Another path to home solar energy

Under an intense sun, workers position a solar panel for a system being installed on a roof in Williamstown.
Under an intense sun, workers position a solar panel for a system being installed on a roof in Williamstown. (MEL EVANS / Associated Press)
Posted: October 12, 2011

Several companies are stepping up campaigns in the region to broaden the residential solar market by offering to install the expensive systems at little or no up-front cost to homeowners.

Solmentum Inc., a San Francisco solar-marketing company, will formally launch operations Wednesday in Mount Laurel to target Garden State homeowners who have big, sunny roofs that are ideal for solar panels.

Photovoltaic solar cells convert sunlight directly into electricity.

Solmentum works with another San Francisco company, SunRun Inc., which opened a Philadelphia office in June. SunRun, which has established partnerships with a stable of installers in Pennsylvania and New Jersey, owns and maintains home solar systems and charges homeowners a monthly fee for the power they consume.

While third-party installers have been leasing solar systems to homeowners for several years, the new ventures involve power-purchase agreements rather than the sale or lease of equipment. Homeowners agree to buy the power produced from the solar arrays at a fixed rate over 20 years, typically below current utility rates.

The agreements are attached to the home and transfer to new owners if the house is sold, said Susan Wise, a spokeswoman for SunRun, which bills itself as the largest home-solar company in California.

"We're finding that having the solar systems makes it easier to sell the homes," she said.

The power-purchase agreements are designed to appeal to homeowners who want renewable power but do not have the capital to buy or finance a system that typically costs $30,000.

"This makes solar accessible to middle-class America," Wise said.

The third-party plans represent the fastest-growing segment of the residential solar market, according to the Solar Energy Industry Association, a trade association.

"They've kind of taken the market by storm," Shayle Kann, managing director at GTM Research in Boston, said last month during an industry briefing with reporters. In Colorado, he said, more than half of the new residential jobs are third-party installations.

Maureen Mulligan, a lobbyist with the Pennsylvania Solar Industries Association, said several local companies are also offering creative financing and ownership plans to broaden solar's appeal.

"If homeowners don't have to finance systems on their own, it's a whole new market," she said.

Under the power-purchase agreements, companies such as SunRun typically claim any tax credits for the systems, which allows them to competitively price the power they sell to the homeowner. Because utility rates are higher in New Jersey and Southeast Pennsylvania, the region is attractive to solar suppliers because their power is more competitively priced.

The companies also typically capture the renewable-power credits generated by the solar systems, also helping to keep their prices competitive.

The appeal for homeowners is that they can lock in a fixed-rate electricity price for the long term.

Mulligan said the third-party financing plans may appeal to homeowners in Pennsylvania now that funds for state solar rebates have been exhausted. Those grants were available only for owner-operators of solar systems.

Mulligan said several local companies - Heat Shed, of Quakertown, and Gemstone Lease Management L.L.C., of Wayne - are offering variations on ownership plans.

While customer surveys show that solar power appeals to a broad range of customers, the systems are economical for only a small number of properties - houses with unobstructed south-facing roofs, and households with monthly electric bills averaging more than $100.

Solmentum, which describes its business model as selling metered electricity "just like a utility," plans to employ a sales force that will "hyper-target" homeowners whom it identifies as the best candidates for solar panels rather than marketing to a broad population.

"Solar doesn't make sense for everybody," said Jasper Platz, Solmentum's chief operating officer. "If you live in a neighborhood with lots of trees, it's probably not right for you."


Contact staff writer Andrew Maykuth at 215-854-2947, amaykuth@phillynews.com, or @maykuth on Twitter.

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