2011-10-07

Co.Exist

Solar Entrepreneur Lynn Jurich: Sunny Days Ahead

What's the future of solar energy? Fast Company gets Crystal Ballin' with Lynn Jurich, cofounder of SunRun, which is flourishing in a season that has seen a few high-profile bankruptcies in solar energy.

For the latest installment in our futurist series of interviews, Crystal Ballin', we talk to Lynn Jurich, the 32-year-old cofounder of SunRun, which specializes in installing and operating solar panels on residential rooftops. SunRun's twist on the model is to retain ownership of the panels, sparing residents the tens of thousands of dollars it would cost to buy and install them themselves, thereby speeding adoption. Last month, the large solar firm Solyndra went bankrupt, leading to speculation about the future of solar. Jurich, for her part, is confident that it's going to be sunny. 

FAST COMPANY: Tell me a bit about SunRun’s vision.

LYNN JURICH: We started the company five years ago, and we’re now the leader in residential solar-as-a-service. The inspiration for the company was that we saw all this investment going into solar technology, and we could see that solar was finally going to be cost competitive with other energy sources. Our thesis was that since homeowners pay the most for power, residential rooftops would be an important market. We go out there and sell the homeowner power that’s a price at least equal to what a utility charges, or less than that. We pay for the whole solar installation, and the homeowner just pays us for the electricity. And what this does for the grid is it helps us to move away from dirty, dumb, huge energy plants, where 40% of the electricity that we generate is wasted before it even reaches the end user.

What markets are you currently in?

Today we’re in nine different states: Hawaii, California, Arizona, Colorado, New Jersey, Massachusetts, Pennsylvania, Maryland, and Oregon. In those places we can literally put up panels on residents’ rooftops at zero cost to them and save them money immediately.

How is business faring?

We have about 14,000 customers today, and we’ve raised money to install about 750 million dollars' worth of panels on rooftops. Today we’re installing a million dollars’ worth every day in residential rooftops. We’re growing at a rate of over 100%.

How do you raise those numbers further? To what extent is solar a technological problem, and to what extent is it a financing problem?

The majority of it is not just financing, but a finance and business problem, that whole last-mile problem. The panels are reliable and affordable now, and the price has really come down, following a pretty predictable curve just like in other industries. The majority of the friction in the model is in financing definitely, because it’s a newish industry and a long-lasting asset. These panels last 20 to 30 years, and it’s difficult to get cheap capital against a 20-year asset when it’s less known. Other major problems are regulatory problems. So much of what we spend time and money and effort on is education and lobbying. An interesting fact is that in Germany, which doesn’t even require a permit for you to install solar panels, the gross cost to install solar is less than in the U.S. You can contribute a lot of costs to local red tape--there are huge soft costs that we could easily eliminate with less bureaucracy.

What proportion of your job is spent on politics, lobbying, and the like?

My time personally, 10 to 15%. But we have six full-time people in regulatory affairs. We actually spend more money in legal or regulatory efforts than we do in marketing.

You said that you offer solar at a price equal to or cheaper than traditional energy. Is saving money the only thing that will move consumers to be green? What about the old-fashioned appeal to the conscience?

We don’t believe that that’s a realisitc approach. “Pocketbook environmentalists,” we call our target customers. They make buying decisions based on value. The primary driver is cost and convenience, and the environment is a secondary nice-to-have. The mainstream is not willing to make sacrifices in cost or convenience.

I bet this kind of talk goes over great at Greenpeace rallies.

I’m on the board of the Sierra Club Foundation, and am myself a big environmentalist. But the way to make the biggest difference is to change mainstream behavior.

A couple solar companies have a fallen on hard times, lately: Solyndra is the latest to have gone through a high-profile collapse; Evergreen was another. How does SunRun gird itself against such catastrophes?

We’re technology-agnostic. A lot of people are investing in panels and hardware, and we don’t want to take a bet on that: We want to be the beneficiaries as those costs come down. The high-profile companies you’ve seen go bankrupt have almost been victims of the solar industry’s success--they’re hardware companies, and because cost has come down so dramatically over the last two years, they’re not able to compete. This is a growing market where there is a shakeout as the market develops. When Netscape failed, it didn’t mean the Internet was over. If you look at the fundamentals, the solar industry is healthy.

I had totally forgotten about Netscape. So energy is like the computing industry?

We used to have mainframe computers and dumb terminals, then we moved to the client-server model, then fully distributed on the Internet. We believe a similar thing will happen with energy industry.

How many times a day, when describing the current state of things, do you find yourself using the word “dumb”?

Thanks for pointing that out, I’ll have to watch that in the future! The way the system works right now, you have these centralized power plants, and the grid flows one way, and there’s no flow of information. I think what we’re moving towards is a smart grid where real-time information is feeding back and forth, as well as decentralized production. What happens today is you have to build capacity for peak demand. So on a hundred-degree day, power plants have to turn on these things like jet engines, which are really expensive and really dirty. When you look at the cost of peak power, it’s much more expensive today than solar. You have to look at the entire system and what it truly costs. The Northeast blackout in 2003 cost the economy 3 billion dollars. All we needed were 80,000 homes with solar for that to be avoided.

Time to look into the crystal ball. Where will residential solar power be in one year?

In a year I believe we’re going to have significant growth. I believe we will expand to an additional three or four markets where we’re cost competitive.

How about five years?

In five years I think it’ll start to become a meaningful contributor to our energy sources in the U.S. By “meaningful” I mean I think solar will be a known quantity for households. I think it’ll be more of a household name in five years, easily.

And in 25 years?

Solar adoption in the U.S. is now at, like, .01%. I think in 25 years, there’s a reasonable chance it could be between 5 to 20%. When wireless cellphones first came out, analysts predicted that at peak, it would only replace 5% of landlines. They said the quality wasn’t good enough. Clearly that was improved. I think you’ll find a similar thing in solar.

Is 20% adoption the asymptote solar’s aiming for? Can’t we ever get to 100%?

I don’t think you’re ever gonna totally get there. With the right storage you might be able to. In the medium term you’re always limited by the environment, the infrastructure, the way the roofs are oriented. I also think that in 25 years, in new construction, clean energy production will be incorporated in every new building. There’s already a huge interest in having smarter homes, facing in the right direction, with roofs unshaded. We’re seeing that in California, Texas, and Arizona.

Texas and Arizona are pretty right-leaning states.

Our customer base isn’t just people saying, “I’m an environmentalist, I’m in my my Birkenstocks, I went to Woodstock.” Solar is a bipartisan technology. Republicans like solar, conservatives like solar. Over 30% of our customers are veterans. There’s something very American about being able to produce power on your own rooftop.

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