In just two years, rooftop solar startup Sola.Energy has grown to 25 staff and pivoted into a solar-as-a-service model that founder Alan Hunter says will improve the sustainability of his fledgling business.
Hunter says Covid shutdowns prompted the company to rethink the sustainability of the business and subsequently change its entire business model. It’s since teamed up with energy retailer Locality Planning Energy to offer its customers rooftop solar and battery plans that are just like phone plans from telecommunications companies.
The rooftop solar on-demand model is not the first attempt to disrupt the traditional ownership model for rooftop solar that locks out customers that can’t afford the high upfront capital costs and those who don’t own their roofspace, such as renters and tenants.
There’s a range of providers offering power purchase agreement and other options that reduce upfront solar kit costs for households but what makes Sola.Energy unique, according to Hunter, is its partnership with an energy retailer.
Compared to some of other rooftop rental agreements that result in one bill for the solar system and one from the retailer, his service results in the customer having only one bill.
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“Customers just want it to be simple. Energy is already complicated enough.”
Teaming up with a retailer also makes navigating the complex regulatory environment easier.
“The energy sector is very regulated on the retailer front and not on the distributor side, anyone can sell energy. That’s why we work with a distribution model and sell to a retailer and they then they sell to the customer.”
The challenges in the rooftop solar industry
The traditional rooftop solar industry is incentivised to put in as many cheap solar systems as possible, Hunter says, which has left many Australian households and businesses with broken or poor performing solar systems. Hunter says around one in five solar systems in Australia are faulty or not performing at their best.
Under the service model, which is essentially a power purchase agreement, his company retains ownership of the solar kits and rents its customers roof space. As such, its driven to install high quality systems and ensure they are working optimally. The ongoing maintenance and monitoring systems is also a win for longterm business stability, he adds.
“There is a huge irony that solar companies aren’t sustainable … they are driven to keep selling.”
Competing with the grid
Hunter sees solar offerings like his competing against the grid, saving people money because they avoid the 60 per cent of a standard energy bill that goes towards the substations, powerlines, underground cables and power poles that move energy around. He says his system can save his customers 30 per cent on their energy bills.
The model also opens up new doors for clean energy investment. Investors can purchase a solar panel through the company’s network that is install on the roof of a producer. The investment covers the cost of the panel, installation and maintenance, and the producer then pays the reduced monthly energy bill and the cash from those bills goes back to investors, offering a 14 per cent return on their investment.
For renters, which is a 3.2 million market in Australia largely locked out of the market due to the split incentive issue, the model allows landlords to profit or yield from their roof, while the consumer ends up with cheaper costs.
For property developers and investors, the model eradicates capital costs of rooftop solar and batteries that lower bills for prospective customers. “We want to lease their roof and they can yield from their roof.”