May 2, 2007 10:25 AM PDT
The next chain outlet concept: Energy experts
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Standard Renewable Energy and Conergy are building a branded network of energy experts across the U.S. to take some of the cost and confusion out of installing things like solar photovoltaic panels. And, of course, the companies are aiming to earn money at the same time.
Right now, most consumers get energy technologies from local installers. While these companies may be highly qualified, they may not have the brand or economies of scale of a chain, said John Berger, CEO of Houston-based Standard Renewable.
"How do you make using renewable energy easy? There is nobody doing that," said Berger, who used to run the East Coast power desk for Enron. "You get a consistent laugh out of that," he said, referring to his prior role.
Standard Renewable, through a division called NewPoint Energy Solutions, sends a representative into a commercial building or home, conducts an audit, and then compiles a list of recommendations--put in new insulation; install a new water heater; and so on--for cutting energy bills. The audit is free, but the company then bids on the contract. Some of the products to be installed are made by third parties and resold by Standard, but other products come from Standard itself.
The average contract price comes to around $33,000 for a residence and $60,000 for a commercial building.
Typically, the company representative won't be an employee with Standard Renewable. It will be an electrician from another company, but the individual will have been trained and qualified through a standardized procedure.
Standard Renewable is also building biodiesel refineries in association with the venture arm of ChevronTexaco.
Conergy, meanwhile, is mostly associated with solar power. It's one of the largest solar installers in Germany and has invested $30 million in a panel manufacturing site in Eastern Germany. The company is now expanding into the U.S. and is broadening its product portfolio to include wind turbines, biogas and other technologies, according to Cameron Moore, Conergy's regional head for North America.
By 2008, Conergy wants to generate half of its revenue from outside of Germany and half from products other than photovoltaic panels. A major segment of the non-solar panel revenue will come from offering financing to customers. Conergy both sells and installs equipment directly and through a dealer network.
Reducing installation costs
Installation and service in many ways is the skunk in the energy efficiency party. Billions have been spent over the past few decades to try to improve the efficiency of solar panels and reduce their costs. Nonetheless, half of the cost of a solar system still involves getting someone with a truck and a ladder to come to a home and put panels on the roof.
By standardizing these services and doing volume buying, these chains say they can reduce the service and installation costs. Although Germany isn't exactly associated with cheap labor, it is cheaper to install a solar system there, Moore said. In part, that's because the overall solar market is eight times larger than in the U.S. Conergy (like Standard Renewable) said it will also navigate the morass of rebates and tax credits for customers.
Right now, the installation market is fairly fragmented, Moore said. In California alone, about 600 companies offer solar services and, in many cases, an installer or service company will be primarily versed in one technology.
Many customers also got burned in the 1970s and 1980s by poorly trained installers, according to some in the industry. The solar water heater market was notorious for shady operators. Many installers were legitimate, well-run businesses, but closed when the owners decided to retire or move into another field.
"When a market takes off, it attracts the good, the bad and the ugly," Moore said. "We have to be careful as an industry. It is important for customers to be able to pick someone who has staying power."
Both Conergy and Standard Renewable, however, will have to face established players who survived the crunch in the alternative energy market in the '80s.
Berger said that the economic gains a building owner or consumer can get from energy efficiency are genuine. In some cases in the South, customers are seeing their utility bills drop by around 60 percent. Typically, the best results come in areas where consumers run their air conditioners for hours a day on high. Replacing old biodiesel boilers for heating systems in commercial buildings also has a pretty strong payback, he said.
"Utility bills are on the forefront of everyone's mind. Some retirees have electric bills that rival their mortgage payments," Berger said.
Standard Renewable's pitch is purely based on economics, not saving the Earth.
"We believe Americans believe they have a God-given right to have their cake and eat it too," he said.
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