Residential solar remains a difficult sell.
It's a big ticket item that drastically alters the look of a cherished home. Asking homeowners to pay for it upfront, regardless of plunging solar panel prices or incentives, is an uphill battle. Just take a look at the rooftops in your neighborhood to confirm that.
The residential Power Purchase Agreement (PPA) model and the moribund PACE program seem to be the only ways to get solar systems on homeowner's roofs without the intimidating upfront cost.
Until now, there's been a very small pool of solar financiers offering residential PPAs -- SolarCity, SunRun and Sungevity. Each of these firms has their own spin on the business plan; for example, SolarCity does the actual installation while SunRun and Sungevity work with a network of installers. It seems to be a winning formula judging by the relative success of these firms.
However, there's now a new entrant in the field: BrightGrid. Coming out of New York and founded in late 2009, BrightGrid is funded by a group called PanAsia Solar which has principals in Australia, roots at the University of New South Wales and includes the early founders of Suntech and JA Solar.
Stephen Crawford, BrightGrid's CEO, started his career at ConEdison and sees his firm as "a premium service provider." In his words, "We have been very focused on investing in the core operating platform and business blueprint to build a scalable and adaptable business platform."
That kind of salty language can only mean one thing: Crawford has worked at a management consulting firm. Let's check: yes, he spent some time at Accenture.
The "technology platform" is meant to escort the residential solar project from origination of the customer through making a proposal, booking the sale, and finding the right solar system and installer, as well as servicing the account. BrightGrid's staff includes executives with extensive experience in the leasing business.
BrightGrid provides a good definition of the solar lease: In a lease arrangement, the leasing company covers the cost of installing solar panels, typically on the rooftop of the customer’s home. In this model, the leasing company owns the system, rather than the homeowner. Solar leasing companies receive any state and federal tax credits and other incentives available for alternative-energy installations. The homeowner agrees to pay the leasing company a predetermined monthly payment over the term of the lease, and receives the financial and environmental benefits from all of the power produced by the solar energy system. Solar customers buy additional power as needed from their local utility at the going rate. They may also sell excess energy back to the local utility.
Solar leases typically run between 15 and 20 years. BrightGrid’s lease is an 18-year term. If the customer sells the home within that time, the lease agreement transfers to the new homeowner, pending credit approval. Alternatively, the customer may buy the lease from BrightGrid.
According to the company, a BrightGrid lease will drop the homeowner's electric bill by 10 percent to 20 percent.
SunRun is similar to BrightGrid but not a direct competitor -- SunRun is investing in branding and in the origination of business, positioning themselves as the most sought-after brand for consumers. Meanwhile, BrightGrid sees itself as the "Intel Inside" of home solar installation. Another player in residential solar is Clean Power Finance. CPF is a CRM tool serving the long tail, although they may aspire to financing. Brightgrid, on the other hand, is focused on large-scale installers.
According to the CEO, "residential is the logical point for us to start, although we also like small commercial." The firm is focused initially on California. Their pilot program is funded by Brightgrid and treasury grants, but the firm will have to go to institutions like US Bancorp or Wells Fargo for their financing capital.
The residential solar market certainly needs some new players in what is rapidly becoming a commodity market. We'll learn more about BrightGrid and their ability to compete with the established players in the coming quarters.