Sungevity: A Solar Business Model that Works

What do you get when you mix a banker, an activist and a marketing genius? In this case, you get affordable, accessible solar energy.

Sungevity was founded by a group of friends who came together with a common vision to “make it easy, make it affordable.” Their unique talents make the business model possible: co-founder and President Danny Kennedy is a former campaign manager for Greenpeace; co-founder and CEO Andrew “Birchy” Birch is a former banker and BP Solar Executive (who also holds a master’s degree in photovoltaics); Chief Development Officer Patrick Crane is a former marketing guru from the social networking giant LinkedIn; and co-founder and Chairman of the Board Alec Guettel inspired Danny to start the renewable energy company. (Thank you, Alec.)

Based out of Oakland, Calif., the sunshine crew uses technology as a convenience, allowing them to lease solar energy like one would lease a car, providing affordable and accessible solar power to places as far as Australia.

Sungevity’s iQuote system allows you to obtain a quote remotely, and their unique financing structure allows you to lease your power so there are no costs up front. Think of it like booking a vacation through Expedia versus going to a travel agency — your specific needs are met on your budget and on your time. In this instance, you also save energy and money. And in some cases, if you produce more energy than you consume in a year, some utility companies will pay you back. Seem too good to be true? I spoke with Danny Kennedy to find out how they do it.

What prompted you to found Sungevity?
We wanted to make solar power easy, affordable and attainable to more people. In particular, taking away the up-front costs, which was a big barrier to adoption historically, and making it easy and hassle-free …  so we innovated the online business model we have that really makes Sungevity unique.

What sets you apart from other solar energy companies?
Using modern technology and leveraging the internet … we built software that allows us to mesh up the satellite view or top down image with aerial photographs which come at an angle from an airplane and through that we can get the angles which give us the pitch of the roof and the circumference of the roof and those angles are important to calibrating what the production of that solar panel will be on your roof and how much electricity you’ll get out of it. So, effectively, we are able to image an aerial system without going to your home. And the level of engineering is as accurate or more accurate than the manual process. That, in turn, allows us to go out and get the financing solution that we have now, which is the solar lease, which allows you to pay for the electricity supply rather than paying for it up front.

How are you able to lease energy instead of obtaining money up front?
We partner with third party financiers to create funds that pay for everything that goes into installing and inter-connecting a homeowner’s solar system. We always wanted to do a lease-like solution, take away that up-front cost. The history being that you would pay for the whole thing. We had to pioneer the strategy of using the internet and get that going with the inside selling that goes with this [call center-based sales.] Before we launched [in 2008] that had never been done. Now most of the industry is doing call center-based sales, but when we started that was just unknown.

Why is it important to make solar energy more mainstream?
We want to create value in the economy. The book that I’ve written ["Rooftop Revolution"] is really about how solar power is going to create a whole new economy and save people money in their homes, create jobs…. It’s just a smarter better way to power society. A more modern reliable technology than the fossil fuel-based system that we’ve inherited from the 19th century.

There are several ideas out there about how to increase awareness and popularity of renewable energies, such as carbon taxes and financial incentives. What do you think would help advance the movement?
The main thing is certainty. One of the problems with a lot of policy making over the years — and this is what I used to do for my bread and butter for two decades almost — is that they kind of shift the goal post, change the policy, use this policy incentive and that incentive, whereas the current sources of energy have had a fairly stable playing field for a long time. So, one overriding request is that we let this business flourish on solid ground and not keep changing the rules of it. We can talk about different policy settings and structures, but … in the last ten years it’s grown into a multi billion dollar business with 100,000 employees and allowed us to have what’s called net metering, which allows us to sell electricity into the supply, into the grid. That net metering concept is a matter of regulation of the public utility commissions in different states and it is sort of under attack right now. The utilities are asking them to take that away from us. If you take that away it’s hard to create the stability to attract investment and to build growing companies and continue to serve customers easily.

Of course, there are people with vested interests, but … there’s a whole new cycle of innovation happening, solar panels, solar leasing … these businesses are growing like gangbusters. We’ve got to get in front of it and support the job creators and the new economic opportunities that are coming with that. What is more about energy independence than letting a family in America produce their own energy? Or some of it? Harvesting the sunlight falling on their own home.

Where do you see solar energy in five years? What role do you hope to play?
Solar energy is going to be huge in five years time. Just in the years since we’ve been in business, we have exceeded expectations as an industry in terms of jobs created, dollars saved, the cost structure of electricity. Sungevity will continue to grow as a business because the curve will continue. I think there will continue to be all sorts of new additional bundles of service. Just like simple computers that could word process suddenly became connected to one another though the internet, then came the platform to all sorts of software and new services. So to, the distributed architecture of solar power in every home, being involved in energy, will create more technology innovation and more finance innovation, bringing new value and new services we couldn’t have conceived of before. Here we are engaged in the creation and consumption of this service called electricity. There will be more other ways and business models of serving more people for less with solar electricity.

I believe Sungevity will definitely be at the forefront. We are an innovative company … with a unique team that combines business savvy and technology. Patrick is now helping us think through what’s next for solar as a social network, almost gamifying this spread of solar service. (And, of course, there’s the book.…)

What needs to happen next?
To move on in the conversation, make people think of it as a lifestyle choice. We need to get over the hackneyed debate of the 20th century that this stuff doesn’t work, it’s not ready. It’s powering millions of people’s lives today. It’s a 100 billion dollar business, today, it employs 100,000 Americans today. Let’s move beyond that knee-jerk debate and recognize this is neither left or right, it’s out front. It’s what’s helping America move forward, creating jobs, saving families money. We are the good news story of American entrepreneurship succeeding. That’s what we should be recognized by and for and not some kind of whipping post for the culture wars.

What do you want people to learn from your book and where can they get it?
There is a sunny side up to the story of solar and how we make electricity going forward. The price is coming down enormously which makes it the best way to move forward. The way they can get involved is with activism or entrepreneurship.… Sungevity is part of the story, but we’re not all of it, by any means. There are millions of businesses that will grow in the next decades to rewire the world with this cleaner better way of getting electricity. That’s a huge good news story for the economy.

“Rooftop Revolution” will be available on Amazon.com or in bookstores starting Sept. 4th.

Note: The book also includes a forward by retired U.S. Army General Wesley Clark, (former supreme commander of NATO) who emphasizes that a solar-based electricity supply with less dependence on foreign sources of fuel is a more secure one.

When an activist and a militant agree on an agenda, the message seems clear: “Solar is where it’s at right now.”

Main photo and additional image credit: Sungevity.com