Solar Red – Finally some PV Innovation on the roof
J. Peter Lynch
Residential solar photovoltaic (PV) systems potential in the USalone is a half a trillion dollar market; yet only 13,000 residentialinstallations were completed in the US in 2007, out of 73 million homes(.0002%). There are many reasons for this lack of adoption, for whatshould be a very popular technology:
- Installation requires a significant amount of expert labor
- The cost of residential PV is high relative to grid power prices
- There is a lack of financing options for consumers
Solar Red (www.solar-red.net)is taking a unique approach to making residential PV systems ubiquitouson homes, which addresses all of these key industry issues. Solar Redis attacking the high cost of sales and installation by leveraging the23,000 roofing firms that replace approximately 5,000,000 roofs in theUS each year (National Roofing Contractors Association).Solar Red will provide products and services to the roofers which makeresidential PV systems uniquely easy and inexpensive for them to selland install. By doing this, Solar Red is dealing with a largelyunaddressed, yet significant component of the cost structure ofresidential PV.
Solar Red’s offering includes three components:
- Proprietary and patent pending technology that greatly simplifies and reduces the cost of installation
- Aset of services that provide the roofers with missing back-roomfunctions, which are needed to enter the residential PV installationbusiness
- A consumer-financing vehicle that deals with thesingle largest barrier to the mass adoption of residential PV, theconsumer’s up-front capital expenditure
The Technology
SolarRed’s "plug-and-play" residential PV system is quickly and easilyco-installed with a new roof by any roofer with standard roofing skillsand tools. By enabling the roofing industry as residential PVinstallers, Solar Red lowers the overall cost of residential PV by25-30% (i.e. nearly $6,000 for a $20,000 system). Solar Red’s all-AC,parallel system architecture increases overall system efficiency by 7%and eliminates differential shading problems that can cause poweroutput to plummet in a traditional system.
The simplicityof the Solar Red solution ensures quality installation, which in turnensures years of reliable power flows. The system is modular and canaccommodate residential PV arrays of any size, and allows forsnap-in/snap-out installation of the solar panels once the brackets areinstalled with the roof. This innovation allows for quick and easymaintenance or changes in future technology. The snap-in/snap-outtechnology also addresses fire safety concerns as the panels can bequickly released and dropped to the ground should firefighter access tothe roof become necessary. This avoids potentially significant futurefire safety limitations on residential PV systems.
SolarRed’s proprietary system allows it to assemble the best in classtechnology for a complete and cost effective turnkey system. BecauseSolar Red can pick and choose the PV panels and other technologies itoffers from all available sources, it can quickly take advantage ofchanges in technology as they occur. Solar Red will continually improveits own products as well as search the world for the best residentialPV technology to offer enhanced value to their customers.
The Services
SolarRed’s services, created specifically for roofers, are designed toleverage technology to create great efficiencies and enable them to getinto the business quickly and easily. The services will includesatellite aided computerized system design and estimating, training,building permit preparation, tracking and processing of rebates andfinancing for the PV system. This will allow roofers to earn additionalprofit on each job they perform with little or no additional overheadinvestment and allow Solar Red to share in the installation profits oneach job. Leveraging the re-roofing market provides instant deal flow(roofers make approximately 5 million roofing sales annuallycollectively worth $23B).
Sales Channel
Approximately10% of roofer’s nationwide control 80% of the re-roof market and willbe our primary targets for developing long term business relationships.Through these key services Solar Red will enable roofing firms in theUnited States who are missing out on the growing residential PV marketbecause they lack the skills and knowledge to easily and quickly addsolar installation to their existing business. The roofing firmsprovide Solar Red with an untapped sales channel worth thousands ofsales each year at NO additional sales cost and a low cost vehicle forinstallation.
Financing
Solar Red andinvestors will provide pools of funds to purchase residential PVsystems which are then leased on a long term basis to consumers. Thisovercomes the single largest barrier to mass adoption of residential PVwhich is the high upfront capital costs. With today’s banking systemmelt-down and the real estate crisis, even if consumers had the will,it is unlikely that they could find financing for a residential PVsystem. The lease structure solves this problem, is simple forconsumers to understand, has low transaction costs and still allowsSolar Red and Investors to take advantage of depreciating the systems.All billing will be automated and the consumer will be responsible forthe maintenance of the system.
Business Overview
SolarRed is in the business of providing services and technology to helproofers successfully tackle the residential PV installation market,while building a strong brand within the channel for service, qualityand innovation. Solar Red will generate revenues through all threeactivities outlined above:
- Sale of hardware to our Authorized Dealers at standard manufacturing markup
- Margin sharing with the roofers on each installation
- Lease payments on the residential PV financing pools
Throughthe efficient installation of residential PV systems and the use of thelease financing structure, Solar Red will create long-term, recurringcash flows that grow with time, while creating strong value for theconsumer. They will create value by reducing costs, consolidating dealflow, managing risk and assuring high quality, long lasting power andcash flows. Solar Red is focused on building a business that will besustainable in a world of mass market adoption of residential PV, wherethere are a million or more residential installations per year.
SolarRed’s management team fervently believes in creating a world of massmarket adoption of residential PV by 2017, in which roofer installedresidential solar system sales volumes exceed 1,000,000 systemsannually. This represents a total of 5GW – the equivalent of building 5large nuclear power plants each year.
Solar Red was foundedby a solid team of entrepreneurs with extensive startup experience andexpertise in Cleantech, Solar, Residential Construction and PublicPolicy dedicated to creating value and moving the company to the nextlevel.
Current Company Status
Thecompany is perfecting the engineering and fabrication for the prototyperesidential PV system hardware. Solar Red will installed their firsttest roof in May 2009 in San Jose, CA. They will work directly withroofers to insure they have the best system available and that it livesup to expectations for ease of installation. The company hopes to haveits second generation system up and running in early fall of 2009 withthe assistance of a DOE grant.
The company is looking for itsfirst round of outside financing to complete the testing andcertification of the technology, develop the back-room services andprovide general start-up funds. In addition, Solar Red is looking forinvestors interested in funding the lease pools.
Solar Red,by virtue of its proprietary installation system, services andfinancing plan, will lower the cost of residential solar PV systems andmake their installation commonplace with any new roof. Should you haveany questions regarding Solar Red or desire more details, please do nothesitate to contact the company at www.solar-red.net. The CEO, Joe Augenbraun, may be reached at joe@solar-red.net or contact Mr. Lynch for details.
