Difference between revisions of "Solar Energy Investment Fund"

It seems like the way to spin it is as a fund you invest in, to offset your electric bill, and you get something better than CD rates of return for 2 years and then you can roll it over and buy additional panels or get your principal back. To avoid SEC filing requirements we should start with friends, family, and people we have had some business dealings with before ( e.g. your corner grocer, or your barber).

Goal: Generate first solar power by March 31, 2007. We'll start with our own money and once that's working, we'll be looking for people that want to invest.

Another idea is that instead of us selling the panels after 2 years to the building where they reside, how 'bout the owners of those buildings buy into our fund and the fund buys more panels on someone else's building.

solar question

Ted, I was reading with much interest this solar panel business (I assume this is the same link you mention at another spot – I going to that web site). In terms of putting them on my own house, I contribute a current “wonder”, in hopes that addressing it will help increase sales, thinking other potential customers might have this same wonder, it potentially acting as a sales barrier.

As one that tracks technologies routinely I know that solar technologies are going to undergo some major changes in the not too distant future, due to novel R&D in fields such as electro polymers – which can lead to radically reduced cost and more durable structures – and from a visual perspective, “less ugly” (a market place reality is that many home owners don’t want solar panels because they view them as unsightly).

This changing technology picture raises the question, “what if I buy the panels and then this much better solar technology comes along – will I automatically get this upgrade?”, or “what if I want the old panels removed at this future time, what will that cost me?”

Seems to me from a business perspective the solar company installing the initial panels can only get payback and profit if the original panels remain in place for the duration of the contract, thus would not be able to make this upgrade.

Has this situation or scenario been factored into the business plan? MartinPfahler

The link on my talk page is for a different solar scheme. CitizenRe.com is that link. The plan there is for a homeowner not to buy panels, but to rent them (no upfront cost other than $500 security deposit when they're installed), for a contract length of their choosing, either 1, 5 or 25 years. The idea is that you lock in your electric rates near today's rates for the length of that contract, then you buy whatever electricity your system generates (that's the rent) during the day. You'll likely not actually be using this much electricity during the day so instead you sell that power to your electricity company (your meter runs backwards). Then at night, when your panels aren't producing, you buy from the power company. Anyway, this whole scheme can be looked at in much more details on the CitizenRe page and if you decide to sign up, you can use my affiliate link and become my customer.

This page on the other hand, is look at a different issue. Here in Chicago, it's not all that sunny, and Portland even less-so. Sure, people are installing panels on their own roofs, but not because that's the most efficient, but because they want to be able to point to their own roof and say they're doing something. But they're not actually doing as much as they could be if they invested that same amount of money in solar panels on a roof in Arizona, for example. There are plenty of roof-tops in Arizona that we can use rent-free (we know people). So we invest in this little fund, and the fund buys panels and gets them installed in Arizona. The people living in those buildings in Arizona buy power from us during the day instead of from their power company. In fact, assuming our panels generate more than they're using, they do the same as above and run their meters backwards.

• For the Arizona resident with out panels on their roof, their electric bill stays the same because we charge the same as their electric company.
• For our investors, they see a return on their investment in solar panels that we estimate to be 10% per year, far higher than they'll get in Portland or Chicago.

This is still a half-baked idea that needs more energy (so to speak) put into it before we see if it'll really work.

I do have some questions for you. You said that technology will improve thus making it not cost effective to buy panels that will simply have to be replaced in a few years. Why do they have to be replaced? If I live in Arizona and buy a system that will provide for my electricity needs, why does it matter if costs go down for solar in the future? I suppose it will matter if they go down enough so that the electric company starts using solar instead of coal or nuclear and thus rates fall significantly. If that's the case, then the payback on my investment will also fall. Is that it, or is there something else? TedErnst

Ted, I think you have a neat business model idea here, because it addresses the issue of "not enough solar energy from panels in northern latitudes".

I am not sure how the numbers pencil out, I am no solar power expert (my technology tracking is more involved with underlying core technologies). I just brought up an issue that might effect the profitably or business expansion potential.

For example let’s assume that your business locks in on a particular panel technology, and customers rent at a rate equal to their power company – so they are happy. Then a new competitor comes along (sees your business model and thinks they can do it one better), and they lock in on a newer technology, that for arguments sake is orders of magnitude more efficient. What that means is they can do one of two things, charge customers the same price but make higher profit margins, or steal market share or expand faster, because they offer your existing customers, and new customers, a better deal (a lot lower electrical rate than they pay to the power company, or to your company).

The competitors new technology also has potential to take up less surface area, or also to be more attractive so as to blend in with existing architectural styles (for example rather than looking like a reflective mirror it looks like a traditional roof shingle) – that potentially causing your existing clients to switch, or potentially new customers to go with your competitor, thus negatively impacting your sales and expansion.

Again, all hypothetical scenarios on my part. Where I suspect the rubber really hits the road is getting solid numbers on issues like installation cost, long term panel maintenance, sales overhead, in addition to the actual efficiency of the power producing device (gaining the latter is the easy part). And I suspect unless there is some type of pilot project to gain these solid numbers, there will be a high degree of risk for investors – and that typically translates into investors wanting a higher return on their investment (in one way or another that jacks up the power rate your customers pay).

I also suspect that you understand one of the underlying power technology problems scientists are trying to solve. From the power company’s perspective they have an unequal load/demand cycle that causes an imbalance – the ideal is to use the power at the same time that it is produced. When this does not happen, then power must be stored – which with today’s existing technologies simply gets expensive (so in one way or another consumers have to pay for this storage function). Some ways this power storage problem is being addressed include large power capacitors, power factor correcting motors, batteries, pumping water to a higher level, which is later dropped to a lower level to power a turbine, flywheel, etc. Note that if one can figure out better ways to store the power as well, one can also make money in this area. For example today power companies give large industrial plants a power discount if they use power factor correcting motors or capacitors in their factories.

In any case I still think a neat business model concept. Note in the past I have read about some fuel cell companies using a similar rental model (but with fuel cells they can provide at any location in the country). These fuel cells do a direct conversion from a liquid fuel source, to electricity (fill the tank, out comes power, but no air pollution).MartinPfahler

Martin, I think you're right on all counts, about what we need to take into account. We're skipping the storage issue by copying CitizenRe by using reverse metering laws and installing systems that won't provide more power in one year than that household can use in one year. In effect, customers pay for storage by paying their monthly connection fee to their utility. We'll be posting more here about all the other stuff as we go. TedErnst

I'll follow this effort, keep up the good work! MartinPfahler

for reference

• Eesolar.com
• http://www.aboutus.org/Special:AboutUsSearch?auSearch=solar&fulltext=Find%21
• http://www.worldchanging.com/local/chicago/archives/006251.html