compared to the second quarter, or spring of this year, and is down year to date from last year, according to the National Venture Capital Association.
But the forces that led to Solyndra's demise, it turns out, are the same that are causing record solar installations by consumers and soaring business for solar installers, according to Energy & Capital investment newsletter. Its managing editor, Nick Hodge, says the price of solar panels has dropped more than 50 percent over the last year as panel manufacturers in the U.S. battle for market share with low cost manufacturers in China. While the plummeting prices have hurt solar panel manufacturers like Solyndra, those prices lure consumers.
"With a high supply of cheap panels, homeowners have been quick to snatch up deals," Hodge said. "Solar installations in the United States have grown 426 percent since 2010." Installers "are making a killing" his newsletter said.
Additionally, new lease arrangements in which customers lease solar equipment for their rooftops, rather than buy them, has proved to be another boon because leasing means consumers avoid big up front costs in going solar. The solar installation market is now 75 percent lease rather than buy, Hodge said.
"New financing models are allowing installation companies to own, maintain and insure the solar panels while homeowners pay a fixed rate for electricity over 20 years. This new model has the sharks circling as Wall Street's biggest banks are racing to provide the upfront funds so they can get a cut of the 20-year action," Hodge wrote this month. "It's the reason California homeowners alone have put $1 billion into solar leases in the past five years."
According to CleanEdge, a market research firm, solar installations in the U.S. doubled in 2011 from 2010 and industry revenues surged to $91.6 billion from $71.2 billion over that time.
The success of the industry and his business is a big part of why Kennedy wrote Rooftop Revolution, he said.
"I wanted to reset the debate. I'm tired or all these nabobs of negativity. I wanted to respond," Kennedy said in an interview in his office in Oakland’s Jack London Square. "A business that was a good idea five years ago is now thousands of happy customers, hundreds of happy staff members and millions of dollars in revenue. Yet when I go to dinner parties, people tell me lines like 'Sorry about the solar industry’ or 'Sorry about that Solyndra thing.'
"Solar is actually a great American innovation story," he continued. "It is the fastest growing American industry, employing 100,000 people while coal employs 60,000 and is shedding thousands of them as we speak."
That's why he wants it out of politics and dares politicians to talk about it again.
"Solar energy isn’t a left or right issue: it's an economic one," he writes. "The sun's reliability coupled with recent manufacturing efficiencies in our industry have made solar energy a more affordable, cleaner and safer way to power our lives. It’s not the energy source of the future; it’s the energy source of now."
Renewable energy has not always been a politicized topic, he said. But since the influence and money of big oil companies have become so strong in current day elections, he argues, renewable energy has become a taboo topic and labeled as a leftist cause.
But revered national heroes, from Thomas Edison to Gen. Wesley Clark, the retired U.S. Army General and Former Supreme Allied Commander of NATO troops, have extolled the power and promise of solar energy, Kennedy says in his book. Thomas Edison - way back in 1931 - even realized the potential of solar.
"I'd put my money on the sun and solar energy. What a source of power! I hope we don't have to wait until oil and coal run out before we tackle that," Edison is quoted as saying in a 1931 conversation with Henry Ford.
Clark, in an introduction to Rooftop Revolution, writes, "The United States has squandered lives, treasures and legacy in grasping for foreign-sourced petroleum while sitting on the most abundant energy resources and intellectual and entrepreneurial capital in the world."
Kennedy said more success stories are waiting to happen in solar. It needs entrepreneurs, he said.
"We'll continue to thrive here at Sungevity, but one thing I've become aware of is we need more people willing to start businesses," to see the true possibilities in solar. "We need other applications in other markets," from cars to computers, he said.
"Solar entrepreneurship is what we need know and I think Oakland is a natural place for that to happen."