Thursday, December 04, 2008

Sun Salutations

Towards the end of the 3-hour mark of the Solar Industry 101 Tutorial at TiE Silicon Valley offices last night, the moderator Murali Rangarajan asked in a very innocent way to the six distinguished panelists:

"How many of you actually have a solar panel on your roof?"

Here they were up on the stage - all six of them - a very promising Solar Industry entrepreneur, two successful solar energy company executives, a VC and an angel investor who specialize in clean tech, and a prominent consultant and industry journalist. You'd expect almost all of them to raise their hand, right?

Only one hand went up out of the six, rest murmuring some embarrassment-laden excuses.

It's really not their fault. It just shows the state of the overall clean-tech or green-tech industry. A typical consumer in the US today does not have a lot of economic motivation to switch to Solar or any other clean energy source. The ones who do it, they are doing so more out of the goodness of their heart, or a feeling of social and moral responsibility to take care of their planet. And I salute their effort. But the rest of us, let's admit it -- this is one of those things we label as "a great noble idea, should do it when we can get around it", very much like the panelists in yesterday's seminar. Because there is not a compelling need to do so (our electricity and utilities seem to be working fine), there is no market force (it's not cheaper, and actually more expensive in the short term), and it sounds like a complex, time-consuming project (it's feels more like a full-fledged home improvement project as opposed to how we typically get electricity installed when we move into a new place, which is basically a phone call to the local utility company)

This is not to justify our current behavior of consuming unclean energy and further endangering the planet, but more an observation of the long, long way we still have to go in terms of making clean energy a viable alternative.

During yesterday's session, Eric Wesoff from GreenTech Media jokingly mentioned his sidegig as a Yoga instructor and that if the talk got boring, he offered to lead the audience through some sun salutation asanas. Not sure if the reference was intentional, but the pioneers and the entrepreneurs in the solar industry are definitely worth of our salutations.

I personally think that currently solar has a better market fit for developing nations, specially at the so-called bottom of the pyramid (BoP), where there is extreme energy poverty. These folks don't have energy resources like electricity and natural gas and coal-fired plants, etc. -- but the sun shines equally upon them as it does in any other nation, so solar to them is a very accessible resource. Can there be micro-sized solar installations for these BoP communities that will at least light a few light bulbs, help with basic cooking and food preservation, and water purification? For a solar solution combines all these, I'm sure the market there will raise their hands a lot faster than our panelists last night.

Now that would really be worth some heartfelt sun salutations.


Eric Wesoff said...

Thanks for the blog mention.
Even if I could afford solar, my landlord would be a bit upset if I started drilling into her roof.
The fact is - solar is expensive. At $10 per Watt installed, a 2kW system would cost $20K, essentially asking the consumer to pay their electric bill for the next 15 years in advance.
Creative solutions like the low money down plans offered by SolarCiity and others will help allow consumers add solar to the US energy mix.

Sandeep Giri said...

Namaste Eric

thanks for your comment - I guess the question is when do Solar (or any clean energy alternative) prices reach a point when your landlord will seriously start considering drilling holes in her roof.

Anil Chitrakar in Nepal mentioned a similar challenge with his Solar "Tuki" (Nepali word for a small lamp) project in Nepal, which received an award from the San Jose Tech Museum in 2007. It's basically a solar-powered lamp, which also has surplus energy to power your radio, charge your mobile phone, and also has a little zapper that can instantly purify a glass of water. The Solar Tuki's actual costs is somewhere around $50, which is way expensive for a rural Nepali household. So, very much like SolarCity, they partnered with a Micro Finance entity to make it available via a 3-year payment program, so the monthly cost came down to be the same as owning a kerosene lamp. Now, the interesting part is that the Solar Tuki comes with a warranty for the duration of the loan - if it breaks or anything goes wrong, maintenance/services is provided as a part of the payment program.

If solar installation companies in US start providing something similar, providing solar as a 15-year payment program - so the prices are comparable (even lower with the subsidies and net-metering) - will that entice your landlord? Also, will the solar company be willing to commit for a 15-year service plan?

That should be one of the big billion dollar question for solar industry today.

Would love to hear your thoughts

- Sandeep

Eric Wesoff said...

Solar City is a fine firm, run by good people. But it's a start-up and start-ups can fail and go out of business. How can a homeowner have confidence in that long term contract?

Sandeep Giri said...

So Eric - if it was PG&E providing the exact same deal (and quality of service) that Solar City does today, will customers flock to that product?

Not sure how likely that is, or that PG&E could acquire Solar City - but seems like not only solar industry requires government subsidies to have price parity, but it may also need a FDIC type insurance from government that would enable start-ups like Solar City to offer long-term payment/service contracts backed by an insurance policy.