US-based Sungevity has hired the founder and former head of upstart energy retailer Australia Power & Gas as it seeks to become the dominant solar player in the Australian market, and ultimately take on the country’s biggest electricity retailers.
The hiring of James Myatt as its new CEO in Australia is a key part of this strategy. Myatt founded APG in 2006, building it from scratch to more than 350,000 customers and $500 million in revenue before it was sold to AGL Energy for $160 million in 2013.
“I’ve done it before, and I can’t see why it can’t happen again,” Myatt told RenewEconomy in an exclusive interview on Thursday.
Sungevity, a pioneer of solar leasing products in the US and in Australia, intends to roll out a new power purchase agreement product, known as Sungevity Power, where the company effectively “uses the roof space” of a customer, installs a solar system, and offers a fixed price that will provide a significant discount from normal electricity contracts.
Next year, Sungevity plans to add battery storage to the mix, at which point it will then assume a role as a fully fledged “energy services provider”, putting it in direct competition with the incumbent electricity retailers.
“My aspiration is to make Sungevity the biggest solar company in Australia,” Myatt said. “Right now, solar is a very fragmented market …. and none of the traditional retailers have embraced solar.”
Sungevity is not the only company or organisation looking at using solar to penetrate the retail market, and to marginalise the incumbents. As RenewEconomy reported earlier this week, organisations in NSW have gotten together to look at a “community” owned energy retailer, others are considering various strategies and even some network operators are thinking of using solar to go “direct to customers” and bypass retailers.
Myatt said his experience at APG gave him a first hand perspective of how disruptive solar can be. It is difficult for traditional “gentailers” to incorporate into a portfolio, he says.
That’s because they don’t have a brand position, they find it difficult to absorb because of the load profiles of their fossil fuel generators, which affects load shaping and hedging strategies. And because solar reduces demand from the grid, it cuts the returns on investment on call centres and billing procedures.
“Once battery storage comes in – we can come in with a product that is a total energy solution,” Myatt says. “With storage we can take control of the full customer relationship.”
And there are other non-solar technologies that are also making life harder for traditional retailers – the introduction of various bits of software, even the arrival of the smart phone
“The bigger retailers find it very hard to alter their systems and move. When you are smaller and nimble you can move and innovate a lot quicker.”
Myatt says the advantage of a PPA over a “solar lease” is that there is no cost to the customers, the savings are immediate, and the customer is not required to buy back the system at a later date – although they can do so.
“The advantage of the PPA option is that Sungevity owns the panels – we are just using the roof space.”
Myatt says Sungevity has yet to price its PPA, but it anticipates savings for customers of around $10,000 over the 15-year life of the contract.
Myatt replaces Nick Lake as CEO of Sungevity Australia. Lake – the founder and owner of Sungevity’s Australian joint venture partner Nickel Energy, will become chairman of Sungevity Australia, focusing on strategic partnerships and direction.
These include partnerships with the not-for-profit sector, and for commercial partnerships – such as the link with Lowe’s, the second largest hardware and home improvement chain in the US.
Lowe’s has a stake in Masters Home Improvement stores, which has a growing presence in Australia. Sungevity also recently launched a domestic solar partnership with European energy giant E.ON.
Sungevity, which was co-founded by Australian Danny Kennedy, has made its mark by being one of the originators of the solar leasing model now prevalent in the US. The Oakland, California based company was founded in 2007.
It caters for both home and business owners and has developed technology to deliver a firm quote online and provide homeowners with visibility to significant savings on their electricity bills.