CitizenRE Inside Information Leaked - major issues revealed
[Update 1/3/08: CitizenRE has two competitors...]
[Update 3/12/07: I've completed a three-part series on CitizenRE at GreenOptions.com - Part 1, Part 2, Part 3.]
Apparently some CitizenRE internal information has been leaked by an EcoPreneur (not a Consultant as originally thought) (click here to download, Source):
“Citizenre Warnings & Red Flags: Immediate Action Required to Prevent a Complete Loss of Confidence and Severe Negative PR”
In a nutshell, life is not rosy in their world, as hidden as they are trying to make it (background information here and here). Summary information…
1. Overall: “Powur of Citizenre Network Completely Out of Control” (page 2)
- “Exponential Demand Growth with Production Supply Constraints”
- “Training inadequate and tests compromised”
- “Looming PR Disaster”
- “Deceptive income claims…with no prospect for any significant return for >95% of ecopreneurs”
- “Risk of Regulatory Investigations and Sanctions”
- “Excessive unethical behavior driven by lack of training, skewed incentives, and lack of controls”
- “Excessive Secrecy & Lack of Verification”
2. February Sales Won’t Be Installed Until January 2008 (page 10)
3. Security Deposit (page 16):
- $1,452 average per application (that’s over $14 million for 10,000 systems)
- Only 13.5% qualify for no money down
4. Big Issues ( page 18, 19, and 61):
- “>90% of sales force pitching free installations and cheap solar with expectation of Sept 2007 installations”
- “Current path is unsustainable and risks severe alienation of customers and the loss of >80% of associates”
- “It is unethical to encourage associates to make marketing investments in regions where they cannot expect installations in 2007 or the 1st half of 2008?”
- “If there really is $650 Million Invested, Citizenre’s Executives and Officers Are Accountable to Both the Board of Directors and the Investors”
5. Sales Force - EcoPreneurs (page 20 and 51)
- “Sales force training completely inadequate and missing”
- “Get 30,000 associates who have no hope of ever being successful”
- “Complete lack of renewable energy and solar product knowledge”
- “Horde of inadequately trained associates polluting internet with Citizenre spam and creating a potential PR nightmare”
- “Please explain to us why rapidly expanding the size of the network is in the interest of anyone but the handful of
individuals at the top of the pyramid?” - “The median associate sells 0 per month, and the average sales per associate is below 1 per month.”
6. Who’s making money? (page 35, 43, 44, and 48)
- “Possibly greater than 80% of funds go to those at the top”
- “Very clever marketing but how does operating a pyramid scheme where only the 20 to 50 individuals at the top of the pyramid obtain the vast majority of thecashflow make you any different from the other MLMs?”
- “Very few Ecopreneurs will ever achieve residual income on thousands of homes, especially given the 2007 and 2008 production constraints. So why are you pushing deceptive view of the opportunity?”
- “The compensation plan does tell lot about the company – a pyramid is a pyramid…”
7. Marketing (page 43, 55, and 57)
- “Hype the opportunity but zero discussion of the risks and real returns for anyone that sign up”
- “If >30% of customers are part of the Powur network, the Federal Trade Commission would sanction Citizenre for being a Pyramid Scheme”
- “Citizenre has a major snowballing problem with trust and its image”
Am I happy about this? Absolutely not. I would love for this concept to work. But it really doesn’t seem like it’s going to work for CitizenRE.
February 9, 2007 at 8:43 am
The big question I had when seeing that was who produced that presentation, and for whom? They seem to have done a pretty sophisticated analysis, and they seem quite familiar with many of the facts. But they don’t really know if $650 million has really been raised.
Also, where did this come from?
Ultimately it doesn’t matter. All these questions are going to have to be answered now for CitizenRE to do anything. And it’s good to get this all cleared up now before the solar panels become synonymous with a huge scam. Could hurt the entire renewable energy sector’s credibility in the future.
February 9, 2007 at 5:47 pm
Wow, what an interesting analysis! Was it performed by true insiders or a competitor?
The part that really bothers me is that Citizenre Corporation has set up a separate company (Powur of Citizenre) to front the MLM (Multi-level Marketing) part of the business plan. With no public funding, management, plant ground breaking or other news out there, the whole thing sounds like a very creative fishing expedition targeted at measuring residential solar market demand. Is it legal to use an MLM (i.e., free labor) to do this type of market research WITH no real guarantee that thousands of “Ecopreneurs” won’t get left out in the cold? Do the Ecopreneurs involved truly understand the risks and rewards?
Why can’t Citizenre just come out in the open and admit to their Ecopreneurs the truth about current funding and production limitations. Why the secrecy? By the way, the Federal Trade Commission and any number of MLM watchdog groups advise ANYONE interested in joining a MLM to do their homework. Check out the following websites:
http://www.ftc.gov/bcp/conline/pubs/invest/mlm.pdf
http://www.mlmlegal.com/investigating.html
February 9, 2007 at 10:29 pm
Let’s be clear that it was not a “consultant” who wrote that report. It was one of our Independent Ecopreneurs who incorrectly used our logo’s for an analysis that he did privately. We have no problem answering any and all questions and are preparing an official response.
Some of the information was great and the person obviously spent considerable time and effort. Some of the information and conclusions are misleading at best.
We just learned of this “report” and will have an official response. Please don’t be too quick to judge until you have all the facts.
Thanks,
Rob Styler
President, Powur of Citizenre
February 11, 2007 at 7:42 pm
Rob - if the report is “misleading” why have neither you or David Gregg publicly responded to a single concern raised? I would expect that your pending “official response” is little more than a sad attempt to delay. Interesting how the much promised press releases have been delayed at least twice. Your actions define who you are. You have intimidated, harassed, and strongly discouraged any dissention, asking of questions, or discussion among individual ecopreneurs (all of whom are independent contractors). Your minions have consistently harassed ecopreneurs who have asked questions that you refuse to answer with responses such as the following:
[Editor's Note: small section deleted unrelated to CitizenRE]
What are you hiding? You clearly don’t want ecopreneurs to do proper due diligence about the company. Something is very fishy and stinks here. You only make things worse by creating a web of lies, deceipt, and secrecy.
Rather than answer any questions, you chose to speak to the greed of ecopreneurs by making claims that there was $5 million in advances that would be distributed when there are 100,000 audited customers (currently 6337 unaudited customers). Rather than addressing problems with training by doing training on the product offering and how to address customer concerns, you dedicated yesterday’s training call to discussing the compensation plan (again catering to greed).
You talk a great game in your [Powur] flash presentation about how Citizenre is different from other MLMs, is more ethical, and how getting a group of the right people together can fix the problems that MLMs have had in the past. Sounds great. But it is just more deceptive marketing full of lies. If this was true, you would have real complaince processes and legal review of all advertising claims. You would have legal counsel send ciese and desist orders to all websites hosting ecopreneur ads that are clearly in violation of FTC rules. You would suspend and/or terminate associates who post ads that violate FTC rules. Unfortunately, you have shown your true colors by failing to discipline the ecopreneurs responsible. It is also interesting how you have protected RSD Todd Strand, allowed him to run the “opportunity calls” to help recruit new ecopreneurs, and looked the other way when the following news about his being indicted for fraud by the Dept of Justice and pending trial in April related to his work as the vice president for marketing / national marketing director for an MLM that operated an illegal pyramid sceme:
http://www.usdoj.gov/opa/pr/2004/October/04_tax_721.htm “RENAISSANCE, THE TAX PEOPLE” PROMOTERS INDICTED FOR $84 MILLION TAX FRAUD”
http://www.usdoj.gov/usao/ks/press/Oct06/Oct11a.html “FORMER TAX ADVISER PLEADS GUILTY TO ROLE IN $84 MILLION RENAISSANCE TAX FRAUD CASE”
I guess that this is the right kind of person to recruit as a leader for your team when you want to be different? Anyone under indictment for fraud cannot be trusted with fiduciary responsibilities until their trial is over and they are found not guilty. Standard business operating procedure is to suspend or fire these individuals, not put them in a leadership position. But since you are all about getting 100,000 customers by March 31st, I guess you need to attract more individuals like him with your spam campain sending 18+ million emails about a book titled “Do This, Get Rich” with a PS about becoming a Citizenre ecopreneur.
February 12, 2007 at 11:40 pm
Let’s just deal with the facts…and put your anger aside “Ecopreneur for Truth.”
Todd Strand is an independent rep with our company. He is not an employee. He has no “fiduciary responsibilities.” Todd was an independent rep for a company called The Tax People. It was an MLM that showed people how to save money on their taxes. I knew a lot of people in that company and it always made me nervous because if you show people how to save money on their taxes, then you are taking money out of the government coffers and the government does not like.
I do not “protect” Todd Strand. I offer him the same freedoms that anyone in our country has to be innocent until proven guilty.
I did not believe in the business model of the Tax People. You paid money every month to learn information on how to save money. Doesn’t add up for me.
With Citizenre, you pay nothing to join. You have no monthly fees. There is nothing to buy. The only way you are paid is if you acquire a customer.
I have no problem with people asking questions and I think that is proven by our open forums and open conference calls. ANYONE can ask WHATEVER they want.
I made it clear that we would not be able to share certain information until the press release and if anyone was not comfortable with that they should wait.
I am not sure how we could be more clear or open. That document took a while to create. I have responded in multiple places and we will have an official company response. Because that takes us a few days makes it a “sad attempt to delay?”
We will continue to be open and forthright and we appreciate the opportunity to prove our critics wrong.
Rob
February 13, 2007 at 9:37 pm
If you leave something enough rope it will eventually hang itself or tie a knot and hold on. But if there is not a secured end to either end of the rope then you are just going to lay down on the ground and laugh about it. Solar is good for the world. Solar is going to be around; as it has for the beginning of time; but not to produce conduitant flows of electro motive force as in Pv collectors. Everyone needs to continue doing exactly what they are doing in the industry; as education is a process that will enable money to flow and loans become available and who knows, even plans like renting the appliance as Citizenre claims it can do too. Turn up the heat and the pot boils; but know that the bottoms of all pots are the same color. Lightdrops2003
February 13, 2007 at 10:09 pm
[Editor's Note: Jeff Wolfe, who wrote the Renewable Energy Access article, indicates in a subsequent comment that he had received this information prior to writing the article and it didn't change his assertions or conclusions.]
Here is our response to some of the concerns raised by the solar industry. We will have a similar response to the issues raised by Richard George.
Response to Re-Markets List on Topica.com
Rob Wills et al, Feb 11, 2007
Dear Jeff Wolfe, and fellow Solar Industry members:
Greetings from Citizenre.
We hear your concerns about our business plan. We are responding to your questions and modifying our plans to address the issues that you raise.
At this point, Citizenre is a startup company. We are still putting our management team together. We still have a lot to do. We have not broken ground yet on our PV plant, but plan to do so soon.
Our goal is to revolutionize the PV industry with:
- Successful end-user marketing
- Financing of end-user systems
- Vertically-integrated product line (i.e., integrated inverters)
- Innovative installation methods
- High volume PV manufacturing
The initial marketing program, as stated on the web site, is a pilot. It is showing us what can be done, and in some cases, what not to do. Viral marketing is very powerful, but can suffer from exaggerated claims as the message passes from one person to another.
We are moving quickly to correct misconceptions.
We believe that, rather than being a threat to the solar industry, Citizenre will greatly accelerate its growth.
The ideas behind the business plan come in part from work done by NREL, REPP, and the many NGOs and Environmental Organizations who have sought to commercialize PV effectively. If we do not succeed in our full plan, others will follow our path. At some point, someone will succeed with this plan.
What makes us different is that we are not owned by a multi-national oil or electric company, and so have a different reason for being in business – we want to see solar succeed.
Now the answers to your questions:
Sales Targets
Q: Goal of 100,000 sales in first year. Let’s call it an average $20,000 per sale. That’s $2 Billion of cost incurred. Various interviews have indicated that Citizenre has / is getting / will get (which is it?) $650MM of investment. How does that buy $2BB of installs, year one?
So after year one, we get to year two. Year two has another $2BB of equipment installed. More capital required. Debt markets? Sure, just need to convince them. They will loan against a program like this in maybe 5 years. Right now, you might get 3 - 5 year loans for part of it, but not all of it, and not for the terms needed. I’m actually in the capital markets, although nowhere near this level, and this stuff does not fall from the trees.
A: From this question, it appears that you are blurring the lines between the production facility’s ultimate nameplate capacity and the actual output of the facility during the scale-up of production capabilities.
Roughly nine months after we break ground, Citizenre plans to produce 100MW of PV. There are incentives built in to our construction contracts to motivate an earlier start date – as early as month-6 - and conversely, there are penalties for taking longer. It will take approximate 15 more months to bring the plant online fully. Under this phased approach, we expect that it will take 2 years to fully complete our first facility.
Nevertheless, the capacity we expect 9 months after ground breaking will at minimum produce enough PV for 20,000 systems per year. The target of 20,000 systems/year is based on our assessment of the market which assumes an average system size of 4.5 kWp.
Continuing to ramp-up and bring additional phases online will increase our capacity over the subsequent 15 months. Ultimately, we will have the ability to deliver to about 100,000 homes each year.
Once we prove the feasibility of the first plant, we will duplicate the design and bring more capacity online.
You and others have asked: how is this financed? We have commitments to finance construction of the plant. But as you correctly stated, construction financing does not finance the “Synthetic Power Producer” structure that supports the installation of systems on residential homes. Your estimation of $2 billion per annum is a little high, which is to be expected if you base your numbers on the way that the PV industry does business now. The approach that you should be taking is one that relies on sensible governmental support and more weight towards supply-chain stability, standardization, and operational efficiencies. You may also be overlooking the fact that we have the ability to carry manufacturer’s equity in these financial structures.
The power of Citizenre’s innovative business and financial model has already convinced major investment players of the tremendous opportunity ahead. The first round of investment will be announced shortly along with the plant location; subsequent rounds will underwrite each year’s residential installations.
State Incentives
Q: And Citizenre has said that incentives just get in the way. That’s a good thing, because no state incentive program can put up with this run rate. Outside of CA no one has anything even close, and at this rate Citizenre would deplete the CSI in a couple of years. Ok if it gets the solar out there, but not if it then falls on it’s face.
A: The main incentive that we need is a consistent net-metering law. We will work with the States and new Democratic congress to move towards a National net-metering law.
One of the things provided by our large dedicated customer-base is a significant lobbying base. We expect that we be able to change state and federal policy using this power.
Beyond the necessity for reasonable net-metering laws or a blanket national net-metering law, we will help advocate for 1) meaningful renewable portfolio standards; 2) carbon and other green-house gas taxes; 3) the push for a distributed portfolio standard to capture the economic and national security benefits that the distributed nature of PV provides; and 4) the continuation of renewable energy subsidy programs that place more emphasis on production.
Financing
Q: Where’s the money? No one invests $650MM without some PR, an announcement, etc. And no one receives $650MM without an announcement, PR, etc. This is the most stealth money I’ve ever not heard of.
Understand that $650MM is a very significant percentage of all the money invested in solar to-date. Who are the investors?
A: The investors are large, well-known financial institutions. We will announce their identity and the location of our first manufacturing plant shortly.
Financial Model & Solar-Silicon Cost
Q: I’ve seen various people’s attempts to figure out Citizenre’s financial model. No one has made it work. Even if we get the proposed federal tax credit, the numbers do not work at any reasonable cost for equipment, sales and G&A. The only way it works is if Citizenre is somehow able to lose on each sale! Not a great business model, but could help to get solar out there faster. PV costs money. Without long term silicon contracts (and those cost additional huge money) then Citizenre will be paying well over $60/kg of silicon. This puts a floor price on your modules. You’re not buying glass and aluminum any cheaper than anyone else. So your product cannot be that much cheaper. Yes, you can cut out the middleman and slash the installation budget (perhaps), but you cannot get to half price out of the box, or even in a few years.
Where are you getting silicon? Do you have signed and sealed non-cancellable long term contracts for 200 to 500 MW?
A: We understand the solar-grade silicon market thoroughly. We also understand that secure long-term contracts cost $60 to $90/kg now, and that the spot market price is near $200. We have made arrangements for supply stability at the SG-Si level as well as for the other raw materials that are necessary in the production of PV modules. And although the cost savings are not tremendous – based on our bulk purchase, they are lower than what the average plant in the industry now pays. This is simply economy-of-scale.
SEIA and Legislation
Q: Is Citizenre a member of SEIA? Are you contributing money toward the hiring of very expensive lobbyists? Are you working to get legislation passed that helps the solar industry? Or are you riding on the work and money of others?
A: Yes we are a member of SEIA – and ASES, SEPA, IREC, and ACORE. Yes, we are working to get legislation passed that helps the solar industry - once again, a large customer base will be the most powerful tool that the industry has ever had for policy change. We will devote a considerable part of our profits to supporting SEIA and the other organizations in their legislative efforts.
We are indeed following the work of many who came before us – going back to Bill Yerkes and Arco Solar, the foundation build by JPL, Sandia and SERI (now NREL) and the contributions of all the manufacturers and installers who have brought us to where we are now. Most of our senior management has been in the solar business for more than 20 years.
AC Modules
Q: We’ve never had a good, inexpensive, reliable AC module (I.E. micro inverter). Why now? What’s new and different and makes this unit good?
How many hours of field testing has it gone through? Tough environment on the back of a module. How many hours has it been on the roof?
A: Please check the definition of “AC Module” in the NEC. (I helped to write it). I agree that putting an inverter on the back of a module is a bad idea – we don’t plan to do that.
We are still in the development stage for this part of the system, but do have prototypes running. We have one of the most experienced inverter design groups in the country – we can make this work. Nevertheless, the prototype may have unanticipated problems in manufacturing, in getting into commercial scale production, particularly at the volumes we anticipate needing. Thus, we have created a contingency plan for the bulk-purchase of inverters if we see production delays.
Q: I assume product is at UL for testing (both PV modules and inverters). If not, CitizenRe cannot make the dates they are promising to their customers of September installs, since not only does the equipment need to pass UL, but it also needs to the be manufactured in volume. Please provide proof that equipment is at UL for testing, and an estimate of certification date (I realize that’s hard with UL, but everyone has a schedule).
A: UL’s own estimate for passing the full set of 1547.1 tests is 3 calendar months. The module plant start-up will be approximately 12 months, so we will have enough time for field testing.
Manufacturing Plant
Q: Where is the PV manufacturing plant and where is the inverter manufacturing plant? Ground must be broken by now. How about some photos of construction? A 500MW plant (with only 100MW built out in the first year) is not a small place. It’s also not cheap. My best guess is about $200MM for phase one. Of course, we have another numbers problem here.
If the plant is only built out to 100MW, and you sell 100,000 systems at 2kW each (would you sell smaller, on average?) then that requires 200MW of capacity. It just seems like Citizenre’s statements throw out big numbers, but the big numbers do not match each other. That means that the numbers are just being made up, that there is no plan. Please indicate what the real installation goals and manufacturing capacities will be for year one and two.
A: As stated above, we have not broken ground on the manufacturing plant; what’s more, we will not even be able to break ground immediately after the location is announced. We will have, however, a fast-track permitting process and hope to begin shipments at a rate just over 8 MW per month roughly 9 months after ground-breaking. That means delivering nearly 25 MW to the industry in Year-1 alone. The scaling up of the plant to 500MWp capacity over Year-2 will give us another 250 MW in addition to the existing 100MW. With the announcement now expected by mid-March, that places the first installations in December 2007. Translated to systems, this gives us an estimated maximum of 5000 installs Year-1, 70,000 installs Year-2.
The numbers may not “match up”, as you put it, because there are other parts to the equation that either have not yet been described, or may never be, because they represent proprietary solutions that reduce our costs well beyond the industry’s current experience.
Installation
Q: I hear that the installs take half a day. Amazing. Even with AC modules (so no inverter hook up per se), one still has to rack and install modules. I could believe a day in some areas (1 story, low slope roofs, simple electrical entrance). But this means that the systems must be sized to avoid main taps, cannot be on tile roofs, and have to be within 20 minutes of the shop. It takes time to simply get the ladders unstrapped from the truck and leaned against the house. Telling people half a day is, in my opinion, completely unachievable, except for a very small (two panel?) system that has UF wire connecting it to a breaker. (UF wire for 20 years outside?)
A: We know how much work goes in to a conventional PV installation. There are ways, however, to cut the installation time dramatically using clever design, standardized components and lifting equipment.
The half-day install is for small systems (2kW and the like). Larger systems will take longer. At the size most customers will require – 4 and 5 KWp, we expect that the installation time will be a full day. We allow for this in our business models.
Sales Training
Q: The CitizenRe site indicates that the sales people need to go through training before selling, as do the installers. All well and good, however, the sales people that we’ve spoken with do not, basically, know a thing about PV. Shading analysis? Building permits? Bill analysis? Nothing. Just sign up now and we’ll get you solar in September. How is CitizenRe going to correct this?
A: The first roll-out of the marketing plan is a pilot. We have learned much from this.
All current and new sales people will undergo a much higher level of training. Many present sales people will drop out because of this.
We are just as committed to ensuring the survival of the solar industry as you. We understand the necessity for each of our associates to have a high level of core knowledge and will institute this requirement this month.
One point to note, nonetheless, is the different roles our sales and installation people have. Even when trained to the new standards, the independent sales associates are not expected to do a shading analysis or deal with building permits. Citizenre’s model anticipates that different types of customer interactions require different skills. The sales associates are adept at building customer relationships and explaining the product at a basic level. The nuts and bolts of the installations, however, will be left to the installers who have completed NABCEP training and certification, as a minimum.
For the customer, there will be on-going reality-checks with regards to delivery time and business plans. For example, we are integrating a new tool on our web site to predict actual site review and delivery times. Part of the training will be to help the customer understand the issues that may arise – even the risk that customers may not receive a system if all of our requirements are not met.
Q: The site also indicates that the sales strategy is pure MLM (multi-level marketing - think Amway). Yes, this marketing method can work, but it can also have a life of it’s own and create major problems for customers in terms of fulfillment. How is CitizenRe going to avoid the problems inherent in this sales method? I saw that in a few states, sales people are prohibited from buying more than about $495 of “sales aids” in the first 6 months of their employment. How much does the average sales person outside of these limiting states purchase in “sales aids” in the first six months? Is this a major revenue stream for CitizenRe at this point?
A: We prefer to call this “Direct Sales”. We do not emphasize the multi-level aspect (the purpose for signing up is to sell solar, not to enlist downstream sales reps), and are taking steps to make sure that the sales royalty stream is fair.
There is no cash contribution required from a sales rep – just time and a willingness to learn about solar electricity. We actively discourage sales reps from spending their own money for advertising (although a few are). We have several cooperative marketing agreements with non-profits and other companies to drive customers to us. These qualified leads are given to our associates to respond to – without charge. We have refrained from bringing this channel online and from starting our PR program at this point specifically because we know now that our sales team needs another level of training. We want to make certain that the first interaction customers have with the PV industry is a good one. As a last point, unlike MLM organizations, we ask for no money from our sales associates, and do not sell advertising or training materials.
Another way of putting this is that your grandmother could tell her friends about the possibility of solar electricity, and qualify leads. It’s the franchised installer who makes the final decision as to the viability of the site and system size.
A Threat to the Solar Industry?
Q: And the most fundamental question is, is CitizenRe out to put all other solar businesses out of business, since who will “buy” a system when they can just pay the electric bill at whatever level they are at?
($0.07 anyone?) Yes, we’ll all be able to install for CitizenRe. Not the profitable business we’ve all been trying to build. Especially if we’re only going to get paid for 1/2 day per job! But more importantly, if CitizenRe succeeds in stealing all the customers for the next 6 months, then fails, we’ll have the double hit that many dealers will go under (no sales is bad for business) and then CitizenRe will not deliver (from what I see, highly probable). So here we are with one firm playing Russian Roulette with the entire industry, and perhaps the future of the US.
A: We understand very well that there is a great deal at stake here, and that Citizenre’s actions will have significant ripple effects for the industry and for the country.
We share the conviction that widespread solar implementation is an urgent part of the solution. It is not our intention to put the rest of the solar industry out of business—far from it. However, it IS our mission to change the trajectory of the solar and distributed generation industry. We plan to bring solar into the mainstream in a way that has never been possible before.
We understand that we are committing ourselves to a strategy that has some very big risks. Is it our intention to “play Russian roulette with the entire industry”? Of course not. Do we understand that competing against this strategy is going to be very difficult for the bulk of the existing industry? That it will inflict upon them the need to dramatically change their own business models in order to survive? Yes, we understand that. Yet we also know that the future landscape of the solar industry can’t be predicted with any certainty. In that sense, all of us – big companies and small, old and new – face the same challenge. We must all do the best we can to anticipate the future’s competitive challenges, and either adapt and survive, or fail in the attempt.
If Citizenre does not move ahead with its business plan, others will follow. The solar industry is about to change in very positive ways. There will not be a shortage of jobs – quite the contrary – there are opportunities in this business model for all of us, and many new people. We need people to handle logistics and distribution. We need a network of good installers ranging from large contracting firms in city areas to “one-person” shops in more remote areas. Our first PV plant alone will employ 1600 people.
Conclusion
Ok, that’s a good start. Nothing hard to answer here, nothing that takes research on the part of the company. Just real hard questions that will tell us if there is anything behind the smoke. Thanks for your time in answering this Rob.
And thank you for asking. Now I would like to ask you a question:
Is it better to try for a quantum leap that results in PV power costing less than retail electricity? Or should we sit back doing business as usual, letting the government tell us they are supporting solar while they spend many times the annual SAI budget every week in Iraq.
Please give us a chance to move ahead and to succeed. There is a huge amount of effort that has gone into forming Citizenre.
It’s easy to attack a new idea, and to be fearful of the consequences of change. There are many in the industry who support us wholeheartedly and look forward to a time when PV has cost parity with other forms of electric generation.
There will be plenty or work for all of us. Solar Energy is abundant.
Dr. Robert Wills, P.E.
CTO, Citizenre
For your information, if you would like to understand more about our business plan, we would recommend beginning with the following documents:
“Solar Energy: from Perennial Promise to Competitive Alternative” (Greenpeace/KPMG)
“Financing Large-Scale Increases in PV Production Capacity through Innovative Risk Management Structures and Contracts” (REPP), and
“What the Solar Power Industry Can Learn from Google and Salesforce.com” (The Topline Strategy Group).
All are available on the web via Google search.
February 13, 2007 at 11:31 pm
I’m the person who wrote the article on RenewableEnergyAccess.com. http://www.renewableenergyaccess.com/rea/news/reinsider/story?id=47419
The information just posted above by Rob Styler was received by me days prior to finalizing my article. (It was posted to a list serve I belong to, at the direction of Rob Wills.) My article took account of these answers, in context with all other information received from other sources and found on the internet. None of my assertions or conclusions found in the article change based on the above information from Mr. Styler / Mr. Wills.
February 19, 2007 at 6:24 pm
I am fascinated by CitzenRe. I have been pricing solar systems, and I find them expensive these days. We do have solar hot water. Still what do I know about the efficiency of the systems you build? I need to know a bit more.
[Editor's Note: Solar systems aren't cheap. They are the Cadillac of environmental choices, ranking right up there with buying a hybrid car. I don't actually sell anything, just give information and my opinion. I can tell you that you'll be waiting for at least another two years for a CitizenRE system and in the meantime, legitimate businesses will have their potential customers continually saying, "But CitizenRE gives it to me for free." Right, if you ever get one. And you get the benefit you pay for - you own your own system, you take all the monetary and environmental savings. CitizenRE owns your system and you get a fraction of the benefit (you still pay them a monthly fee) and no environmental savings (they likely legally own that too).]
February 20, 2007 at 1:30 pm
[Editor's Note: This email from Jeff Wolfe may or may not be authentic (I'll remove it if I find out it's not), but Jeff has publicly stated his position in the Renewable Energy Access podcast interview. To paraphrase: "If CitizenRE puts me out of business and sells thousands of systems, so be it, that's competition. But I won't be put out of business by someone who has a high likelihood of selling nothing." And that's the threat that CitizenRE represents - putting potential customers on hold for 2-3 years. Sure, some customers never would have bought a solar system the traditional way, but some would and that represents the industry's contention. A 40% growth rate and 35,000 installed systems in the last 5 years (over 10,000 in the last year) is nothing to scoff at - the industry is growing exponentially without CitizenRE and is not broken, contrary to some opinions.]
Howdy Folks a dear friend forwarded this email to me and I just wanted to help Mr. Wolfe get his warninjg out! I have pated it here:
Jeff Wolfe has been very vocal about his concern with Citizenre. He is well respected in the industry and has done much to promote solar.
He has stated that his position is not because of any threat Citizenre could pose to his business. I found this email that was forwarded to me telling about his motivation. It is hard for people to accept or understand a new solution when they feel threatened.
Here is an email from Jeff Wolfe to one of his collegues:
“While you may be done with CitizenRE, they are not done with you. Ignore them at your peril. Seriously.
Get the word out. Visit blog sites and post. On the blogs, direct people to RE Access. Any new info you come across, get to Jim Callihan, Oliver Strube or Stephen Lacey at RE Access. CitizenRE is not giving up, they are not done spending their time, and they are not going away without a fight. And without a fight, they win, because Americans love to “give people the benefit of the doubt”. Unfortunately, in this case that benefit to them puts you out of business while you wait for your customers to finally wake up and come back. Ask Bob-O.
Jeff
Jeffery D. Wolfe, P.E.
Chief Executive Officer
gro Brilliant Energy Solutions”
Is this a person with an unbiased opinion? It is important to understand the motivations of people when you read their words. I don’t know Jeff and I am sure he is very sincere about his concerns, but we all see through a filter or our perception, and this seems to be a filter of self-interest.
March 5, 2007 at 5:59 pm
Interesting,
With this Rob Styler involved, just do a Google and discover he was inner circle with the biggest scam in MLM history, Bill GGould of Equinox which was shut down by FTC, so how smart is management to bring on people like this? Makes you wonder who else is involved with dubious past associations. Time will tell.
March 7, 2007 at 9:47 am
[Editor's Note: I would refer you to the blog series I wrote for GreenOptions.com, which tends to be more formally written and organized - "Not Everything Renewable is Green" (3rd of 3 parts). In general, everyone is struggling with the concept of "revolution" vs. "scheister" and determining which is which. Look at this company ("How to Detect a Solar Scam"), which is definitely leaning "scheister" because they are breaking laws of physics, but they too have a goal of 1,000,000 megawatts in 2007. How does the average consumer know whether that is realistic or not? Is that a lie?
Given my knowledge of the industry, I tend to think CitizenRE's stated goals (see Part 2 of the series here) border on the impossible. When is stating the impossible a lie? 30 manufacturing plants in 7 years? 100,000's of installed systems? If they would have a) toned it down to realistic goals and b) not captured so many consumers with a hollow supply, I don't think anyone would be paying so much negative attention to them really. But as I mention in Part 3, all we're judging is what they tell us, which isn't exactly an objective source.]
From what I can see, there’s a whole lot of contempt prior to investigation going on with this issue, specifically and on the part of the attackers of Citizenre’s new model for solar distribution–there appears to be a deep-seated need to be right, as well. So I ask, what if you are wrong? What if this model does succeed? If you really believe in finding a solution to the problem of our unhealthy reliance on dirty energy–and can stand by the courage of your conviction that we do in fact need change and need to be open to cutting edge ideas and unique solutions that haven’t been tried yet–I ask: why are so many of you insistent upon fighting?
You’re all so sure….well, let it succeed if it can. Imagine if it did. Just how many more folks would convert to solar, vs. the old way?
Maria Calidonna
March 11, 2007 at 12:51 am
Your net.com…please read my bio at http://www.citizenre.com and do you homework before you post innuendos in an attempt to smear someone’s reputation. You can also view the flash presentation I did at http://www.powur.com/join Just click on the link that says, “Why we are different.”
I was the one who helped shut Equinox down. I left, wrote a book (Spellbound, my journey through a tangled web of success) and then became the lead witness in federal court against Equinox. I have spent the last 10 years working with the FTC and the network marketing industry to make sure things are done right.
Thanks,
Rob
March 19, 2007 at 11:35 am
[Editor's Note: Don't feel bad. With CitizenRE we all are.]
Now I am really confused..Will solar be inexpensive enough in “bulk” to install and maintain on the average home, and still make $$ for the company?
March 23, 2007 at 3:20 pm
[Editor's Note: I was on a conference call recently where the speaker estimated that 25-33% of the commercial solar markets in California in 2006 operated on the PPA rental model (and California is 75% of the U.S. solar market), similar to the retail side of what CitizenRE is proposing. The model is out there and works, but again, CitizenRE has no experience in doing it themselves.]
CitizenRE strikes me as a religious cult working the public’s fears, good-hearted convictions, and lack of knowledge to forward their own agenda. They espouse belief over fact, loyalty to company above all else, and smear the detractors with the ‘We’ll show you’ line. Two years from now we will all laugh at the ridiculous hype that surrounded this company that is more marketing than manufacturing. They use borrowed money to tell everyone how wonderful they are, spend no money on an actual staff, and sell no products or services.
So far as I can tell, there is no major industry in today’s marketplace that works on the business model put forward by these folks. I wonder if 100 years ago Henry Ford had a similar business model we would be driving cars today. Imagine, instead of creating a manufacturing technique to make his product affordable, Henry Ford said he would drive down costs by ‘eliminating the middle-men’ and went about trying to build the parts supplier, the car manufacturer, the dealerships, and the service stations across the country. His company would then give people the cars for free, pay it’s employees who don’t really work for the company only when another person takes that free car, and only charges them for the gas, which must be purchased from him. Granted the analogy isn’t as clean as I make it sound, but no other industry works like this for a reason. Parts suppliers, manufacturers, retailers, installers, service technicians all have a role to play in every industry, and no amount of marketing is going to convince the majority of consumers that one company can do it all well.
I am not trying to portray CitizenRE as a company full of crooks. In fact, my guess is these people are hard-working, honest folks who are trying to make a difference in this crazy world we live in. They are, however, [deluding] themselves. In the short term, they are going to give this industry a bad name, but eventually they will fall apart or turn into some business model that works. I guess I do agree with CitizenRE on one thing, we’ll just have to wait & see.
March 24, 2007 at 11:27 pm
Geoff:
Similar models would be cellular phones, home alarms and satellite TV. All had a high cost of entry and limited market penetration. Then they offered a “free” product with a monthly service fee and open the market to millions.
We will have franchisees to install and service the product and will have 1,600 workers to manufacturer it. Our independent reps are just our marketing arm.
We have just posted our new training and test so they can better prepared to represent our solution in the marketplace.
Shirley…to answer your question, you have it right. We are bringing solar power to the market at cost parity with utility pricing.
Thanks,
Rob
March 29, 2007 at 10:28 pm
Rob,
You do not bring anything to anyone for any price.
Yes, you talk about bringing something to someone at some price, but six months ago it would be in a few months. A few months ago it would be next month. Now, still nothing.
CitizenRe is going nowhere and those who follow will get nothing.
Wake up people.
April 16, 2007 at 2:09 pm
Interview with Jigar Shah of SunEdison, who’s company utilizes the third-party leasing model for commercial customers…
Click here
July 9, 2007 at 10:59 am
[Editor's Note: Nothing.]
Any update on this story? Did Citizenre announce plans for the factory & production, etc. We haven’t seen any news … and as a solar installer, we’d like ot know status
July 17, 2007 at 8:38 pm
[Editor's Note: We've heard this before. All talk and no action thus far.]
I was on conference call at the end of last month-June- and the word was that a press release reagarding the plant location was about 3 weeks away. I have adopted a wait and see attitude.
August 22, 2007 at 9:09 am
Yesterday, Citizenre released a press release announcing their “financing team” that will help them raise funding. Citizenre does not have any funding. You don’t make this announcement if you have already closed financing. If you have funding, this is not news.
My analysis from six months ago that Citizenre is a highly unethical attempt to prove that there is sufficient demand (e.g. FRAs) to justify financing remains valid. Unfortunately, Citizenre’s timing is lousy and they are extemely vulnerable because they tried to sell first and only after the succeeded in selling, finance and build long-lead time infrastructure (PV and inverter manufacturing plant; thousands of installations dependent on equipment made in the plant).
We are several weeks into the worst credit crunch since 1973 and possibly 1929/1930. Lending has largely stoped - particularly for sub-prime and alt-a mortgages, jumbo mortgages, asset-backed securities, junk bonds, commercial paper, M&A takeovers, and pretty much all lending below AA or AAA. Major banks and investment banks have several hundred billion worth of loans made in the last couple of months (mostly for M&A deals and asset securitization deals) that they are unable to sell to investors without taking major losses. Everyone is scared and pulling back right now. For the little bit of lending that is available, credit spreads have increased by several hundred basis points. This means that if you were expecting a 5% interest rate in July, you may be paying 7% or 7.5% in August if you can still get the loan. Any assumptions about financing that are more than two weeks old have to be revisited. A month ago, GE Money was willing to finance PV systems for single family homes at rates between 7.5% and 14+%, but wanted 5 to 7 year terms. However, even then, they were more interested in commercial PV loans than residential loans. GE is still trying to value the collateral value of home PV systems - there are a lot of technical challenges and costs associated with removing PV systems and a used system may only have value for the first five years.
For Citizenre, they have the assumption that they can essentially give low interest, no documentation, 25 year loans to their customers (a lender’s view of the FRA cashflows). This is essentially a sub-prime, unsecured loan, and any asset-backed security based on a pool of these FRAs would be extremely hard to value right now. The default rate on FRA’s is unknown. Likewise, the cancellation rate and the effective duration of the FRA stream (e.g. how long the average customer has the system on their roof given the easy cancellation terms) are also unknown. Right now, investors do not trust the investment bank valuations of asset-backed securities because 1) there is really no liquid market for these, 2) everything is marked-to-model (where the model is an investment bank spreadsheet) based on investment bank assumptions that may be questionable and overly optimistic, 3) there are major conflicts of interest by the rating agencies and investment banks, and 4) there has been way too much fraud in this space (as much as 50% of all sub-prime loans may have been tainted by frauds committed by one or more of the parties involved - the borrower, the broker, the originator, the rating agency, the investment bank, the appraiser).
If you change the assumptions, Citizenre’s model will break down. There are four major vulnerabilities to Citizenre in this credit crunch:
a) Customer Credit Worthiness Risk: Since no customers have completed credit checks, we don’t know what percentage of them have prime credit. A significant portion of the 19,700+ customers may not have acceptable credit scores and their FRAs may not be financeable.
b) Interest Rate Risk: If Citizenre has to pay higher interest rates, their margins will decrease, making the service uneconomic for them to offer in some locations. This means that they either a) have to raise the rates they charge (which could make the KWH cost of electricity higher for their customers than they pay their utilities) and/or b) have to exit certain markets - particularly those with low interest rates. Again, a large percentage of customers could be lost if entire states have to be abandoned or if Citizenre is forced to change the rates promised.
c) Geographic Risk: Lenders may avoid investing in asset-backed security loans from certain regions that are particularly hard hit by real estate mortgage foreclosures. 50% of the sub-prime mortgages in the past three years were issued in California and Florida. Unfortunately, California is the most attractive solar market in the country (~80% of the US solar market).
d) Contract Language Risk: Lenders may object to certain terms in the FRA contract and require changes. The financing term has the greatest impact on the economics of FRAs. If lenders require shorter terms (e.g. 5 to 7 years, instead of 25 years), Citizenre cannot offer FRAs at their current rates.
Even if we assume that this deal was fundable in the second quarter of this year, today it is toxic and unfundable given the credit crunch. When one adds the other risks in the deal (execution, inexperienced management team, technology risks, manufacturing risks, MLM marketing scheme), it becomes even less likely to get funded.
September 21, 2007 at 11:51 pm
Dr. Richard, you bring up some very valid points. I would like to know why you and other so called experts think that the management panel involved with CitizenRe has not thought of these concerns? It is not rocket science (although Dr. Wills could handle that) to solve all of these challenges. Give them space, time and the drive of their ecoprenuers and they wil get there.
October 20, 2007 at 11:30 pm
[Editor's Note: Don't hold your breath.]
I am curious as to whether anyone has any further information or analysis concerning the viability of CitizenRE and whether it is actually a legitimate company.
I ran across them again today at the state fair (after learning of them months ago online) and they offered 1 to 10 kilowatt systems installed for a deposit of only $100.00 per kilowatt (as pertaining to the size of the system, not as in kilowatt-hour, of course) with no additional fees other than 10.5 cents per kilowatt hour for the energy generated by the system.
They did say it may be about eight months before an install could be done.
Is this a company that is just taking an extremely long time to get off the ground?
October 30, 2007 at 2:40 pm
I must’ve been asleep for the past year. I just heard of this company for the first time last week. I am a conservative American who has invested (and lost) in solar water systems back in the early ’80’s; has spent the higher costs to build a “smart house” with passive solar systems and “healthy house” materials in the mid 80’s and expected that the WORLD would beat a path to my door to copy my example…they didn’t. Seems I was one of the pioneers that took the arrows so that another could follow with more success.
I am not shy to proclaim my dissatisfaction in our elected political officials and the way they treat our hard earned tax dollars as their own. The fact that they can agree to billions of “pork barrel” gifts back and forth amoungst themselves without the say of us taxpayers. To make decisions about granting big oil special tax favors, and about eliminating favorable tax treatment to ECO-FRIENDLY issues if they feel so inclined.
I am disgusted that as the citizens of the world leading economic and military power, we have little or no resolve to PRESS our politicians into doing what is right for our country and for this beautiful planet that we occupy. Status quo sucks!
I am disappointed with the ease that we find ourselves at war over natural resources (oil), and at the complexity in fighting a so-called “just” war (political rules that any “real” war couldn’t abide by). I don’t want to send my sons and grand sons and daughters into harms way if my elected officials are going to stack the deck against them…war is war, if you declare it you go out and win it as fast as can be done… without “rules”.
I want to believe in the CitizenRE model, as sketchy as it appears to be. I will add my name to their list of potential customers TODAY, as they are not asking me for a single penny. IF they fail to deliver, I’ve lost nothing. IF they succeed in manufacturing what I’m willing to spend my money for, and the cost of the rent on my system is a bit more costly than what I’m currently paying my utility provider, I’LL HAPPILY PAY IT, because the direction is GOOD. I would love to see my country make significant strides into becomming energy sufficient, to stop sending billions of dollars to countries that don’t even like us, and to reducing the burden on the earth to sustain life.
SURE, I’ll take one of those systems. Bring it on. I’m getting old, and I dislike waiting in line, but I’ll wait outside on a cold rainy night for this.
November 10, 2007 at 10:40 pm
I have heard many people refer to CitizenRE as a scam. To me, a scam is when some one takes your money and does not deliver what is promised. I think this venture should go in the DIFFICULT column. To do David Gregg’s vision is an incredible undertaking. What i do know is that others dont have the stones to try this type of endevor.
There is a problem however, the problem is with the negativity and venom that flys around on blogs no matter what you are doing! Nobody can ever do anything right for a blogger. Give um a break, let them work it out, and if it works, everybody wins, and if it doesn’t the ones who really lose are the guys who have poured their blood, sweat and tears in trying to get this off the ground. Just think about that, there are real people busting their balls trying to move this forward.
November 16, 2007 at 10:44 am
Well, I signed up for them and I also looked into the idea of promoting them.
It has been nearly a year since I found out about them.
Now I am constantly getting unsolicited emails from their representative assigned to my area.
The emails are typically for “other” MLM/Pyramid schemes, pushing personal political agendas and so forth.
I suspect (but cannot prove) that this is a regular MLM type company that came up with great promise of a non-existent product that will never come to fruition in order to harvest contact information and to sell others on their “additional opportunities”.
Deeply saddened with them.
November 25, 2007 at 12:09 am
I am downright optimistic about my pessimism. Similar to Will Rogers (whom I remember well), all I know is what I read in the National Geographic. It is like what I overheard at the Wright Brothers Bicycle Shop: “That thing will never fly!” I am optimistic that Citizenre” will succeed. If they do, I will have a very profitable and enjoyable time. If they do not, I will have had a very cheap and enjoyable time. Either way, I have an enjoyable time. I think looking forward to something pleasnt if far more wothwhille than griping. You know with absolute certainty that you are going to die. Why not look forward to the resurrection rather than debate its existence?
Jack
December 3, 2007 at 10:48 am
[Editor's Note: Talking about being risky and doing it are two different things. I haven't seen any tangible action by CitizenRE. And their plans are wildly out of proportion with reality. They simply can't make things pencil out profitably in the residential market. And like I've said many times, this business model is already being utilized extensively in the California and New Jersey (and soon a handful of other states) in the commercial sector. It will trickle to more states and eventually to smaller systems, but in logical manner that follows profitable directions.]
I will wait, too. I am an eternal optimist; yet, I believe that someone must take risks to guage market demand for the product. I know there is a market, but we need someone/something with eough youth, fearlessness, and resilience to pave the way.
Humans forget quickly, especially if they do not invest a lot of money. The electric utilities could subsidize this enterprise, or may buy them out. We need boldness to take RE to the streets.
Dee
February 11, 2008 at 2:49 pm
You missed another way consumers will lose out. What happens to that down payment of over a thousand dollars when the company goes out of business before installing the system?
I signed up last year. Figured it was a no-risk proposition, since I signed up during the “no down payment required” period. Got a letter two weeks ago stating that that contract was invalid because of some Wisconsin law and I needed to sign a new one, AND send in a hefty down payment. I got burned last year by SunRocket going out of business after I paid for a year’s worth of service in advance. Not going to happen again.
June 4, 2008 at 3:24 pm
Minnesotans have a way out at least, and hopefully the rest of the midwest within the next few years. New company freEner-g is doing almost the same concept, leasing solar panels for residental http://www.mysolarlease.com