SunRun teams with Virgance to finance solar for consumers Startup Scores $100 Million to Finance Solar Panels

SunRun teams with Virgance to finance solar for consumers

Chris Morrison

Hard economic times mean fewer consumers will shell out for expensive solar panels. Also hard hit are startups that offer no-money-down programs to lease panels or buy their power but can’t find banks to partner with. So, teaming with SunRun — one of the few outfits that still has a healthy line of financing — is a minor coup for Virgance, a company that plans to sign up thousands of new solar users.

I’ve written about what Virgance does in the past, but the quick version is that they run word-of-mouth campaigns to get hundreds or thousands of people to sign up for solar evaluations of their homes. Those that are interested in installing panels are then formed into groups, allowing Virgance to use collective bargaining to cut the total price by up to 25 percent — often saving thousands of dollars.

But it still costs many thousands more to buy a solar system up front, even with government rebates. The recession isn’t the only thing that keeps regular people from adopting solar — it’s the consistently-high price. Outside of affluent neighborhoods in San Francisco, about 80 percent of prospective solar customers said they needed financing, according to Steve Newcomb, Virgance’s chief executive. “It’s that difference between paying about $10,000 and just a thousand up front,” he told me.

From Virgance’s anecdotal experiences, it sounds like there’s a huge market of middle class customers who haven’t yet found an attractive enough financing option to seriously consider solar. In hopes of testing that theory out, the company will have SunRun back up all of its financing with the $100 million credit line the latter has from US Bank — enough for over 2,000 full-size systems.

The plan is to use this year to expand the program, run by a Virgance division called One Block Off the Grid (1BOG), outside of California (the company’s multiple other divisions will be represented at its Equinox event in a week). The Bay Area and Los Angeles have had their own successful campaigns, signing up hundreds of customers in each area, and Newcomb claims grassroots demand for 1BOG in places like Denver and New Orleans has been strong.

But there’s still plenty of work to be done. Ed Fenster, SunRun’s chief executive, points to a number of factors that will determine whether rooftop solar can be successful in other states, including the strength of sunlight, power prices and rebate programs. Also problematic are some state regulations. Colorado, for example, will need to change laws that prevent a company like SunRun from owning small solar systems.

Unfortunately, that ownership is the basis for the company’s power purchase agreement model so that the consumer only pays for the power, not the panels. Fenster says new rules are under consideration in the state. But ultimately, spreading solar across the country will require the two companies to innovate in a more outlandish area: lobbying politicians. And that may be the best indication yet that solar has finally entered the mainstream.

French farmer is new sun king

By Gus Trompiz

WEINBOURG, France (Reuters) - Bright winter sun dissolves a blanket of snow on barn roofs to reveal a bold new sideline for Jean-Luc Westphal: besides producing eggs and grains, he is to generate solar power for thousands of homes.

Economic crisis has cast doubt on funding hopes for many big renewable energy projects, but the giant panels built into roofs on this sloping farm at the foot of the Vosges hills in eastern France are attracting attention from farmers to financiers.

Westphal is one of a small but growing band of farmers in the European Union's biggest agricultural producer who are taking up new incentives for solar power to supplement farm incomes as well as help France meet renewable energy targets.

"We're trying to go a bit beyond agriculture to earn our living in a different way," said Jean-Luc Leonhart, an old classmate of Westphal's visiting his friend's project with a view to installing solar panels on his own farm.

In a mountainous region famed for Munster-Gerome cheeses and good quality white wines, Westphal is working on a grand scale.

His built-in panels form one of the largest integrated installations of photovoltaic systems -- which generate electricity direct from solar power -- yet built.

The 20 million euro ($26 million) investment means constructing five enormous sheds covered by 36,000 square meters of solar panels with a capacity to generate 4.5 megawatts (MW) of electricity, enough to power 4,000 homes.

"It's quite a gamble," said Westphal, who runs the farm with his brother.

The size, combined with a government guarantee of long-term electricity contracts at an inflation-linked "feed-in" tariff, helped win the scheme bank support.

Banque Populaire jointly financed Westphal's project with Credit Agricole, France's leading lender to farmers.

"It was the economies of scale that convinced them," Westphal said. The farmer expects to generate 2 million euros a year in electricity sales from his solar site.

INTEGRATED SOLAR BOOM

The type of solar-panel roof Westphal is using -- known as "integrated" because the panels are built into the roof rather than superimposed -- is booming in France thanks to legislation creating 20-year contracts with strong incentives to sell electricity to the grid.

At 0.55 euros per kWh, integrated solar photovoltaic panels generate nearly twice the revenue of ground-mounted and superimposed solar panels.

The built-in technology is encouraged by the authorities as aesthetically acceptable, in a country where wind farms have been sharply criticised as eyesores.

A key element of a government goal to have renewables make up 23 percent of French energy consumption in 2020, the feed-in tariffs show France imitating Germany, Europe's leader in solar and wind power.

"France's ambition is to play a leading role in the technological revolution which is about to happen in solar power," Environment and Energy Minister Jean-Louis Borloo said in November.

France is heavily reliant on nuclear plants, whose capacity of 63,260 MW dwarfs the 25 MW of solar power switched to the French grid by late 2008.

But the country has already doubled its solar capacity annually since 2006, according to renewable energy producers' group SER, and the government's goal is to multiply this to 5,400 MW by 2020 by luring homeowners, farmers and businesses with attractive tariffs.

"There is a real bubble effect," said Stephane Maureau, chief executive of Evasol, an installation firm that works in partnership with Tenesol, the solar panel maker jointly owned by electricity group EDF and oil major Total.

Adding to the incentives is a fall in the price of solar-grade silicon used in the panels -- it is forecast by some to decline by more than 30 percent this year.

Whereas in 2007 it was receiving a couple of requests a month from farmers to install solar panels, last year Evasol saw about 30 each month, Maureau said.

For his industrial-size installation, Jean-Luc Westphal is operating under his own company, Hanau Energies, and being supplied with panels by Japanese manufacturer MSK, part of China's Suntech Power Holdings Co Ltd.

NO JACKPOT

With farmers' incomes subject to increasing volatility -- linked to rising global demand, extreme weather and speculative interest in commodities -- and the European Union scaling back direct farm subsidies, renewable energies have emerged as a supplementary option.

After two years of healthy rises on the back of surging commodity prices, average farm income in France fell 15 percent in 2008, according to the French farm ministry, as producers faced falling prices coupled with increasing costs.

But even if banks were happy to fund Westphal's project and Evasol's Maureau says demand has inflated rapidly, the credit squeeze has made them more reluctant and apparently hurt big players like Suntech, which reported a fourth-quarter loss.

"There is not going to be as much money as before for this type of project," said Arnaud Berger, head of sustainable development at Banque Populaire.

For other farmers considering solar energy, a cooperative would be a good way to create economies of scale without a huge individual investment, he added.

One example is a group of 77 cattle breeders in the Aveyron region of south-west France, who formed a company, SAS Adder, to manage the 17 million euro construction of 33,0000 square meters of integrated roof panels on their farms.

"It's about minimizing the costs, spreading the risk and sharing the profits," said Pierre Bastide, Adder's president.

Adder's project is one of 30 in the area of sustainable development that will receive a ministry award at the Paris Farm Show running to March 1.

Farmers remain characteristically cautious, however.

"The return on investment is decent enough but not extraordinary," Evasol's Maureau said. "The motivation for farmers is more like to have an extra retirement pension."

(Editing by Sara Ledwith and Gerard Wynn)