May 04 - The Fresno Bee

The new 8-kilowatt solar power array on David Kokka's roof doesn't belong to him -- and he likes it that way.

Instead, the Fresno homeowner has rented his roof out, so to speak, to a Silicon Valley startup called Sun Run Generation LLC. For the next 20 years, Sun Run will own and maintain the solar panels, and Kokka will buy all the electricity his family uses that's generated by the photovoltaic power system over that time -- at a steep discount to the prices he'd otherwise be paying to utility Pacific Gas & Electric Co.

"I'm getting a system that's not only maintenance free, but they're guaranteeing the output of the system and components over 20 years," he said.

But the main bonus, he said, was the low up-front cost, which has traditionally been a key barrier to wider adoption of solar systems by many homeowners.

"This allows me to get the benefits of a solar system without having to pay $50,000 up front," Kokka said.

He paid $24,000 instead, but could have gotten the panels installed for as little as $11,000 down, he said -- and his system is about twice the size of the typical home solar system.

Such power-purchase agreements are fast becoming the model of choice for large-scale commercial solar systems, from massive solar buildouts by companies such as Wal-Mart to local solar arrays at Fresno Yosemite International Airport and California State University, Fresno.

But with Sun Run's entry into the residential market -- and a variant offer from Foster City-based competitor Solar City that lets homeowners lease a rooftop solar system for 15 years for a monthly fee -- the sights of investor-owned solar power systems are now centered on American homeowners' rooftops as well.

And that could represent "a glimpse of the future" of residential solar development, said Travis Bradford, president of the Cambridge, Mass.-based nonprofit Prometheus Institute for Sustainable Development and author of the book "Solar Revolution."

"These types of programs have proven extraordinarily successful in the commercial market already," Bradford said. And the same aspects that make it attractive to businesses are even more likely to attract homeowners, he said.

"It takes all the work out of the customer's hands and puts it into the hands of the provider, who can do it better, cheaper and faster," he said.

That's what attracted Bakersfield schoolteacher Janien McGowan to Solar City and its no-money-down solar lease offer -- a promotional offer set to end in August, when the company expects to begin charging up-front payments of a few thousand dollars.

"Instead of paying up-front, which would have been about $30,000, we just make payments each month," in her case $150 per month, McGowan said. But the power the system generates should reduce her monthly utility bills by enough to make it worth it -- particularly in future years, as electricity prices rise, she said.

Of course, McGowan and other homeowners could arrange financing to purchase their own solar system in a way that avoids tens of thousands of dollars in up-front costs.

But the benefits of having someone else own the solar panels on her roof has other advantages, she said.

"Everything is guaranteed within that 15-year lease," she said. "If something goes wrong, they come out and take care of it. They're constantly monitoring it, 24 hours a day, and they guarantee the productivity."

Solar City's lease offer differs from the power purchase agreement that Sun Run offers, in that the homeowner pays the monthly fee instead of directly buying the power the solar system generates.

But both offer the same "hands-off" benefits to homeowners, with the companies in charge of making sure the solar panels are working to maximum efficiency and replacing any worn-out parts.

Sun Run launched its residential program late last year, and hasn't disclosed how many deals it has made so far.

But Nat Kreamer, company president, said the business is growing "very fast" throughout the parts of the state served by PG&E, Southern California Edison and San Diego Gas & Electric.

"We offer the customer a low-cost way to go solar at the beginning, over time and at the end," he said. By monitoring and maintaining each system, Sun Run will likely enhance the overall efficiency of the home solar systems it owns, since the company gets paid based on how much power its panels generate.

If the home is sold, Sun Run will offer to remove the system if that's what the new owner wants, Kreamer said. But he said he expects most will choose to continue the contract or take over the system at a discounted buyout cost, since market studies show most people consider home solar systems a valuable asset.

Lyndon Rive, Solar City founder and chief executive, said his company offers similar guarantees to customers who sell their homes.

Even if Solar City goes out of business, customers will continue to hold a contract with Morgan Stanley, the company financing Solar City's program, he said.

"The buck stops with us," he said, "and we want that, because we're going to own it for 15 years."

Solar City can make money from the deals for several reasons, including the economies of scale that the company can enjoy and tax rebates that are far more generous for commercial owners of solar power systems than they are for residential owners, he said.

So far, Solar City and Sun Run haven't seen any large-scale competitors in this new line of business. But if the model does prove to be the future of residential solar power, as both companies believe it will, it's likely that others will emerge.

After all, as Kokka said, as long as the companies offering it have a viable business model, then for homeowners like him, "it's one heck of a deal."

The reporter can be reached at jeffstjohn@fresnobee.com or (559)441-6637.

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