SM: Do you offer rebate information for all the states and regions?
DK: We are only doing business in California, but we do cover rebates for all the cities as well as all of the utilities. That is very complex, and some of the most difficult stuff we have had to do on the backend is build the global solar calculator.
SM: Does San Francisco provide a rebate from the city or from the utilities?
DK: They provide it from a dedicated municipal rebate fund. It is unusually high and rich and has been brought down a bit. There are other cities around the state that do it simpler. There is also a California state rebate and a federal tax credit. In the stimulus environment that could be converted to a tax refund, almost like a cash grant.
In California the state money is drawn through the rate payer base and then pulled at the state level and redistributed. It is administered by the utilities. It is not so much taxpayer funds as utility payments that the state has garnered over the years.
Every jurisdiction has models for how it will promote solar. When I was at Greenpeace we were championing a feed-in tariff, which we felt was the ideal model. That is what Germany has adopted over a decade and that is why they are the leader in solar in the world and have created 270,000 jobs in this industry.
When we move to Europe, which we will do this year, we will deal with different calculations on the system. In that case it is a much more simple system. You get paid .44 euro cents for every kilowatt hour you generate. When we know the pitch and azimuth and orientation of the system, and we can tell the customer the exact number of kilowatt hours they will generate and what their corresponding payment will be.
SM: In that case you would have the information for both their consumption and potential generation, which lets you know how much can go back to the grid?
DK: Exactly. In the California case, often the best ROI and systems are the smaller systems because here you have a tiered rate structure. We can have customers in a McMansion in the tri valley. On the fifth rate tier we only have to put a small system in the roof to shave the peak. That reduces their average cost of electricity, which is where the returns are.
Currently the industry tries to sell as much glass as they can put on the rooftop and make the appeal to the customer’s environmental conscience. That is fine if that is the way the customer wants to go, and we do show them that type of option. We also like to offer them a fiscally beneficial model which shows them the ROI and a great offset of their fossil electricity, which affects climate change. We call this making your home a hybrid, and it is a different selling point from the mainstay of the solar business.
That does change the backend and the contractor platform. One of the reasons historically that contractors have had to sell as much as they can, optimizing the system to 100% or more, is that they cannot make a buck selling small systems. We have to be able to sell small systems at a profit for this industry to have a future. Right now it is hard to do that because of cost of goods sold and the intricacies of paperwork. These little mom-and-pop shops which make up most of the industry today barely make a margin and often run at a loss but keep it as a small deal.
Even the bigger, more established companies will shy away from small system. They have to sell systems to people with large homes and high electricity loads. That is not the answer to climate change. For solar to help displace fossil fuels it has to replace them substantially. To be deemed a success politically it has to be everywhere fairly soon.