California-based Sungevity is set to become the first solar company in Australia to offer zero-cost rooftop solar, teaming up with local company Nickel Energy to offer pay-as-you-go leasing deals that have proved enormously popular in the US.
The joint venture, called Sungevity Australia, will introduce a zero-cost solar model that now accounts for around three quarters of sales in California and around two thirds of sales across the country. Sungevity is one of three major providers of solar leasing deals in that country, along with SunRun and SolarCity.
The model allows customers to buy large solar systems – up to 5kW or around $12,000 – for no upfront cost and receive instant savings on their electricity costs.
The arrival of solar leases and zero-cost solar systems was flagged on this web site earlier this month. The Sungevity Australia joint venture is just one of many such proposals being contemplated in a development that has the potential to be a game-changer in the industry – and, as we noted, to the political rhetoric around rising electricity costs and their solutions.
Solar PV, which had been painted as one of the causes (albeit minor) to those rising costs is now firmly part of the solution because of the ability of solar leasing models and the plunging costs of solar modules to deliver rooftop solar systems to all and deliver those savings.
Danny Kennedy, a former Greenpeace Australia campaign manager who is president and founder of Sungevity, says the product will be officially launched in May. It is the company’s second overseas expansion in the last six months. Its first stop was in the Netherlands.
Australia was particularly attractive because it had a lot of sun, and electricity costs were rising quickly as utilities invested billions of dollars into grid upgrades and extensions.
Kennedy said the company’s product, which it dubs “RoofJuice”, could deliver savings at the start. The reduction in the quarterly bill from the local utility would more than offset the leasing costs – possibly delivering savings of 10-15 per cent in the initial phase, but this would grow significantly over time as electricity costs rose, and would deliver thousands of dollars in savings over the life of the lease.
“The leasing model has changed the target audience,” Kennedy told RenewEconomy. “It allows people who don’t have cash up front to get solar electricity and to save money.
“It’s a game changer for the industry. The uptake of solar in the Australian market has been strong but will only get better as electricity bills rise. We think every home will go solar. It’s not just about sunlight, it’s about the economics of electricity costs.”
Sungevity is planning to fund the pilot phase of its new product through its own resources but will then be tapping private sources – funds manager, high net worth individuals – to provide a pool of finance.
Sungevity uses satellite and internet technology to design the installations, and hires contractors to install the systems. It has a presence in eight US states – Arizona, California, Colorado, Delaware, Maryland, Massachusetts, New Jersey and New York.
Nick Lake, the head of Nickel Energy who will run the joint venture, also believes that the new model is a “massive game changer”, and says the Australian market will likely go the same way as America – where third party ownership of rooftop solar systems has jumped from 16 per cent of the market to 75 per cent.
One subtle change between the leasing models in the US and this one in Australia is that this venture will sell electricity produced from the rooftop panels to the householder on a power purchase agreement.
Lake says there are two options. One is at a lower cost to electricity from the utilities, which will deliver savings of 10-15 per cent immediately, and grow as utility costs rise. The PPA will be indexed only to inflation.
The other option will be a fixed price, with a cost initially but with the potential to deliver greater savings into the future. He says this might appeal to businesses and householders wanting certainty over future costs.
Lake says the rates charges will depend on the location (different state tariffs), and systems size, pitch and orientation of the home.
“This is returning the market to the way it was. Instead of outlaying capital cost and providing their own electricity, householders will go back to buying electricity from a supplier, only this will be cheaper and cleaner. We think it will take solar into new markets.”