A plan powered by the sun: Homeowners pay rental fee to firm for electricity to be created by solar panels
Aug 24 - McClatchy-Tribune Regional News - Debbie Kelley The Gazette, Colorado Springs, Colo. A Delaware-based renewable energy company's ambitious business plan may sound like it's reaching for the stars, but company officials say the target -- the sun -- is within its grasp. Critics, though, wonder whether the company's goals are too lofty. "It's not a scam. Is it high risk? Yes. Is it a substantial undertaking? Absolutely. Can it be done? Yes," said Erika Morgan, senior vice president of communications. A year ago, Citizenre introduced its "solar made simple" residential rental model, called the REnU program, and launched sales nationwide to sign up customers. Here's how it works. Homeowners who get electricity from a utilities company that offers net metering are eligible to rent solar units. Customers pay a rental fee to Citizenre for the electricity generated by the solar panels, installed for free on their homes. The rate is fixed for up to 25 years, at or below what they pay for electricity. Citizenre designs a system that will produce the homeowner's current electricity. About 20,000 homeowners around the nation have signed up via the Internet, including nearly 700 in Colorado, Morgan said, 64 in Colorado Springs. By joining the program now, homeowners lock in their electric rate for the contract life of one, five or 25 years, she said. The company collects a $500 security deposit after the solar engineer designs the system. But the solar systems won't be installed for at least a year and a half, and more likely two years at the earliest. Systems will be available nine months to one year after the company's manufacturing plant starts production, Morgan said. But the manufacturing plant hasn't been built yet. "We expect to make an announcement about the facility in 30 to 60 days," Morgan said. The plant will be in the northeast and will be unique, she said, because components for solar PV panels usually are manufactured at separate sites. "Ours will be one of the earliest in the nation to put all the pieces under one roof," she said. The company this week announced the formation of a team of three business partners that will help the company finance the plant and use leases as securities to sell to investors. But the company has come under criticism from the solar energy industry for not being further ahead in development, as it had outlined in the past, which some have said is creating false hopes for solar enthusiasts and perhaps indicates unattainable goals. Morgan said it's a matter of the company prematurely going public with a committed timeline. Simon Eilif Baker, senior conservation specialist with the municipally owned Colorado Springs Utilities, said he has heard of the company's plans and been contacted by some area residents and independent sales representatives. "We are willing to consider the concept, but there are some issues that need to be looked at further. According to city regulations, Springs Utilities shall be the sole and exclusive provider of electric service," he said. "And I find it challenging to understand the economics behind their business model because using ballpark figures, the lifecycle cost of solar photovoltaic is about 25 cents a kilowatt hour. Our residential customers pay about 7 cents a kilowatt hour, retail. So if the company is getting 7 cents from the customer, where is it making up the additional 18 cents?" he said. Morgan said Citizenre plans to use cost-reducing strategies, such as getting the majority of customers to sign a 25-year contract, which will help the company recover the cost of the systems. Removed systems will be resold, she said. The company also is forming a national network of franchise installation companies to sell, install and service solar PV systems on businesses. By the end of this year, Citizenre said it will complete the franchise plan to submit to the Securities and Exchange Commission, Morgan said. "The question of volume underpins all of this -- people have been wondering for 15 years why solar is so expensive. The answer is you can't make enough to bring the costs down. The reason is you can't sell enough units. We think we'll be able to sell enough to create the economic reasoning for a very large production facility," Morgan said. Independent sales representatives, called "ecopreneurs," are counting on the company delivering on its promises -- they aren't getting paid for sales they make until the systems are installed. The Pikes Peak region has 29 sales associates, including Terza Ekholm, a former software engineer and program manager for Hewlett-Packard Co. "Most people probably wouldn't have bought systems anyway, so they're happy to wait for something they can rent," she said. "I'm very passionate about it and am willing to wait for the results -- I've signed up for a system myself." If the company does get off the ground, Baker said additional solar generation in Colorado Springs would reduce peak demand. The city has 25 solar PV owners. "The sun's maximum output coincides with the hottest days when we have the highest air conditioning load, which causes our highest demand for power," he said.
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