Wednesday, January 17, 2007

Solar Power the Amway Way

Solar photovoltaic power is competitive with retail electricity. If you could borrow at 3% and your electric bill were about $200 per month, you could buy a $30K solar PV system that produced all your power usage over the course of a year for the same amount that you pay for electricity now with a 30 year loan. This works in the states that have net metering laws. http://www.eere.energy.gov/greenpower/markets/netm etering.shtml

But, borrowing at 3% is little difficult to come by. Another way to look at it is that at today's retail rates for electricity, you get a 3% return on investment in a solar PV system. You'll get a higher effective rate of return if electric rates go up. This ties into inflation which might make borrowing even at a higher rate (than 3%) make sense but I'm not going to try to calculate that.

That said, venture capital has been moving into the solar PV market because solar is competitive at the retail level. One example where FedEx went solar is here http://www.powerlight.com/success/fedex.php.

At the corporate level that's fine. Big systems and big deals with risk management and all that. At the residential level, things are a lot slower. Enter a new player: Citizenre which plans on renting solar PV systems to home owners for what their utility currently charges them for electricity. Their model for coming to market is like that of Amway: Multilevel marketing. They plan to begin installing in the Fall of this year (2007) and they are signing up customers now through a word-of-mouth campaign. How far will this go? I'm not sure, but they've doubled their customer base in a very short time (about 10 days) and they are approaching 3000 contracts now. That could be 3 million contracts in 4 months if the viral marketing model works. I doubt that this can happen for practical reasons like server overload and the ability to build production facilities fast enough, but the eventual number of customers is not so unrealistic.

Another limit is the amount of net metering that states will allow as a percentage of total energy use. In Maryland, it looks like there is an out for the utilities at 34.7 MW of capacity http://www.energy.state.md.us/programs/renewable/s olargrant/netmetering_statute.pdf which is not a lot.

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As an update (3/4/07), Maryland Senate Bill 595 would increase the cap on net metering to 1.5 GW or about 8% of the 1998 peak capacity in the state. A PDF of the first reading can be found at the bottom of this link. New Jersey and a number of other states have removed caps on net metering. State-by-state information on net metering rules can be found here.

8% of the 1998 capacity is still not a whole lot. We are supposed to do that much under Kyoto but our use of electricity has grown since then so to meet those obligations we should really be trying to switch over 20% of current use, and be conserving at the same time.

I've posted some sales materials in PDF format at www.mdsolarpower.com if anyone wants to help me try to fill out the current cap. Post them in your lunchroom with my thanks.

1 comment:

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