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February 21, 2007 1:51 PM PST

Breaking the mold in solar power

Start-up Citizenre thinks the solar power industry is ready for a radical new way of doing business: rent out panels, rather than sell them.

The company has devised a plan that essentially would allow individual homeowners to lease solar electric panels installed on their roofs. That way, they would avoid hefty up-front costs--a perennial barrier to widespread use of solar power.

But there's a hitch: Citizenre does not yet have a product to sell and has not named financial backers. Next month, though, the company intends to announce its lineup of investors, who are expected to put $650 million into the operation. It will also disclose the location of a planned manufacturing plant.

The absence so far of these crucial details has brought skepticism from solar electric industry incumbents, who fear that Citizenre could set solar power adoption back by promising too much. But even critics admit that one of the big ideas behind Citizenre--letting people rent rather than buy solar power--is compelling.

"Inevitably, somebody is going to figure out how to deliver energy services to customers versus selling solar PV (photovoltaic) systems," said Travis Bradford, author of Solar Revolution and president of the nonprofit Prometheus Institute, which promotes sustainable business.

The energy industry today, like the telecommunications market in the 1990s, is ripe for change, Bradford said. Just as cell phone providers offered an alternative to traditional phone service, new solar energy businesses will arise alongside traditional power suppliers, he predicted.

Right now, homeowners who want to tap solar energy typically pay an installer, who gets the systems from a distributor. The distributor, in turn, gets the different components, including the panels and inverters, from manufacturers.

Bradford predicted that in coming years, an existing utility company, or a solar energy provider serving the commercial market, will devise a way to provide consumers with a wider range of energy services. These could include local power generation through solar panels, financing and ongoing maintenance.

"Solar power is disruptive technology," Bradford said. "Now what we need is new business models."

Buy versus rent
Solar photovoltaic panels for the individual home are expensive, requiring up-front investments of $25,000 or higher. Even after tax rebates, it takes years for that investment to pay itself back to the homeowner in locally generated electricity.

The target customer for Citizenre's products and services is the "average Joe" who, until now, has been shut out of renewable energy by the high price tag, company CEO David Gregg said.

To crack the largely untapped residential market, Citizenre wants to borrow a financing mechanism commonly used by renewable energy companies for commercial customers: a purchase power agreement.

The idea essentially goes like this: A homeowner leases the panels, which would still belong to Citizenre. As part of it, the customer signs a "forward rental" agreement to purchase the electricity generated by the panels from Citizenre at a fixed rate, over five or 25 years.

The advantages to consumers are a fixed electricity rate and a small investment--a $500 fee, which acts like a safety deposit.

"The gamble you make is that your utility power prices will be continuing to go up. Also, you're contributing to a change in the power system, because you're generating power that does not have any (greenhouse gas) emissions," said Erika Morgan, Citizenre's senior vice president of communications, who still works on a part-time basis.

Part of Citizenre's marketing plan calls for it to partner with well-known non-government organizations, such as environmental advocacy groups, to help sign up customers, she said.

Over the past few months, renewable energy blogs have seen a flurry of heated discussions about Citizenre and its approach. Amid criticism, the company's sales associates and others have defended it for trying to break the log-jam in solar power.

"I signed up to get in line for a (Citizenre) Renu system without a request for a security deposit or any money up front, I know these programs take time to work out the kinks. I don't expect to get a unit until sometime in late November or December 2007, or even in 2008," wrote contributor "2renu" in the comments section of a blog that suggested Citizenre's offer was flawed. "Give them a chance to succeed or fail but just give them (a) chance. Who else is taking a risk with a business model like Citizenre?"

CONTINUED: From silicon to rooftop...
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See more CNET content tagged:
solar energy, homeowner, photovoltaics, renewable energy, electricity

Add a Comment (Log in or register) 12 comments
New Solar Model...!
by fmvigneri February 21, 2007 3:40 PM PST
Sign Me Up...!

Looks like Everybody Wins with this.

fmv // Placitas, NM
Reply to this comment View reply
Hmmmm...
by bloated2 February 21, 2007 5:41 PM PST
Selling solar before a factory to manufacture products has been built? Hmmmm.... Hopefully this is not a phishing expedition to attract venture capital money. Hopefully the marketing team has a clean background, with no prior history of shady deals.
Reply to this comment
Better Business Model
by eabu February 21, 2007 9:37 PM PST
Why can't someone just set up solar panel manufacturing in China and sell it at Walmart?
Reply to this comment
Nothing new about this technology, or ancient either.
by Bob H in NPR February 22, 2007 10:50 AM PST
In the late 70s & early 80s, there were many plans in the "Green' magazines & books on how to build a passive solar systems for both hot water & heating use which are much cheaper than $10,000. Unfortunately, none of the major media picked up on it. Evidently they were afraid of losing ad revenue from the power & oil industries (& they were correct in that assumption). Some community colleges even offered low cost classes on energy efficient systems like the excellent 6 week course I took. There were also companies that sold pre-fab ones. Some of those designs eliminated the need for commercial traditional furnaces & water heaters. A few were even capable of meeting at least part of air conditioning needs, though they were more expensive because they required undergroud tanks.

At least some libraries will still have copies of those publication for those who wish to investigate further. "The Mother Earth News", "The Whole Earth Catalog", & some of the Rodale publications magazines are a start. More can be found under the subject files.
Reply to this comment
HOPE and a PRAYER SOLAR SYSTEM
by Privacy-Rights-Army.com February 23, 2007 3:55 PM PST
Interesting,

So with no confirmed financing, no investors and no factory, makes you wonder how they are taking reservations? For what, a hope and a prayer that they will ever have their act together?

Privacy-Rights-Army.com
Reply to this comment
HOPE and a PRAYER FREE SOLAR SYSTEM
by Privacy-Rights-Army.com February 23, 2007 3:56 PM PST
Interesting,

So with no confirmed financing, no investors and no factory, makes you wonder how they are taking reservations? For what, a hope and a prayer that they will ever have their act together?

Privacy-Rights-Army.com
Reply to this comment
Citizenre
by citizenre February 23, 2007 6:40 PM PST
Citizenre has ZIPPO. It has a great website, 700 poorly trained ecopreneurs and that is it. There is no manufacturing plant, and no details as to who is backing them to the tune of 650 million. There are so many holes in this company. Why does Citizenre do not want to disclose?
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if you ever wanted solar on your roof
by yorkvillesolar February 26, 2007 8:12 PM PST
I have investigated all he pricipals of this company and I personally believe they are sincere in waht they want to accomplish.Please join me in a discussion about this company CitizenRe. I have been an associate for months now and have communicated with all of the pricipals involved with this company. I feel that they have a great buisiness plan and soon everyone willl see their financial backers and will be registering their homes for solar. Please visit this site for more info or cal me at 630-553-8697
www.jointhesolution.com/yorkville
www.powur.com/yorkville
Reply to this comment
Why Can't We Believe?
by alleybratz March 5, 2007 8:27 AM PST
If this company is willing to help the person who can't afford solar power why not? If people can afford to put the solar power energy in their house do it now... It will help our planet... If you can't sign up for the solar power from this company.... No investment in the system.... Why can't we embrace the idea and get behind a company that has a vision.... It's not about the money it's about the connection of everyone who plans on living on this planet.....

April Moore Central Oregon
1-541-340-9504
Why do we defend something that is different? Why do we not see the value when you don't have an investment? Why not make a choice to be a part of the solution............
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