SolarCity introduced a new solar energy service that it believes will make it possible for many small and medium-sized businesses (SMBs) to pay less for solar electricity than they pay for power from their local utility for the first time. SolarCity will initially offer its SMB service to owner-occupied business locations in California, but expects to expand it to the east coast and other territories in early 2016.
For the SMB market, SolarCity will initially design solar energy system sizes between 30 – 500 kilowatts of generation capacity to businesses that own buildings with approximately 5,000 – 50,000 square feet of available flat roof space. SolarCity has built a new business unit dedicated to the SMB market, and is currently hiring.
Based on an analysis of SMBs in California, SolarCity expects to make it possible for many to pay between 5 – 25 percent less for solar electricity than they pay for utility power with no upfront cost, depending on their own utility costs and usage. The service will also include fixed, flat solar payments for 20 years, so if the utility rates increase in the future, customers can save even more.
The small to mid-size business covers a lot of ground in the U.S., but as of yet, the market has been one of the toughest for value propositions for solar. SolarCity’s plan for SMBs is to combine three innovations that leverage its experience in high-volume installation, technology development and structured finance:
While most commercial solar developers subcontract installation, which lengthens installation time and significantly increases cost, SolarCity leverages its vast network of local installation crews to install projects for SMBs at a lower cost. SolarCity expects to reduce the cost to install small commercial solar projects by more than 30 percent by using its own crews and technology.
SolarCity’s proprietary, lightweight solar panel mounting system–ZS Peak–allows SMBs to fit 20 to 50 percent more solar panels on each roof surface. ZS Peak also allows workers to install panels significantly faster than would otherwise be possible to reduce installation costs even further, and simultaneously increases solar energy production from each project.
Solar projects for small and medium-sized businesses have traditionally been very difficult to finance because SMBs do not have the formal investment grade credit ratings of large corporations, and also have no commercial equivalent to the FICO scores that are often the basis of consumer financing. SolarCity has teamed with Renew Financial to create a unique financing option for SMBs that combines low cost SolarCity structured financing with Property Assessed Clean Energy (PACE). The first rollout will be under the CaliforniaFIRST program.
Under this offering, an SMB signs a standard commercial solar lease with SolarCity, SolarCity finances the upfront cost much as it would under a traditional solar lease or power purchase agreement, and in turn the PACE program allows the business to pay the solar payment on its property tax bill. Just as it does for other commercial customers under a lease or PPA, SolarCity coordinates solar financing and also handles installation, monitoring and maintenance for SMBs.