A CitizenRE Competitor (but no FREE! solar)

[Update 1/8/08: Helio Micro is now moving into the residential PPA market, creating a third residential PPA style company.  Their website is more murky than Sun Run (below), so you can't evaluate much of anything (which always causes me pause), but they just hired a finance director from SunPower (Solarbuzz article).   To my knowledge, none of the three has installed a system under this model...yet.  Remember: hype (!) = cover-up.  This will happen in California first and then trickle elsewhere - don't hold your breath.  NJ just voted to provide rebates to everyone on the waiting list, but not anyone new as they transition to a market incentive, which is good in the long run, but creates market uncertainty now (article).  So their market attractiveness to this model is on hold.]

According to a news release on Renewable Energy Access, CitizenRE now has a competitor in the residential solar-leasing services industry (of which there are no documented installations as of yet). It isn’t FREE! but I predict they’ll beat CitizenRE to the punch in having actual solar installations…

Borrego Solar, a solar installer since 1980, has a partnership with Sun Run LLC and is now offering a similar solar-leasing product to CitizenRE, but they have a bit of realism embedded in their business plan. It is currently only available in Contra Costa County, California on a pilot basis (not EVERYWHERE for ANYONE!).

Essentially, they install a solar system on your home and if it offsets your electric bill 50%, you pay 50% to your electric company at their prices and 50% to Sun Run at their prices, which are either fixed or declining.

Sun Run’s website has some information about the process on their website (no contracts or clear costs persay) and there are two options:

1. Higher downpayment with a fixed 20 year solar rate

2. Lower downpayment with a higher but declining solar rate

The solar rate they give in their example, shows the higher down payment of just over $16,185 (not FREE!) and a solar rate of 13.5 cents/kilowatt-hour, which seems expensive but California has high rates (actually, even in Maryland, I pay 15 cents/kWh). It should be noted that the $16K down payment is still $20K less than buying it yourself, based on their math.

Before solar, this example home pays 26 cents/kWh to the electric company, and after, they pay 17 cents/kWh to the electric company (since they’re now in a lower rate tier with solar because they are consuming less) and 13.5 cents/kWh to SunRun at a 20-year fixed rate.

If electric rates never rose, you would break even on this investment over 20 years if you used over 23,000 kWh/yr, not counting the cost of money (that’s a lot - I use 3600 kWh in DC). So, you are really banking on electric rates rising to recoup your up-front investment on a quicker basis, and using a lot of electricity (but cut your electric bills first!).

The second option doesn’t have an example on their website, but would be something like paying $8,000 up front and your solar rate being 18 cents/kWh in year 1, and declining to 13 cents/kWh in year 20, when conventional electricity prices are presumably much higher. Ultimately, the economics are probably the same for either option for the company but gives the homeowner the option to make a choice on the amount up-front.

On it’s face, this sounds like a much more reasonable alternative to CitizenRE:

• No hype
• Actual employees
• Financial numbers that are realistic (not FREE!)
• Pilot program to prove the model
• Working with an established solar company
• Limiting the scope to states/markets that make sense

There are only a few places where some combination of electric rates, amount of sun, and solar incentives make this possible - California, New Jersey (when they aren’t running out of incentive money), maybe Arizona, Nevada, or New Mexico. Hawaii has sun and rates but not incentives. The East Coast has high rates, some programs, but less sun. Colorado’s sunny and has incentives, but the rates are a bit too low (and they may run out of $/motivation soon if they aren’t careful by growing too fast).

Like with all things, if it sounds like a silver bullet, things are almost always more complicated than they seem. I know nothing about either of these new companies, but on their face, the programs have a measure of realism to them that CitizenRE never had (note past tense).

As has been pointed out in the past, this is only “new” because it’s being done on homes, which are higher cost per amount of solar installed. Large business no-cost solar systems are a common part of the solar industry in California and New Jersey already.

This provides an interesting reference for how much CitizenRE would have to further reduce costs to get to their goal of a $500 down payment and solar across the country. Just to operate in California, they’ll have to deal with the over $15,000 they’re not getting from the customer, and in other states, the lower electric rates and solar resource. My original 3 part series on CitizenRE can be read here - “Not All That’s Renewable Is Green - Part 1 of 3″.

Solar Energy vs. Wind Energy Advertising Smackdown

Those darn Europeans! They’ve gone and created melodramatic renewable energy commercials!

Power of the Sun (Bronze Medal Clio Award Winner)

(Apparently Solon has gotten negative feedback that the batteries look too much like bombs, aka terrorism attack.)

Power of the Wind (“Golden Lion” Winner at the Cannes Advertising Festival)

(Honestly, the wind one would be a lot better if they closed with a helicoptor pan of the “wind guy” on top of a wind turbine raising his arms in victory to more strongly tie the link.)

Renewable Energy Might Not Help Global Warming

Isn’t that a loaded title? But if that’s what it takes to get your attention…

I’m going to show you a pollution policy slight of hand…How renewable energy helps global warming when there aren’t any greenhouse gas regulations, and doesn’t when there are…Impossible? Read on.

Most people think global warming is bad and most think that renewable energy is at least one solution to it. But it really depends on the regulatory framework that a government implements.

One of the most popular is called “cap and trade,” which was wildly successful at reducing sulfur dioxide from coal power plants, i.e. acid rain. Essentially the government tells industry the total amount of carbon emissions in tons that they can emit and allocates a proportional amount to each power plant as “emission permits,” either through historical generation data, an auction, or some other method. If you emit 100 tons in a year, you have to have 100 tons of permits at the end of the year. If you were allocated 75 tons of permits, you have to either reduce your emissions 25 tons by adding new technology or buying permits from someone else who reduced theirs. If you don’t, there’s a penalty, usually a fine. And the cap theoretically goes down every so often, leaving less emissions permits. Those that want to innovate can and those that don’t, don’t have to. It’s not free - industry still has to pay for the reductions somehow - but it allows the cheapest options to oversave and sell their permits to the more expensive options. Making your plant more efficient, using renewable energy, or if allowed, preserving forest in Costa Rica could all be options with different costs. Genius.

But here’s the catch with renewable energy (or energy efficiency for that matter) - under a traditional cap and trade system, the carbon emissions are the same regardless of whether there were 0 wind turbines or 5000. The emissions are capped and the carbon savings are resold as permits to someone else so they can emit their carbon. One of the big questions, is who should own the permits, the wind facility or the coal plant? But that’s a policy decision, not a technical one. Of course, you get more energy to work with (extra electricity, natural gas, or whatever) that was freed up by the carbon-free wind turbine, but the emissions will still happen. Under a cap and trade system, renewable energy makes us more carbon efficient but doesn’t reduce carbon more than would have already happened.

In a carbon-only regulatory framework, if wind energy is a cheap carbon-saving option, it will still happen, bringing all those lovely value-added economic development benefits. But you’ve probably heard of these state requirements that 10% of electricity be from renewable sources in various places - renewable portfolio standards (RPS). This is a totally separate requirement from a carbon one, at this point. There’s almost always a similar permit trading mechanism (they call them credits though) - someone can overgenerate their renewable energy sell it to someone who undergenerated. Wind energy that is the cheapest renewable resource would get installed.

If a wind turbines constructed for an RPS can count toward a carbon-cap and trade, the result is the same amount of emissions regardless - the “cap” is the limit. The usually set by some compromise between politics and science and will lower the levels of emissions in a predictable pattern over time. This effectively sets the carbon permit prices at the incremental cost of the wind energy over the wholesale cost for the RPS portion of the carbon reductions.

But if they don’t count and an RPS is over and above the cap and trade limit, those additional wind turbines are saving carbon - cap + RPS. You would have wind turbines being built, some of which are saving carbon and some of which aren’t, depending on where the “permits/credits” are applied.

That’s the nutshell version. There are a lot of legal frameworks that have to get developed to figure out who owns what under what regulatory regime. I’ve heard of an idea in Britain to create a cap and trade system for the average consumer…You get an electronic card and have to use it to deduct carbon from your carbon account when you buy gas, use electricity, etc. If you run out, buy more from the “market” or do without. This seems awfully complicated for the average consumer and would probably make them resent global warming more than their concern cares for it, if not for the very visible costs it creates (if it happens at the industry level and prices rise, it’s more hidden and can be blamed on other things like weather, market speculation, etc).

Does this mean we shouldn’t install wind turbines? No. Under a cap and trade, they would make us more electricity efficient - we’d get more electricity for the same amount of carbon, which is a good thing. Think of them as one of many options for allowing more electricity for the same carbon. But the level of carbon wouldn’t actually be reduced any more than normal. Of course, there could be a day shortly where wind energy is implemented because it’s cheaper and provides a nice portfolio diversification for electricity generation that provides a measure of risk management. That’s what we ultimately want in the end.

Resource: Implications of Carbon Regulation for Green Power Markets (National Renewable Energy Lab, 2007)

A CitizenRE Story

In a county near yours, there were 10 small organic farms. These farms had sprouted up over the last ten years, through a lot of hard work and determination, and now a small but growing community of farms were sprouting up across the county. All the different farms were certainly competitors in one sense, but they all found that it helped them to work together to promote the health and environmental benefits of small, locally produced, organic food to the area’s residents.

These farms are “CSA’s” - community supported agriculture. Basically, local residents, usually from the city, sign up for a “share” of the farm and get weekly deliveries of whatever the farms grows - carrots, corn, peas, potatoes…you name it. They pay all the money upfront, anywhere from $300-500, and take whatever the farmer can deliver over the course of the season - a box of vegetables is delivered every week. Every season, something fails - the deer eat the beets, a drought knocks back the corn, or the potatoes get a fungus. Hopefully not all at once. But regardless of what happens in the fields, the participants share the risk with the farmer, who has some upfront money to run the farm.

Not everyone can run a farm and some go out of business, but over the years, CSAs have become pretty popular - 10 in this county and a few thousand across the country with almost 50,000 customers participating now. They’re not Walmart or Whole Foods, but “local” foods wouldn’t be part of the national discussion without the collective efforts of CSA farms and their customers.

One January, a new mega-organic farm is announced - bigger than a 100,000 farms put together. The biggest farm in the world in fact. Instead of asking for the $500 up front, they’re offering organic vegetables delivered to anyone in America’s door for $25/week on a pay as you go basis. Just sign up and starting around June, they’ll deliver the vegetables. And they seem to be everywhere - fliers all over town, in every town. Ads on the internet. Everywhere. Some of your customers start to call and ask who they are and why can’t you offer the same deal? Some leave. Some stay. You’re having a hard time recruiting new customers - everyone seems to be signing up with this mega farm because it’s free. Or waiting for the season to start to see how well it works.

No one has ever heard of the owners. No one knows where they’re going to locate. No one knows how they can afford all that land. Can they even farm? Do they know how to space out plantings to get a consistent harvest over the season? Do they know what to do if cabbage bugs ravage the fields? No one knows. They claim to have all these fancy planters and harvesters and seeds that you’ve never heard of. They’re going to build factories to build all of the machinery and have scientists working on these new seeds - we’ll revolutionize everything they say. A lot of people are talking and most don’t know the difference between what’s true and what’s not. Don’t they know that some of this really isn’t possible? You can’t figure out for the life you how they can afford all this or even if it’s going to work. Even they admit here and there, that it’s a stretch - some things may work and some won’t they say, but it will all work out over the next five or ten years.

By April, you’ve lost half your customers and can’t seem to get anyone new to sign up…The other farms are in the same boat. You buy what seeds you can with the money you’ve received and plant vegetables for your customers that signed up. By June, the mega-farm company announces that they are delayed a little bit and won’t start until next year after-all. The factory to make the combines is delayed and the seeds in the lab still need some work. Some of your customers come back and ask about signing up again, but it’s too late to plant more - the season is too far along.

You struggle through the season and try to make do. The newer farms in the county don’t have much savings and three shut down. The mega-farm apologizes to everyone and says that they’ll really get it going next year and not to worry. It’s all just too unbelievable but no one listens to you. Next year, for sure, the mega-farm will start and isn’t it great that you don’t have to pay anything up front? Just pay for what they deliver.

Next spring, some of your old customers come back, but not many. It seems like everyone is just itching for this mega-farm to work. Won’t it be great? Cheap organic food delivered to your door. No up front money. And all the new technology - so modern and advanced. Imagine! All these small farms are just doing it all wrong - digging in the dirt with their bare hands and tools, maybe a tractor. The organic industry needs to get big to get successful - I’m sorry but you’ve had your turn and its frankly time to move over and let the mega-farm fix everything.

But the same thing happens again. You can’t sign up many new customers - everyone is waiting and hoping for the mega-farm to get going. No new farms are starting and many are closing. Sure, a lot of these people never would have paid $500 up-front for vegetables, but what was really promising and growing - new small farms, sold-out shares each year, and in the big picture, thousands of happy customers - is now dimming as everyone waits for the mega-farm…

Not All That’s Renewable is Green (Part 3 of 3)

[Update 8/27/07: CitizenRE now has a competitor...]

[Editor’s Note: This is a repost of a 3 part series I wrote on CitizenRE at GreenOptions.com, titled “Not All That’s Renewable Is Green” (Part 3 of 3). Access Part 1 and Part 2.]

The most common response from CitizenRE supporters¹ is that since no money changes hands, no harm is done, even if CitizenRE doesn’t deliver any or is delayed in delivering their promised solar systems or manufacturing plants. “Who cares if CitizenRE fails? At least they tried.”

This is a really limited point of view… At least some of the misgivings about CitizenRE are their isolated, and often naive, approach to transforming the industry. There are a string of stakeholders involved in the development of the evolving solar industry. Other solar businesses, non-profit organizations, investors, the government, and policy makers played an important part in the successful growth of the solar industry to date, and into the future.

CitizenRE could be an amazing success or a total failure. There’s not a lot of information to judge them on, other than what they tell us. I would define their short-term success (the next two years) as building a manufacturing plant and setting up 1,000 or more rental systems. If they can do these two things, which are astronomically lower than their own projections, they will have accomplished something significant. Based on a) their current progress, b) their lack of focus, and c) the high number of “moon shots,” I personally think the delays will continue and the actual accomplishments will be limited.

However, it might be constructive to look at the question of CitizenRE’s impact on the various stakeholders. How does their success or failure affect everyone? In the interest of space, I’ve limited my discussion to four main stakeholders:

Consumers: This is the first stakeholder everyone thinks about, and includes both commercial and residential sectors². Since part 2 was published, I’ve struggled with the passion of the debate on both sides, trying to understand why this company in particular has resulted in such a strong reaction. I think the existing industry is most sensitive to disaffecting residential consumers, and CitizenRE’s apparently hollow marketing effort targeted them first and foremost (September 2007 installation timelines have now been extended into 2008 and beyond). The proverbial black-eye looms potentially large.

No money has changed hands, but goodwill has…CitizenRE’s failure isn’t just one less installation to any one consumer. It is their (and their friends’ and families’) future interest in supporting the technology or additional federal and state policies. CitizenRE’s failure will also create stereotypes in a lot of minds about the viability of solar who never “signed up,” even as the industry changes (You wouldn’t believe the number of people who still cite the solar hot water debacles of the 1980’s.). CitizenRE’s success provides obvious consumer benefits, insurance against electricity price increases, and potentially on a scale and in a sector no one thought was possible.

Interestingly, I don’t see everyone everywhere adopting this rental model, though. Why? Risk and reward. As electricity prices increase and solar prices decrease, you get a greater return from owning a system. Owning a system is an investment rather than an insurance policy.

Installers: Installers represent the market segment who could see the most direct financial repercussions from CitizenRE’s failure by putting their potential customers in a holding pattern. Most of CitizenRE customers may never have purchased their own solar system in the next 6 months…many over the next 2 years. But if 100,000 people “sign-up,” 100,000 “wait and see,” and 10% of those would have considered purchasing a system over the next two years. Thus, 20,000 potential sales were turned away. CitizenRE has now acknowledged this potential and when customers sign up, they are given a greater amount of disclosure about the possibility of delivery delays; it remains to be seen how this issue will play out.

CitizenRE’s success will put some people out of business, but frankly, that’s capitalism. It could also represent a new set of opportunities for existing or new installer businesses. An important part of moving forward is the training and use of certified installers, which CitizenRE has not appeared to immediately address (which is not surprising given all that’s on their plate)³ .

Investors: Investors themselves are probably the market segment that I have the least bit of personal concern over…They need to perform due diligence in determining where to invest their money. But a colossal failure, by CitizenRE or any other major solar endeavor, could create a chill in the ability of future technology and ventures to raise similar capital. Renewable energy is the current investor darling. Everyone is falling over themselves to push money into CleanTech investments, reminiscent of the dot com frenzy. Will an over-exuberance over poorly-thought out companies cause a similar industry correction? CitizenRE’s apparent colossal nature, and the results it does or doesn’t accomplish, makes its current and future peers highly scrutinized targets.

Policy Makers: Solar is a subsidy-driven industry. So is wind energy, coal, petroleum, and natural gas. It is politically much easier to offer carrots than it is to take them away. I guarantee that policy makers are starting to hear about CitizenRE, but their degree of understanding is often limited. “If this company can do free solar, why do you need this tax credit? Rebates? Portfolio standard?” “Why should we start or extend our incentives if they all go to CitizenRE?” CitizenRE needs these incentives as much as anyone else. They aren’t exempt from solar economics, even with their purported vertical integration cost savings. The perception of market readiness can be easily muddied, and their model isn’t terribly repeatable, given the billions of dollars at hand that are needed to get started.

There is the distinct possibility that this flurry of excitement is all for naught. CitizenRE may fade from sight this year, or in five years, and do absolutely nothing. I’m really suspicious about the solvency of their business plan and their ability to execute it. I really don’t appreciate that they’ve created a hollow frenzy in retail consumers before their supply chain and installation structure had any framework. I think they need to focus on doing one or two things well, rather than talking about everything. Or they could prove me entirely wrong…

No matter your opinion, they aren’t going away, and we’ve reached something of a debate impasse. Consumers can read the opinions, largely based on conjecture and one-sided information, and make up their own minds. But until CitizenRE takes concrete and public steps toward their goals or releases verifiable information, not a lot of additional constructive debate can occur (if any of it has thus far been constructive in the first place).

Notes:

1. Interestingly, the most passionate and often argumentative stances don’t appear to come from CitizenRE itself, but from EcoPreneurs and seemingly average consumers. CitizenRE itself has made belated efforts to acknowledge the significance of the existing industry and their desire to respect and integrate within it. However, CitizenRE’s involvement in major solar organizations has been non-existent, even if they are “members” (having registered as the “Citizens Electric Corporation”).
2. If CitizenRE is a business interested in profitability, and that low-hanging fruit represents the best opportunity for stable profits and capturing the best market before a competitor, their major focus on the residential retrofit market is the least profitable approach. CitizenRE is essentially leasing roof space, which is not a particularly limited commodity. Why deal with 100 consumers, contracts, and installations when you can deal with one? Why not work to maximize your most profitable sectors before your competitors do? The most obvious answer is the ready political support that would come from involving average consumers in changing state or national policies. But with bills to pay, can a fledgling company afford this route?
3. The North American Board of Certified Energy Practioners (www.nabcep.org) is a highly recommended pathway for certification.

Not All That’s Renewable is Green (Part 2 of 3)

(Courtesy: NREL)

[Update 8/27/07: CitizenRE now has a competitor...]

[Editor’s Note: This is a repost of a 3 part series I’m writing on CitizenRE at GreenOptions.com, titled “Not All That’s Renewable Is Green” (Part 2 of 3). It will attempt be a more formal accounting on CitizenRE than previous blog posts. Access Part 1 and Part 3.]

The three most common reactions from many CitizenRE supporters when questioned about unrealistic goals is to:

1. Dismiss any questioning as being a solar industry conspiracy against the new competition. However, three other solar companies already offer a similar rental model, and you would be hard pressed to find any serious debate on their integrity.
2. Chastise the existing industry as having accomplished little and not having a real vision for the revolutionary ideas, even though the industry has grown at a rate of 40% annually over the last decade. Thousands of people work in the solar industry, many of whom have no vested financial interest in any one company, and a sizable portion are skeptical of CitizenRE’s claims.
3. Explain what CitizenRE isn’t rather than answering the substantive questions about what it is and can reasonably accomplish.

Ultimately, the skepticism of CitizenRE is founded in overstated plans that have relatively little supporting documentation, other than “trust us.” CitizenRE’s goals are ambitious to say the least:

• World’s Largest Solar Manufacturing Plant - Last June, Nanosolar (a company started in 2001 and backed by the Google founders) announced the construction of a 430 megawatt solar manufacturing facility, the world’s largest. Nanosolar’s new thin film technology was met with cautious optimism: as one industry insider put it, announcing and producing are two different things. CitizenRE states it intends to develop an even larger 500 megawatt solar manufacturing plant that will use a new combination of lower-quality silicon material. Originally slated to begin production in early 2007, the CitizenRE website now states a production goal of early 2008. In a recent interview, Sharp Solar, one of the world’s largest solar companies, indicated they have manufacturing lead times of 18-24 months under the best circumstances, which would further push CitizenRE’s new plant into 2009. The proposed plant is not on the radar of any solar news or industry analysts and CitizenRE has still not announced a location.
• New Solar Technology - CitizenRE’s new solar manufacturing plant will use a lower-purity silicon in the production of the solar panels, in hopes of lowering costs. All things being equal, this will result in a lower-efficiency solar panel. The new technology has no commercial track record. Furthermore, silicon supplies are tight, impacting multinational corporations like Sharp and Kyocera. CitizenRE will also need to deal with this tighter market.
• New Inverter Manufacturing Plant - Solar panels produce DC power, like batteries. Inverters convert the DC power into grid-compatible AC power. CitizenRE also intends to build their own inverter manufacturing plant.
• Third-Party Solar System Ownership - Three companies already offer “third-party ownership,” where a solar company owns and operates the solar system installed on a customer’s building. CitizenRE is similarly proposing to operate the third-party ownership model on residential homes, a scale over 200 times smaller. The also plan to do business in 30 or more states than existing companies currently operate. Industry analysts indicate that they cannot run any realistic scenarios where such a venture could be profitable.
• 100,000 Installations per Year - There are currently about 35,000 solar systems in the United States, with approximately 30,000 (PDF) of these coming in the last six years. CitizenRE originally had a stated goal of 100,000 installations per year, which has since been scaled back to a reported 25,000 per year.
• 2025 Vision - By 2025, CitizenRE has a vision to operate 25% of net electricity generation (presumably in the U.S.), 20% of peak capacity (also presumably in the U.S.), 330,000 megawatts of solar manufacturing capacity, and over 1 million megawatts of installed capacity. It is truly unclear how these are in the realm of reality. They will need to build 660 of their 500 megawatts plants in the next 18 years - that’s thirty-eight plants per year. And the first one has been delayed at least one year.

If any ONE of these things was announced by an unknown company, the idea would be met with serious skepticism. Frankly, if many of these things were announced by an established company, there would be skepticism. But the combination of industry-changing goals, all with serious learning curves, really brings into question CitizenRE’s basis of understanding. Could five established companies accomplish these goals, let alone one unknown?

CitizenRE’s business structure and start-up methodology also raise questions. As a multi-level marketing company, CitizenRE has recruited over 5,000 “ecopreneurs” who are not company employees, but rather associated with the company and will potentially receive a payment based on signing up other customers. Typically MLMs involve emotional sales pitches, sold from person to person, and can be associated with devolving into pyramid schemes, where a few top leaders make money by exploiting the lower ranks.

In CitizenRE’s case, money isn’t exchanging hands, which is frequently cited as a reason CitizenRE can’t be a scam. Instead, an equally powerful motivator is being used, one that drives the environmental movement: hope. CitizenRE is essentially promising THE energy, environmental and economic solution all rolled into one. It’s a powerful emotional driver that has resulted in the viral spread of CitizenRE’s ecopreneurs and potential customers, many of whom are no doubt one in the same, and whom may not understand the nuances of what they are selling or purchasing. Perhaps the promise of a future solar system is reason enough to participate, in leiu of immediate payment. Since ecopreneurs will ultimately be compensated (PDF) based on the number of systems they refer, misinformation and excessive hype has been the common marketing strategy. The company has since disapproved of such tactics, and ordered associates to stop using such tactics.

In addition to the sales force and resulting customers, CitizenRE will also need to train and recruit hundreds, if not thousands, of site inspectors and installers across the country. Not all homes will be suitable and every installation is unique, with the permitting and interconnecting process varying by each locality and electric company. Imagine trying to process 25,000 permits for a backyard deck, a common permitting request, in a few thousand cities. Now imagine doing so with a technology of which the inspectors are only vaguely aware. As permits delay things, installation quality will likely suffer in the name of making up speed and efficacy. And once the installation is complete, the system needs to be inspected for safety with the electric grid. Delays are inevitable at nearly every level of the sales and installation chain.

Ultimately, one wonders why they did it this way - marketing heavy and delivering lightly. Why not start building the manufacturing plant, which in order to raise money from investors or loans from banks, would have to show fiscal solvency in and of itself? Prove that idea. Why not start installing tens, and then hundreds of systems in the California first, the best market for solar systems, and build some industry experience and credibility? Prove that idea. Why not focus on doing one thing well before doing all things hypothetically? I am amazed at how far the hypothetical has taken this company.

Instead, CitizenRE has promised it all to everyone. There is basically nothing they haven’t decided they can do bigger and better than the existing solar industry, as if forging new paths is only a matter of an idea. But ideas are cheap and CitizenRE needs to hit grand slam after grand slam in order to come close to their vision. The shifting time frames and requests for patience have already started, and it is only a matter of time before various parts of the plan fall apart. The best businesses do one of two things - “promise and deliver” or “underpromise and overdeliver.” It’s kind of ironic that the industry is now abuzz about CitizenRE, a brand new company that hasn’t delivered anything…only promised.

Next Time: What effect might CitizenRE’s improbable success have on the industry? What about failure? (part 3 of 3)

How to Detect a Solar Scam

Thankfully, this isn’t about CitizenRE. Instead, we have the DBK Corporation, “The Energy Family - Low Cost Electricity”…

Step 1: Anything ridiculous?

DBK has a goal of 1,000,000 megawatts of solar by the end of 2007 (at least CitizenRE had the sense to wait until 2025). For reference, there were about 5900 megawatts of solar in the whole world in 2005.

Step 2: Anything strange?

Their “new” solar panel has a reported 70% efficiency, a 312% increase over the standard 17%. Look here, they can prove it with fancy language (”multi-junction”) and show you that it puts out 2.8 amps with a fancy meter. For reference, the theoretical limit for photovoltaic efficiency is around 45%.

Step 3: Anything impossible?

It only takes one solar panel to power your whole house. Nothing says powerful like a single solar panel on a gravel roof (picture above). No doubt, that’s powering the whole building. For reference, it would take 6-8 solar panels to generate what they are claiming for their single smaller panel, and it would take 15-20 to offset 50% of the average American home.

Step 4: Anything fishy?

All of their break-through technology costs half as much as their “competitors.” For reference, a 3 kilowatt residential solar system might cost $24,000 before incentives and $14,500 thousand after (really depends on your location and available incentives).

Step 5: Review

No basis in reality. Miraculous technology. Half the cost. It’s gotta be legit! Give them your credit card!

Solar energy works but is expensive. So is a hybrid car. So are new windows and a high efficiency furnace. None are your first choices for reducing energy use and environmental impact when money matters - do the simple, low-cost things first. Use your brain in making decisions.

There are reasons it sounds too good to be true…

On a related note, excessive exclamation points (!!!) have a clear inverse correlation with reputability. This company “Parts on Sale” is a good example. Unbeknownst to most people, they have dozens of sister websites for different cities and states across the country. Google “Florida Solar Rebates” and they are number one, with a different website but plenty of !!!. They have the exact same website for Massachusetts, Minnesota, Colorado, Sacramento, Texas, etc. with plenty of !!!  If you have a good product at a good price, you don’t need !!!.(!)

Not All That’s Renewable is Green (Part 1 of 3)

(Courtesy: NREL)

[Update 8/27/07: CitizenRE now has a competitor...]

[Editor's Note: This is a repost of a 3 part series I'm writing on CitizenRE at GreenOptions.com, titled "Not All That's Renewable Is Green" (Part 1 of 3). It will attempt be a more formal accounting on CitizenRE than previous blog posts. Access Part 2 and Part 3.]

Green Options Editor’s note: 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. Mike’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)

Another CitizenRE Skeptic and the EcoPreneur Quiz

[Update 2/21/07: Renewable Energy Access has since published this article "CitizenRE: A House of Cards" and this podcast "Special Report: A Look at CitizenRE," and Wired Magazine published this piece today titled, "Selling Homeowners a Solar Dream."]

The solar industry will now take a little more notice of CitizenRE, which has been floating below their radar (since they’ve never been to any industry events to promote their ideas or products).

And now, the moment everyone is waiting for…the CitizenRE Ecopreneur Quiz…thousands have been recruited, but do they know anything about solar?

(No cheating - turn off your internet.)

1. What does “NABCEP” stand for?

2. What are the majority of solar cells made of?

3. What does UL stand for?

4. What is an azimuth? What is the correct direction for the northern hemisphere?

5. A solar pathfinder does what?

6. What is the difference between “capacity” and “energy”?

7. “Grounding” prevents what from happening?

8. The average home has a peak use of how many kilowatts? (plus or minus 5 kilowatts)

9. What is the leading country for solar energy?

10. What does an inverter do?

Answers in a few days…

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.