February 21, 2007 1:51 PM PST
Breaking the mold in solar power
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That model calls for Citizenre to make a significant break from today's solar supply chain. The company plans to do its own manufacturing and to offer installation services for its panels through a network of independent affiliates.
Citizenre intends to purchase the equipment to build panels from existing manufacturers such as SpireSolar, Gregg said. It will buy its own silicon, which is used in the solar cells that convert light to electricity. And it will manufacture its own inverters, which are the boxes that convert the direct current electricity generated by the solar panels to the alternating current used in a home.
By "vertically integrating" these different steps--manufacturing, assembly and installation--the company will be able to wring an economic advantage out of today's fragmented market, Gregg said.
He noted that the solar industry is already seeing signs of this sort of combination. SunPower, a manufacturer of solar cells and panels, last year bought PowerLight, an installation company, with the goal of speeding up its delivery of systems.
"The industry has always known it is possible to manufacture on a large scale to drive down costs," Gregg said. There are other ways of squeezing costs, he added: "We can eliminate the investment hurdle using our debt financing structures."
Gregg said that within nine months of breaking ground on a manufacturing plant, it will have turned out enough solar panels to generate 100 megawatts of power. Within two years, it will have produced 500 megawatts of capacity.
By comparison, there were about 100 or 150 megawatts of capacity installed in all of the United States last year, said Alex Klein, a senior analyst at Emerging Energy Research.
To keep the cost of sales down, Citizenre has devised a multilevel marketing approach in which independent salespeople, called "ecopreneurs," get a cut of the money generated by other salespeople. That, in theory, will enable the company to sign up a large number of customers quickly. It also intends to set up franchises that will help train sales staff.
Not buying it
Citizenre, whose management has a mix of experience in renewable energy and the IT industry, has made ambitious claims since launching a pilot program five months ago. Perhaps because of that, the company is getting grilled by many people who have been steeped in the solar industry for decades.
Jeffrey Wolfe, CEO of solar photovoltaic installer and distributor GroSolar, said he examined the company's business plans and concluded that the numbers do not add up. In a piece on the Renewable Energy Access Web industry site, he said that Citizenre's promises ultimately will disappoint consumers in a situation which "represents a threat to the entire solar industry."
Richard George, a solar industry professional who signed up as a salesperson for Citizenre, has also been a vocal critic. George stepped down, as he felt that the company's top executives were not addressing a long list of "red flags" (described in this PDF).
Gregg said that some skepticism is warranted because people have yet to see and hear the full picture of the company's plan, something it intends to divulge over time.
However, he believes Citizenre is also catching flak because its business model is a challenge to solar power industry incumbents.
"The harshest critics making accusations are the distributors, who are the most at risk of us taking their jobs away," Gregg said. "Unless you study the industry from the bottom up, you won't know where the cost savings are."
Gregg and Morgan acknowledge that the company has gotten ahead of itself in some respects. Specifically, it has signed on many salespeople without having the resources to fully train them. That's a situation the company intends to address in the coming weeks, Gregg said.
Also, they caution that customers may have to wait years between signing their forward rental agreement and having the panels installed.
All in all, Citizenre--which Morgan describes as still being "in extreme start-up mode," has drawn both ire and admiration.
Some solar installers say its rental plan addresses one of the biggest problems facing the widescale adoption of renewable power, a long-pursued but unrealized goal.
Yet the company's stated ambitions to break the rules of the existing solar industry have alienated many of those who built that industry up. Much of the criticism is due to the large scope of its planned operation and the lack of detailed information on its setup.
"If you're going to make claims like that, the details need to be available if you want the support of the industry," Bradford said.
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