Until recently, Sunrun—a solar leasing company that puts solar panels on your roof with no upfront cost—offered services in 15 U.S. states. But late last year, Nevada changed the regulations to make the economics of having solar on your house vastly different: They increased the fee to connect your panels to the grid, and they lowered the price that you would be paid for the power you put back into the system. Now that home-owners have to pay a lot more to connect to the grid and stand to receive less for selling excess power, leasing panels isn't the proposition it was in the Silver State, despite its abundant natural resources. So the San Francisco installer dropped out of that market, along with SolarCity and others. No more solar leasing in Nevada.
But Lynn Jurich, Sunrun's co-founder and CEO, doesn't sound too worried. The solar industry has successfully fought back connection charges and "net metering" changes in 57 other instances, she says. And, the fundamentals for residential solar remain strong, she argues. Prices for panels and "soft costs" around installation are falling. There's a deep need to decarbonize in the face of climate change. There's a shift to decentralization in the energy system, like the shift from mainframes to client PCs, or landlines to cellphones. And, solar companies are more in tune with modern consumer expectations than traditional utilities tend to be. There are bumps in the road, but the road is still fit for traveling.
The fight over connection charges and net metering—which allows customers to make money on the surplus energy they generate—is playing out across the country. Utilities argue the fees are necessary to maintain the grid and that net metering is a form of subsidy for renewables. But the solar industry says this is disingenuous talk and really just a way of slowing its progress and maintaining monopoly-sized profits.
"The scare tactic here is to say solar customers aren't paying their share for the grid," Jurich says. "Intuitively, people say that makes sense. But, actually, rooftop solar is saving everyone money and it's the opposite. Solar increases the grid's resiliency and prevents utilities from having to spend more money on transmission and distribution, and having to buy new generation."
By distributing generation to people's rooftop, homes aren't so reliant on the grid and take a weight off traditional generation. Jurich says utilities should be embracing the move to solar because it takes the weight off utilities to maintain a buffer between demand and supply. All the more so as homes begin to get battery storage like Tesla's Powerwall, which Sunrun is beginning to sell in Hawaii this quarter. That will allow solar homes to back up the grid when it's not functioning for any reason, she says.
When utilities slap on fees for connection, all they're doing is encouraging home owners to cut the cord completely. "With these inexpensive storage solutions, customers can totally step off the grid," Jurich says. "That's not a great outcome for utilities, because even solar customers are good customers because they're getting 30% or 40% of their power from utilities most of time."
Jurich (who doesn't own a car!) founded Sunrun in 2007 with Ed Fenster, a fellow MBA graduate from Stanford business school. They were pioneers of the solar leasing model, whereby the company installs, maintains and owns the equipment and customers buy back the power, in most cases beating what they pay for utility power. The model was key to expanding the solar market in the U.S. Back in '07, most people didn't have to money to buy panels upfront, and loans tended not to be available.
Now Sunrun, which listed on Nasdaq last year, has 100,000 customers and plenty of money for further investment. It recently raised $250 million in further bank financing.
In time, Jurich sees opportunities for solar installers to work with utilities rather than fighting them. Sunrun could for example put in solar-plus-storage and sell a demand-response service to utilities so they wouldn't need to invest in back-up resources of their own. But, for now, such collaboration seems unlikely. Many utilities seem intent on resisting solar and maintaining their dominance.
"Rooftop solar is the first real threat to monopoly utilities. We're seeing a lot of lobbying efforts to block its growth," Jurich says.