Math getting better? -- CitizenRe

(Note: I have posted a followup article on CitizenRe as a result of this thread. Also a solar economics spreadsheet.)

I’ve been writing about the economics of green energy and solar PV, and have been pointed to a very interesting company named CitizenRe. Their offering suggests a major cost reduction to make solar workable.

They’re selling PV solar in a new way. Once they go into operation, they install and own the PV panels on your roof, and you commit to buy their output at a rate below your current utility rate. Few apparent catches, though there are some risks if you need to move (though they try to make that easy and will move the system once for those who do a long term contract.) You are also responsible for damage, so you either take the risk of panel damage or insure against it. Typically they provide an underpowered system and insist you live where you can sell back excess to the utility, which makes sense.

But my main question is, how can they afford to do it? They claim to be making their own panels and electrical equipment. Perhaps they can do this at such a better price they can make this affordable. Of course they take the rebates and tax credits which makes a big difference. Even so, they seem to offer panels even in lower-insolation places like New England, and to beat the prices of cheaper utilities which only charge around 8 cents/kwh.

My math suggests that with typical numbers of 2 khw/peak watt/year, to deliver 8 cents/kwh for 25 years requires an installed cost of under $2/peak watt — even less in the less sunny places. Nobody is even remotely close to this in cost, so this must require considerable reduction from rebates and tax credits.

A few other gotchas — if you need to re-roof, you must pay about $500 to temporarily remove up to 5kw of panels. And there is the risk that energy will get cheaper, leaving you locked in at a higher rate since you commit to buy all the power from the panels. While many people fear the reverse — grid power going up in price, where this is a win — in fact I think that energy getting cheaper is actually a significant risk as more and more money goes into cleantech and innovation in solar and other forms of generation.

It’s interesting that they are offering a price to compete with your own local utility. That makes sense in a “charge what the market will bear” style, but it would make more sense to market only to customers buying expensive grid power in states with high insolation (ie. the southwest.)

Even with the risks this seems like a deal with real potential — if it’s real — and I’ll be giving it more thought. Of course, for many, the big deal is that not only do they pay a competitive price, they are much greener, and even provide back-up power during the daytime. I would be interested if any readers know more about this company and their economics.

Update: There is a really detailed comment thread on this post. However, I must warn CitizenRe affiliates that while they must disclose their financial connection, they must also not provide affiliate URLs. Posts with affiliate URLs will be deleted. Some salient details: There is internal dissent. I and many others wonder why an offer this good sounding would want to stain itself by being an MLM-pyramid. Much stuff still undisclosed, some doubt on when installs will take place.

carbon tax

interesting comments. i've always assumed that you would be able sell the power generated at market price. but that price will be driven down when more people install similar power-generating equipment. i've been similarly thinking about social eco-friendly ideas... but in the carbon tax arena. i recently read an article about private jets charging the super rich a percentage of the fare to offset their carbon-emissions. on its own, it won't matter much, but i wonder to what degree can it be stretched to make carbon taxing a real solution.

Citizenre-Solar

What I can't find anywhere is what happens if solar does really catch on. Eventually, peak demand will be at nighttime when everyone has to buy. Also too many secretes scares me. A ligitimate company with a great plan could share a lot more facts and info.

doesn't compute

I can't see how it is possible even if they can manufacture and install at $2/peak watt since they will have administrative costs and may be paying commissions to an AMWAY like telemarketing/sales force. I have a strange feeling about all of this.

Not $2/watt

That’s what the final cost needs to be, but they are getting rebates and credits. The small system credit is $2.50 per peak watt in California. In addition, there is a 30% federal tax credit with write-off in 6 years available to commercial installations with no cap. There’s a cap for residential of $2K. So that’s $6.42 which starts to be obtainable, but you have to do better than that to make a profit and justify the risk. (I don’t know how these combine, and the tax credit is not quite that good, it’s over 6 years.)

There’s a 1.5 cent/kwh federal production credit. One thing I don’t yet understand is California’s performance-based-incentives program for systems over 100kw. Some claims say this pays as much as 39 cents/kwh for 5 years, which would make a dramatic change, and explain why it would be profitable, at least in California, to own an amalgamated generation system like this.

Er, I can't even work out my own electric bill ...

Citizenre is going nationwide, so talking about California’s situation doesn’t cover Citizenre’s situation. I live in somewhat less than sunny Pittburgh, Pa, with lots of cheap coal waiting in dangerous holes for us. And the rebates don't work here (more so in Jersey). My wife wants me to contact Al Gore, to ask him about Citizenre, because she trusts him. Ed Begley advocates Citzenre on his website for his "Living with Ed" show, but my wife doesn't trust him (maybe if I can get Ed to call Al). The thing is, I am wiling to make a commitment for 25 years (I'm 45), I don't know if my wife is (at 51), and I wonder if solar will come down. It is the initial investment that matters, to me. How does/is Citizenre making the initial investment (loans? IPO?), and will they be able to support making the payments?
Ed Heath

Not for 25 years

CitizenRe claims you can buy on a year by year basis or a 5 year at a time basis. Your rate changes each year (quite possibly that’s in your favour) on the year by year. Only the 25 year offers the onetime free move of your house.

But yes, I don’t understand how they do Pittsburgh, either. And beat West Penn Power’s 7.4 cents/kwh to boot.

I predict solar will come down, and that is the historic trend. Carbon-fueled grid power should go up, too. At some point the grid starts moving to the newer, cleaner, cheaper sources, be they cheap solar or otherwise. Eventually the tax credits and rebates vanish, though.

But CitizenRe’s CFO wouldn’t allow them to sell this plan if they didn’t have math to show it making money, even with some planned number of defaulting users in the event panels become cheap. If you take the 25 year plan, you pay them that rate for 25 years so it doesn’t matter then, to them, if panels become cheaper. If you take the short-term plans, it seems they could get royally screwed by panels and grid power becoming cheaper.

So while I happily believe ordinary homeowners might dupe themselves into thinking their PV system is cheaper than grid, a large company won’t make that mistake. The question is, how are they making it work, and how much of it is the taxpayer?

taxpayer has nothing to do

taxpayer has nothing to do with Citizenre. It is privatly funded. 650 million already before everything is up and running.

Tax credits necessary

CitizenRe (and other solar installations) only have any chance of economic viability due to the many tax credits and rebates. I'm not saying this is a bad thing, but it's the truth.

I beloieve I read that they

I beloieve I read that they stated they can not beat rates of extremely competitive smaller utilities. If the utility is not listed in the directory on their page you can request to have it reviewed to be added. They won't offer the contract if they can't beat the price or you will know theprice when the contract is proposed and it could be higher.

General Motors, Staples and

General Motors, Staples and SunEdison are doing this. General Electric Energy Fund is a major player in this arena already. Many large companies are seeing benefits from soalr energy and are using the "Solar Services Model" to their advantage.

Hi I was just wondering how

Hi I was just wondering how your wife feels now that they outed Al Gore for using 20 percent more electric then the average citizen and the news corospondent wanted to know what Ed Begley thought about him. (Did you see this news Cast?} Remember Gores a politician . Just alot of talk.

They seem to be counting on

They seem to be counting on a 50% reduction in cost of goods sold by 2015, and a further 50% reduction by 2025, coupled with orders of magnitude increases in plant scale and secondary mechanisms (e.g. energy storage) to manage peak demand.

http://www.citizenre.com/web/index.php?p=roadmap
http://www.citizenre.net/web/index.php?p=renu

The latter page also links to a description of their plans regarding "Renewable Energy Certificates", which they seem to expect to provide a further 5c/kwh.

All this seems to suggest that their basic plans involve energy arbitrage (buy at off-peak, resell at market), clean energy generation, and high volume manufacturing.

http://www.citizenre.com/web/index.php?p=strategy

Sounds great

And I expect solar to get cheaper. But they seem to be saying this is in the future, and they don't get their plant online (at 20% capacity) until 2007Q3. So this doesn't explain how they can contract today to put up panels and sell the electricity to me at below utility cost.

If they buy an expensive panel today, they have to amortize it on today's cost. It doesn't help that they bring the cost down in the future. Unless this is a way to lose investor money to develop "market share" until the install can be profitable. But that doesn't make a lot of sense. There is not much market share on permanent installations.

I would love to see them get the price that low and more clean power spring up. I just want to understand how they do it.

(I guess there are some aesthetic issues to turning our rooftops into a sea of panels, but they are not as bad as the aesthetic issues of staring at the smog.)

Another issue that would be a great problem to worry about -- how to handle hot, cloudy days. The existing grid has to still be able to handle that peak load, but if that carbon-burning equipment isn't used much on sunny days, how will it end up priced?

Demand for electricity is

Demand for electricity is only going to go UP so to meet that demand utility companies will either have to build new plants or buy power from someone else. Citizenre et al = "someone else". In effect these alternative energy companies offset the long-term capital expenditures that utility companies pay to satify their customers.

Most utility companies would rather be distributors rather than generators anyway. That is, they charge the players a monthly fee to connect to the grid, and let someone else move power across their grid. "Commercial" solar installations pay a monthly connection fee while, at the moment, "residential" solar installations don't and that raises a red flag with me for this kind of scheme. It would take a very small change in policy to declare a scheme like Citizenre's a commercial solar enterprise and start billing the homeowners for access to the grid. That could blow their business model all to smithereens, leaving the company bankrupt and the homeowners with obsolete grid-tied solar systems on their roofs that they can't legally keep connected to the grid.

Re: They seem to be counting on

Very interesting thread, and forum, Brad.

I am the Southwest Regional Sales Director for the company. It would be completely inappropriate for me to engage in discussion here, which could only be construed as biased self-promotion. However, I invite anyone in the group to call me if you'd like to put your questions and concerns at (520)749-3121, and I'll ring you back on my dime. Thank you gentlemen.

Sincerely yours,
Douglas Grant
Tucson, Arizona

Feel free to post

On-topic posts from industry players are generally welcome on most message sites. What people hate is shilling for the point of shilling, or worse, people who say, "I just discovered this great new site..." when they actually are involved with it.

You are correct

While it is not found anywhere, I would also expect them to sell syndicate the recvbles and depreciation on the equipment. This would allow other companies to get the depreciation from the equipment and the discounted cashflows. Kind of like how a leasing company works.

As you state they also plan to sell the certificates on the open market, they will make money in the "green" futures market.

I have been in banking for the past 20 years and as a result I always try to figure out where the money is coming from. This plan makes sense to me. While I am not a big fan of MLM this approach has some very good benefits for them such as reduced marketing expense. The downside is they will have a hard time keeping the brand clean and making sure the few ecopreneurs (associates) that cause problems do not ruin it for the rest of us. I am an ecopreneur and have done quite a bit of research on their plan and based on the information I have found I am comfortable with associating with this product.

http://www.myfreesun.com

Actually the associates

Make it more confusing for me. They must pay the sales commissions on top of it all. Yes, you can depreciate solar panels faster than normal, and you can sell off that depreciation for some early tax breaks, but show me how it all adds up to 8 cents/kwh spread over 25 years. Right now expect to pay $5 for a peak watt to buy the panel, pay for grid intertie equipment and wiring, permits, installation, sales commissions, and overhead (billing, support, legal), risk costs and future maintenance expenses, as well as of course, the cost of capital. Each peak watt gives you about 2kwh per year in sunny places, a bit less elsewhere.

Now take away rebates, tax credits, depreciation resale, clean generation credits, pollution credits and get me down to 8 cents/kwh with a profit. If not, what do you have to pay for the peak watts to make a profit?

handling peak load

Having read the contract,(and I am no gentleMAN, being a middle-aged lady) I notice that consumers must agree (except in off-grid applications) to purchase energy from the electric utility when consumers' demand for power exceeds their PV panels' supply, and that the Citizenre system is understood NOT to be consumers' primary source of electricity; also, the contract specifically states that there are no guarantees that adequate power will be provided by the PV panels, also that the local electric company to which the consumer is linked may be awarded surplus energy generated by consumers's PV panels without compensation to the consumer. These little items may respectively put some pennies in Citizenre's coffers and offset poor insolation conditions. One would need to read the contracts between Citizenre and the local utilities they link to, I suppose, among other references.

Not that bad

I read it and I don't think it means what you suggest. If it said that (you don't get credit for what you feed back to the grid) then it would be a dealbreaking flaw in the agreement, since this really only works with net use metering.

I think what they're saying here is that CitizenRe isn't going to make guarantees about how the net use metering works in your area. Your local utility may credit you less for your backfeed than you pay CR to generate it, and they're warning you it is possible the utility may not credit you at all, leaving you screwed.

Solar only works with grid-tie and net-use metering. If you don't get those it's vastly more expensive. Off-grid use is not very green because in most cases the panels spend a lot of their time throwing away energy because the batteries are mostly charged. As soon as you start throwing away any significant part of what's generated you really kill the utility of the PV.

Here, however, is a catch that people may not consider with CitizenRe (or privately funded solar) if grid power goes down it price. If you sign a 25 year contract with CR for 10 cents/kwh, and grid power goes down to 5 cents/kwh, then it's not just that you are now paying 10 cents when your neighbours are paying 5. It's that any excess you generate must be paid for at 10 cents, and you can only sell it to the utility for 5. That is what they are warning you about here.

Will you generate excess? With a system sized for your real usage, you will generate a lot of it. A system sized to handle your needs can only provide you power at night or when it's not sunny by buying it from the grid then, and giving it back to the grid when it's sunny.

If you size your system below your needs, then you have less risk here, but more risk if grid power goes up.

Buying solar is (both with CR and regularly) a bet on the price of grid power. If it goes up, you win. If it goes down, you lose. What it will do is hard to predict.

They are also warning you that utilities and states might change the net use metering rules, or even take them away, which really leaves you screwed unless you can get out of the CR contract. If you did it year by year you are safe.

One thing to compensate is time-of-use metering. Most people with solar try to get time of use metering, which means electricity costs more in the day than at night (roughly.) That's perfect for people with a solar grid-tie, except on hot cloudy days that need A/C.

However, power utilities are fighting the idea they should pay you the peak rate for electricity you feed back during the peak time. They try to pay only the blended rate for that. That's not very fair, but it's what they do. I don't know how much success they and solar owners have had in the fight over that.

In the end, a 25 year contract with CR is really just a novel way to finance solar, combined with, if they're good at it, a low cost supplier and somebody to coordinate all the hassles (the value of which should not be dismissed.)

You're still largely buying a PV system, and financing it, and taking the risks associated with that.

Tempting, tempting...

That reroofing problem worries me, my house is about the age where a new roof will be necessary soon. I was hoping that I would be able to install thin film PV shingles when the time came. Maybe they will treat it as a "one-time move" situation and reinstall after the roofers do their job, with no charge.

According to their literature, they try to design a system which will supply the number of kilowatts you use over a year. My house has a heat pump and I don't know if there is enough room on the roof to provide that much power over a year.

Could they be making money by selling power in the day and buying it cheaper at night?

Reroof

Why not get the roof before the solar install, if that's what you want. Though they claim only $500 for a temporary remove of a 5kw system.

Look at your power bill and see how many kwh you use per year. The power companies often give you such details, or have it on their web site. Divide by 2, that's how many peak watts you need to meet your needs with solar. A typical house might use 8,000 kwh per year and thus need about 4,000 peak watts here in California. More in less sunny places.

My personal vote would be not to get full capacity, though. Hedge a bit on solar getting cheaper. Excellent odds that you can add more later. With CitizenRe you must buy all the power their panels produce, no option. So buy a little from the power company today, and add more solar (for less money) later. Plus I would not try to get so much as to totally fill all your south roof space, etc.

They only "sell" power in the day (you are required to buy all the power your pv system produces.) You buy the power at night. You actually "sell" your excess during the day to your power company to power your neighbours. CR does not do that. Strictly it's net metering -- your meter runs backwards during the day, and forwards at night, though they never let you go to zero, even if you provide more power back in the day than you take at night, unless the law forces them to do so in your state.

Citizenre

I too stumbled across Citizenre's sites a couple of weeks ago. I was searching for information on solar power- this year's home improvement project. Because we live in NH, my husband and I had pretty much concluded from available literature that our only economically feasible solar energy use in our area would be for heating hot water, including possibly contributing to a forced hot water heat system backed up by oil or electricity. Citizenre seems to offer a way to feasibly pay the installation cost of PV electric generation over time.
I read through almost all of their sites and am interested, but wary.
The thoughtful and informative discussion here about the company's economics (if it's too good to be true...) are welcome. I wonder if the company's real revenue will come from its ability to sell clean energy credits (generated from the customer base in each state) to the various local and national electric utilities to enable them to meet regulatroy goals or mandates for minimum use of renewable energy? From law school, I remember reading congressional testimony about passage of NEPA in 1969 and other landmark federal environmental laws enacted in the '70's. One of the arguments for imposition of minimum environmental quality standards on industry was the development of a market for clean energy credits, and once market forces took hold, they would carry out good energy policy in a generally profitable way. Perhaps those economic forces are now here.
I would feel a lot more comfortable if the Citizenre site gave information on the major stockholders.

Clean energy credits

I don't believe they are this valuable. Certainly carbon credits are worth only a tiny amount. If somebody has hard figures I would be curious. CitizenRe realizes the price has to be under $2/peak watt to be competitive, they just say they will do that with better manufacturing, vertical integration and of course all the tax credits and rebates.

Citizenre competitor

There appears to be another company offering a similar service that on its face appears legitimate. It's at: http://www.solarcity.com/company.aspx

Nope, that's a normal solar supplier

They seem to be an ordinary solar company, you buy the solar system with upfront cash or a loan, and make loan payments (or lose income from other investments) instead of utility payments. They make the claim of payback in 5 to 10 years, which my numbers say is totally bogus -- in my opinion possibly even bordering on fraud, but I would be happy to see them justify those numbers.

CitizenRe says -- and they are backing it up by paying for the system rather than having the customer pay for it -- that they will get the cost of systems down to $1.50 per peak watt, which really does pay for itself.

I should add, by the way, that in California, where a high-use house pays a very high rate per kwh, over 30 cents/kwh, solar can pay for itself at least down to the baseline. It just can't yet pay for itself at the baseline rate and definitely not the national average 8.4 cents/kwh rate.

I have recently signed on

I have recently signed on with CitizenRe and just wanted to make a couple points.

Maintenance and upgrades are part of the plan, so as the technology gets better, you will benefit from that.

If power goes down dramatically in price, at most, you will be out your deposit and or removal fee should you decide to get out of the contract (compared to still paying for, or owning an outdated system should you buy instead).

They are not available to everyone. For instance, those people who pay too low of an energy price for CitizenRe to compete.

The plan is to only provide you with up to the amount of power you need so you are not paying CitizenRe for more then you need and losing the credits earned from your power company.

Be aware, I do not know everything about this company, nor will I pretend I know what their plans for the future are, but hopefully what I wrote will answer some of your questions.

Tracy Ansell

Just your deposit?

You can terminate and just lose your deposit “with reason.” Things like moving and so on. I don’t think “I don’t like the price anymore” will count as a reason. If you want to terminate for such purposes, they reserve the right to “full remedy” which in the worst case would have them charging you the full rates. However, they claim to want to be much nicer about that, and I suspect they are reasonably sincere.

Nevertheless, if solar prices drop in half of their install cost, there will be an issue. People putting in new systems will be paying half what the customers who put in old systems are paying. They may just grumble about it and wish they had forseen. Some, however, will default. In their contract, they even imagine people deliberately damage the unit to avoid the power obligations, so they have thought about this.

If a lot of people pull out, and CR lets them, then CR probably goes bankrupt. That’s not actually too big a worry for the customer. Whoever buys the assets will own your panels. At worst they will be hardassed about contract terms but you have the advantage — the panels are on your house, and they really would rather not take them away, since that costs money and their value is highly depreciated. Easier for them to come to a deal with you at the new low prices, so you win.

If no power alternative goes down in price below CR’s solar, or in fact they all go up, the CR customer and other solar purchasers will instead feel quite good about a prudent choice to go solar at today’s prices.

Yes, they try to size the systems to not go over your power requirements. It would be foolish to do so since most utilities will not pay consumers for co-generation, when you actually put back more than you take out.

Security Deposit and Costs and Savings

This is an interesting thread. I am the Regional Sales Director for Citizenre in New England. I have been with the company Since October, and it has been eciting to watch this unfold. We have used vertical integration to produce our panels, from metallurgical-grade silicon, which will be supplied from a contracted supplier. By manufacturing our own panels, from relatively cheap silicon, we save a significant amount of money. Also, our manufacturing plant, whose location will be anounnced soon, will be powered by hydro- so no carbon dioxide displacement will play out with the manufacturing of the panels.

The Security Deposit, which is only paid when the customer approves of the designed system, is approximately $500, with some scaling for larger systems. This can be lost when the contract is broken. If the homeowner moves, s/he has three options: take the system, using the one free move; transfer the contract to the new homeowner (keeping the locked rate); or break the contract and the system is removed and roof repaired. Only under the last scenario is the security deposit lost.

The only other cost that can be associated with using this program is with your homeowner's insurance policy: it is recommended that they are contacted so they are made aware of this 'added value' to your property (eventhough it is only rented, the homeowner is responsible for its condition). This may/may not cause a slight increase, but in most cases I have not heard of any.

On the site, there is a Savings Calculator, which a user can enter their utility company and their monthly usage. The calculator will provide a conservative estimate as to how much money they would have saved: assuming a conservative 2% annual increase in electricity (6% is more accurate, nationwide), and a 9% bond-interest on saved money.

For example, someone spending $200/month on Massachusetts' National Grid will save over $13,000 on their electric bill over 25 years!

Granted, one could buy a system, but this requires a financial investment typically of $30,000 $50,000, which most do not have available. Cost of photovoltaic systems has been the greatest barrier to the use of this technology, and Citizenre REnU removes this barrier, allowing customers to save money, use renewable electricity, and even the health of the climate is taken into consideration. What other program is out there? No current politician will be able to do anything about the future climate problems. Only we can.

There are many facets to this system. Another possible savings exists with customer referrals: if a customer recommends someone, and they get a system installed on their home, the referring customer will get 5% of their referral's electric bill deducted from their own bill. Make 20-25 referrals, and you now have literally free solar electricity (an no, you will not get paid the 5% if it is beyond the value of your citizenre rental amount!).

I hope that provides more information. Any questions are always welcome!

Marc Plante
Regional Sales Director- New England
getsolarelectric@gmail.com
t: 978.774.0127

Yes

Thanks Marc. I understand how it works. What is surprising to me is that the vertical integration you speak of can be that good, to make this economical where all other projects are not. Especially when you add the cost of referral fees, sales associates etc.

You say one can buy a system for $30,000 and that’s true, but what amazes me is that CR must have a vastly lower price than that. After all, a $200/month electric bill for 25 years — the example you cite — only works out to $28,300 of today’s money, so it can’t justify $30K and definitely not $50K. (You indicated the customer saves $13,000 with CR, meaning a $15,300 cost, cutting the payment from $200/month to $108.

The national grid price is around 10.7 cents/kwh. You’re saying you sell it for 5.8 cents. How can you do this?

(All this is presuming a constant 7% interest rate, that might fluctuate of course.)

This leads me to suspect when you quoted $13,000 saving, you are quoting a future value or a near-meaningless “add up the payments” calculation — the sort of bad math I have been talking about. Is that the case? Even then it’s hard to figure.

System cost, Calculations of Savings

Brad, you are correct- our system value is significantly lower: our estimated, average system value is around $15,000 (due to savings in the raw materials, manufacturing, system architecture and design, etc...).

The customer's electric bill will not actually be lowered- it simply will not got much higher than it is today over the course of the contract: a small portion of the customer's electricity will/may still come from the grid, so there is some future increase there. Our rate will not change over the course of the contract. The demonstrative Solar Savings Calculator is based on a hypothetical savings based on future rate increases by utilities. If it happens that electricity suddenly becomes cheaper, the homeowner could either renegotiate the contract for the lower rate or just have the system removed (either choice, at the expense of the security deposit). Cheaper electricity rates are unlikely. The state of Connecticut just allowed a 50% electric rate increase for this year alone!

The calculations are not "bad," but are hypothetical, based on the last 25 years' history of electric rates.

Lower rates

Well, if solar is going to get much cheaper -- which is a prediction CR plans to make real -- then electricity will get cheaper, because we'll take coal plans offline and put up local solar. We would be crazy not to.

However, I still need to grasp your numbers. A person paying $200/month at 10.5 cents/kwh is using 22,600 kwh/year. That requires something like a 12kw peak system (or more) in Mass. So you're suggesting you can put in a 12kw system for $15,000? That's such a major step over today's prices. Now you're selling it, so it must be true, I just remain amazed that vertical integration could make that happen.

Or are the $200/month customer and the $15,000 system two different examples? How heavy of a user is the $15K system meant to support?

Net Metering

This biz model is designed to work with the Net Meterig policies for the utility in question. If your utility does not support Net Metering, you are not eligible for this program. Having said that, most Net Metering programs cap the size of residential generation at 10KW. That being the case, you are still going to be paying some money to the utility.

Additionally, part of the service that Citizenre provides is to suggest areas where energy might be saved thereby lowering usage and hopefully reducing the overall size of the system as well.

David Cottrell
dave@cottrellinvestments.com

Citizenre RECs

According to Citizenre's website, found under What We Do/RECs, They plan to sell Renewable Energy Certificates. Waste producers will be able to purchase these credits to offset their emissions in order to comply with Federal and state emissions standards.

Yup, I know

But at present those are not that much financially. They claim they will have the cost of the PV system after all rebates and credits to $1.50 per peak watt, installed and maintained. That's what I want to see the math on.

long term costs and rewards

I'm a new Citizenre "ecopreneur" in California, and I can't pretend to know all the details, only that I'm working my butt off to educate myself on the issues. I do know that I've waited for 30 years for PV power to become affordable, but it hasn't seemed to be headed that way so far.
One detail that does occur to me is that we are given a figure of 2.1% as an average annual cost increase for electricity from the utility companies. And, that 2.1% annual increase assumes that the cost of coal and petroleum will only increase at the same levels they have historically, which is by no means certain.
Obviously, that can change, but given that figure, a homeowner investing only a $500 security deposit and then paying the same electric rate for the next 25 years could conceivably invest that 2.1% amount on their own and put the interest in their own pocket, rather than allowing it to accrue to the local utility company.
Conversely, a homeowner who takes out a $20,000 loan to purchase a solar PV system and pays it back at 5% over the term of a 30-year mortgage is going to be paying a huge amount of interest to do so, in addition to being responsible for maintenance and repair of the system.
In other words, they would end up paying almost twice the original cost of the system, and they would have to become far more technically sophisticated than the usual person in order to keep repair costs down. And they'd still have to pay for replacement equipment when necessary.
Contrast that with locking in your electricity rate for the next 25 years, NOT financing that equipment cost, risking only $500, and having the option of investing that 2.1% increase for yourself, and this seems like an idea that's worth approaching.
Again, I'm not an expert, but I'm intrigued enough with the possibilities to take a chance on it.

Prediction always difficult...

Clearly if grid power goes up, a solar investment does better, if it goes down, it does worse. The cost of solar also factors into your equation. For example, if you anticipate solar might drop in price by 50% within 5-10 years, you should, from a financial perspective, wait, or more simply take CitizenRe's 1 year or 5 year term.

One thing that may not be clear to people is that, by and large, with CitizenRe it is almost identical to buying a PV system with a few minor tweaks. Compare it to buying something like a house or car with a loan. You don't pay up front, instead you make payments. If it is damaged, repair is your problem. If you move, you can move it with some cost. You can "sell" it to the next buyer of your house. The cash flows are the same. You take on a legal commitment to make the payments as long as you have the item.

The tweaks -- they own the system at the end, not you. And they promise great flexibility in letting you unload if you want out for a good reason, saying you will only lose your security deposit.

The reality is, if there were another vendor who sold, installed and moved panels and PV systems at the price CitizenRe does internally -- and I don't think there is -- you would actually save money buying from them and owning. That's because CR is not a charity, should we want them to be. Some of the positives of CR include their very low cost ($500) for moving or remove/replace of the panels.

But these are minor adjustments to the main realization. While it seems like something very different from buying, it is in fact, from a cash flow basis, very similar to buying. It has to be, since CR buys the panels and needs to make a profit. This is not bad, just something worth understanding.

Solar Savings Calculator

I'm not sure that I get your point, Brad. It seems that you are quibbling over whether or not to use regular or premium unleaded when your vehicle is a deisel. Does the math bother you because you think Citizenre is a scam? You don't express this directly, and sometimes you seem to recommend them. I'm a little confused (and I'd like to know if they are a scam).

Alternately, so what if the math doesn't add up or you end up paying a few cents more per kwh? The point is that you will be using solar energy, rather than fossil fuels. For some people, this is more important than quibbling over the math. If your interest is in going solar NOW, Citizenre is the way to go; if your interest is in saving money, then maybe the environment isn't your top priority.

For me, the calculations need to be based on the impact the type of energy used is having on the planet. I personally prefer solar because I am well aware of the consequences (environmentally, socially, politically) of fossil fuels. Besides, it just makes sense to use an energy source that COMES TO US in MASS AMOUNTS in a form that we can EASILY HARNESS.

We make choices all the time that are despite the math; for instance, leasing a car rather than buying one. It makes more sense to buy the car because you have made an investment and can try to get a return on your investment. Leasing a car means you are taking a loss, period; however, leasing is popular because people want the option of upgrading and they want someone else to take care of all of the details (maintenance, paperwork, etc.)

I think what Citizenre is doing is a step in the right direction--it's making solar available to an entire demographic of people for whom solar wasn't an option before. It also caters to the people who aren't as concerned with making a return on their investment, or how the company is going to do that. I only wish it were available to renters (like me).

If you want to check some math, click on the Solar Savings Calculator at www.jointhesolution.com. It calculates how many cars could be (hypothetically) taken off the road if you switched to solar. I find this to be the most important math.

I appreciate this thread of conversation that you have instigated, Brad. I wish more people were talking about it in such a sensical manner. I appreciate your math too, because as much as I would like to disregard it, it is a major consideration for most--especially those who don't consider themselves environmentalists. If math is what will bring people to solar power, then calculate away!

Neither

The skepticism I am showing over CitizenRE is simply that their offer is vastly superior to all existing solar providers. When somebody comes along and says, "Hey we can do it for half the price of everybody else" then the natural reaction is a mixture of "Wow, that would be fantastic" and "Sounds too good to be true, so show me how."

I'm not at all saying I have reason to think they are a scam, but I'm definitely saying "show me."

What I have written about is there are sellers of current price PV technology who are scamming people, by using bad math to pretend their products compete with grid power. That's clearly not the case here, because CR is putting their money where their mouth is. But it's what breeds skepticism.

I agree that ideally we should factor in all the costs, including environmental, however, we aren't there yet. I don't mind a solar vendor saying, "This costs more than grid, but it's worth it because it hurts the environment less." I am wary when they say, "this costs less than grid, AND also hurts the enviroment less." Though that's what we all want in the end.

Note that if a solar provider sells pollution credits in order to become competitive, it's an interesting question as to how green that is. It's not as green, for example, as not selling the credits and removing the emissions entirely. I will have to examine that math a bit.

Smoke and Mirrors

No phone numbers to call. No actual products to sell. No biographies of the leadership. Lots of hype. Lots of exclamation points. Grand plans but a lack of concrete details. I'm very wary...

Read my assessment.

I personally don't think

I personally don't think it's a scam, but to be honest the only people who know for sure are the ones putting it together.

The good thing is that by the time anyone other then the company needs to put out any money, everything you want to know will be on the table and out there for you to inspect.

Everything I use as an associate is paid for by the company. Contrast that with another company I am with, and I pay a membership and 2 websites.

No matter how you look at it, this company is putting out a lot of time, money and effort for this to be a scam with no income coming in.

Call it smoke and mirrors if you like, and avoid signing for a contract if you are worried, but remember, even if you did sign the contract, you still will not have paid a dime until at least Sept. when you will know one way or another if they really exist.

I am going to stay optimistic, and if I find it is a scam, I will personally call all of my customers and warn them off. I just don't think that will be necessary.

This company is a scam and a MLM scheme

They have no factory. They say they are building one but won't say where. There are no pictures of the construction. You can't get a system installed because they don't exist (yet, supposedly). There are only a couple of actual employees of the company, and there are no corporate offices.

What they do have is EXTENSIVE guidelines on their website about how you can make money peddling their systems. You get money for the people you sign up and the people they sign up, etc. It is clearly a multi-level marketing scheme.

When they can actually show me some solar panels that THEY made in THEIR factory, I will consider their product. Not until. DO NOT give these people money until you can actually have the panels installed. If you do, you're crazy. Plain and simple.

Again, they are taking no

Again, they are taking no money until (or if you prefer, IF )the panels are ready. If the panels never materialize, then a whole lot of people will be out NO money because they are not taking any money.

However, the company will be out a ton of money because (again) they are the ones who are putting money into the business.

As far as the compensation plan, I'm not here to discuss the pros and cons or try and convert someone into liking MLM. You either do or you don't. Not really a concern of mine.

Strange mix

It’s a strange mix. I don’t know how MLM this business is, but you would be foolish to buy/rent a major purchase like a hole solar system from an MLM. MLMs have to pay the people at all the levels enough to keep them happy, that’s just money not doing much for you — you only get support from the level who sold you, and the main company. This is not like amway, where the products sold tend to be cheap, high margin items where you can afford the MLM as another type of marketing cost. With solar, cost is so important you want the most efficient sales channel you can get — direct from the vendor where possible.

MLM Scheme? Yes...

...but I like that part of it. There's something tasty about subverting a cutthroat, mercenary tactic like MLM, stereotypically reserved for use by hyperconsumers and vicious marketers, and making it work for renewable power. Think BP Solar would have tried that?
It's worth noting again that CR salesmen are not required to put a dime in up front or along the way.
Rumor is financials are coming out mid-February.
Is it possible that the company's projected profitability is based on a much longer term than American business is used to, and that is the source of that "just doesn't feel right" intuition?

Comp. plan note

That's a good point Brad, and as I said I am not here to convert people to liking MLM, however I did want to say one thing about this particular pay plan.

They are paying a small commission monthly on the memberships you market. This means that for every membership, you will get a small chunk of each customers bill.

It is not too terribly much by itself, but if you take the time to bring the company a lot of business you will keep getting that money for up to 25 years.

Most MLM's you have to continually keep selling product to the same customers over and over if you want to keep getting paid.

I think that this instant form of residual income is what will draw in and keep happy most people who like MLM.

And that is aside from the fact that most of us really do want to do something we feel good about.

Contrast that with some of these health and wellness companies where you really don't know if the product is helping, or is just some fruit juice being passed off at a high price....

Anyway, that's the last I will write regarding the comp. plan. I just thought it was worth mentioning.

The Biggest Point...

I have just recently signed up for Citizenre and still have a lot to learn. But to me there are two big reasons to look into this. One is that people with no money to buy a system now have a way to contribute to being green. That is a huge barrier for most of the population. Then there is the installation and maintenence of the system which is huge! I have a small cabin that I installed a small system in, and it took me forever to figure out, then install. It is indeed way more than most people want to do. So far I have been reading and rereading the information and even though it seems too good to be true, the only flaw I see is that I am still scratching my head trying to figure out how they can financially do this. But apparently they can. And as far as I can see they will let you break the contract for the $500 deposit. And by the way, if you need a new roof they will remove the system once for free for this and then replace it when the roof is back. The big thing is that we can help move the planet to a cleaner place through this company. I am willing to risk $500 for that fact alone. Doesn't seem like a huge loss if it doesn't work out.
Jerri McCombs

Not that hard

Since solar systems are only put on owned homes, most people who are not super heavily mortgaged should be able to buy a system with a home equity loan. If CR or a competitor would sell the same service one could even do it cheaper, but with higher exposure. That the CR exposure is only $500 seems very attractive, though my read of the contract is that this is your exposure only if you have a good reason to leave the contract. Just "I want out, it's not competitive any more" does not get you out for $500.

Citizenre Customers Beware! -- Scathing Internal Memo Leaked

Anyone thinking of signing up as a customer of Citizenre should take a look at this memo which was leaked to the public yesterday. It's written by someone from within the organization and contains 61 pages of info on the ethics violations of the company. Here's the scoop. (via linkitt.com)
Sorry for the plain-jane page layout of my webpage. I got hit with a killer hosting bill and had to put some ads on to cover costs of keeping it online. I'll make it pretty again one day soon.

(Editor's note, this post was moved from being posted in the wrong thread, I suspect deliberately.)

Interesting info

I would be interested to know more info on who wrote the memo. It does ring true on my intuitions about MLM. MLM has a bad reputation for a reason. It's how you sell products that are hard to sell in other ways. Mostly in this post I've been wondering about how CitizenRe's plan seem too good to be true, and not talked much about the MLM aspects (which I wasn't even aware of when I first heard of it.)

If a product is really good, it doesn't need MLM, and doesn't want MLM. This memo suggests some people at some level are asking the same question. Solar at cheaper than grid is a product people will line up to buy. In today's world of web and blogs you won't need much marketing. Indeed, there will soon be marketing on the roofs of many houses. You don't need to pay MLM fees to the Sierra Club or Greenpeace -- they would be telling their members about you from the PV-panel-covered rooftops without a dime.

On top of that it just makes people suspect. I came into this because a friend told me about CitzenRe after I lamented that solar can't yet compete with grid on a cost basis. CR, it seemed, could prove me wrong. So naturally I felt, I want to find out how. But MLM adds an immediate stink, and there's no reason to add it. Is there legitimate MLM? Sometimes. But it's not your first impression. As the memo suggests, they should be able to see all their planned capacity from the pent-up demand to go green and to say FU to the big power companies. The fancy marketing program is for later, unless there's scary competition on the horizon.

Thanks for the memo

That is some interesting stuff, and to be honest, I brought up some of this myself.

I am eager to see what the response is, because although there are several things I question, I think they can turn it around if they want to.

I agree with limiting the sales force and I agree with making it harder to be a sales rep. I am more then happy to get further training and stop the recruiting personally, and I think many others would be as well.

I look forward to seeing how this shakes out, because I really believe they are on to something good.

Citizenre

I couldn't find the web site that listed Citizenre's ethics violations. I'd be really interested to read that.

Memo Leak

I've summarized some information from the memo leak here...

You may be right, I may be crazy...

I see lots of good points up above here, and I've done a lot of reflection on this whole thing.
What I've decided is, I'm taking a chance on this, maybe JUST BECAUSE it sounds crazy. I think that it may be an idea whose time has come, and that it may succeed, not because of all the inherent flaws and imperfect people, but in spite of or even because of them.

Nobody is asking me or anyone else for a dime, just for a commitment to an idea. As long as I tell people what I believe to be true, and give them as much information as I can regarding what appear to be possible problems (mostly regarding implementation delays, from what I can see), I'll let them come to their own conclusions. And if they want to take a crazy chance along with me, well, I'll have company on what could be an incredible adventure, or, at worst, a free chance to learn something valuable.

All I know is that nobody is asking anyone for any money, and perhaps the reason for the MLM system is just to generate a critical mass in order to bring a revolutionary idea into reality.

I'm going to keep wishing on falling stars, too! Not everything is just about the math!

Please, no affiliate links in blog comments

I have just noticed that a large number of postings on this item have had CitizenRe affiliate/MLM links as the home page. While I do encourage — in fact require — people who have a financial interest in a discussion to disclose it, this is about the worst possible way to disclose it. If you want to list your own personal home page, that’s fine, or you want to point to a page at citizenre with particular information, that’s fine. But this sort of activity makes everything in the comment highly suspect. Any further posts with affiliate links will be deleted outright (I removed the existing links but not the posts)

This is one of the things that casts a stink on MLM. It’s not pretty. While I continue to hope that CR can deliver affordable solar, I call on them to abandon pernicious marketing techniques like MLM.

I can understand peoples

I can understand peoples hesitancy regarding MLM. I mean, there has been a lot of crap going on in the industry, and when I first signed on with one, I almost walked the other way. It wasn't until I spent a few weeks researching the product that I decided the compensation plan didn't matter. I believe in the product, and if I do, so will many others. How many are going to ask me how I get paid? How many are going to care as long as they get a quality product or service?

If this was a situation where most of the associates were customers because that was the only way they could get paid, I would understand. But I am an associate and not a customer (although that is only because I do not own a home).

At any rate, I believe each of us who are associates have been up front about it. At least it seemed that way to me.

I would have thought the links would contribute to what we said, because it was a direct source from which people could get their answers. Pretty much everything (aside from the things to be released in the press releases)that people are asking can be answered at the websites linked to. Not to mention, if people really want to learn more, they can sign as an associate and get a behind the scenes view as well as ask their questions and get answers from the source. It's not as if it costs them anything.

They also have 4 live daily calls where both associates and customers can call in, listen to the information, and ask questions.

I would like to thank you for keeping the posts, and for allowing us to discuss this though. I believe it is important for everyone to see both sides. The sides of those who are anonymously posting negative things and the sides of those who are willing to say who they are when trying to help answer those posts.

From what I understand, there will be a point by point rebuttal to the "memo" above. I can't wait to see it, and will bring it here when I do if someone doesn't beat me to it.

Affiliate links

Affiliate links, especially ones that provide no new information, provide at the minimum an appearance of conflict of interest. I aleady have a link to the CR website in the main article. The only purpose of the affiliate links is to take people to the same website but tied to you as a customer. It creates a presumption of inappropriate bias. It raises the unavoidable question -- did that person post to educate us, or to spam us? I don't even want to have to ask that question.

Does MLM have to be a scam? No. But it often is. So if I had a truly good product, I would not market it with MLM any more than I would sell it with spam. A spammed product can be real, too. But the first reaction to an MLM is going to be, "Ok, what's the scam here?" Why would any company want to have that be the first question many prospects ask? Just to gain a few more sales associates? If the product is good, the company will sell out all it can produce for some time. Later, if it finds it is limited by sales staff and not install flow, it can find ways to boost sales, of which there are many -- more paid sales staff, affiliates, advertising and MLM. But MLM's normally last on the list.

As a customer, do I want my money going to the affiliate who recruited the affiliate who recruited the affiliate who told me about the product? Doesn't seem to provide much value to me.

A response to that powerpoint presentation would be good to see. But it really can't respond to the charge that MLM has a bad reputation and has that bad rep for a reason. That charge is just plain true. The best it can do is explain why the company felt, in spite of that bad reputation, in spite of the bad things that will happen from out of control MLM associates, that MLM was the best route for it to take.

Posts I have seen on other lists say the company has not broken ground on its factory, and has not closed their financing, and can't deliver anything in 2007 -- nor can they predict when they will deliver because first they must close financing, start building their plant and wait for it to be up to speed before their cheaper panels can come out the door.

Other lists

Brad,

on the comment in your paragraph, where are the lists that are talking about this? I've been casually following the CitizenRe stuff for a few weeks, and have ended up in some weird conversations with CitizenRe sales associates, so I'm still trying to filter the true from the not-so-true. It is making me suspicious that the factory location is so secret, so it wouldn't surprise me to hear that it hasn't even broken ground yet, but I'd love to hear more info, if it's available.

Thanks.

Please be patient

Let me clear a few things up. We have not yet broken ground on the manufacturing plant. We are currently doing our engineering. It is not that we are trying to be secretive...it is simply that we are in active negotiations and it would not be prudent to share all of that information at this time.

We make it clear to our Ecopreneurs and our customers that they will have to wait a long time before the plant comes online. We are building the largest solar manufacturing plant in the world: 600,000 SF with 1,600 workers on three rotating shifts so it will be producing 24 hours a day. This is no small undertaking.

The people who are working with us now do so because they believe in our mission. We charge nothing for customers to sign up and nothing for reps to sign up. Many of our reps are working extremely hard so we have committed to pay $5,000,000 in commissions to the field before we even install our first unit.

Contrary to the opinions of many on this thread, MLM is the best vehicle for a company to introduce a new technology that needs some personal explanation. As a company we have a fixed cost for marketing and we don't have to pay for a large sales infrastracture.

MLM is a $120 Billion a year industry because it works. The largest cosmetic company in the world uses MLM. Many fortune 100 companies have used or still use MLM. Warren Buffet bought the controlling interest of Pampered Chef, an MLM, in 2005. He said it was a brilliant business model.

Our goal is to educate a focused group of people who are passionate about our mission and offer them a vehicle to earn money while doing something they believe in.

We have made mistakes and we will continue to learn and grow. Our barrier to entry is free...so we have a broad range of talent and training with people sharing our message. Some have been "overly enthusiastic" and we are taking measures to correct that. We never plan to charge a fee to join, but we will increase our testing so their will be a higher standard of training.

We will have more press releases during the next month that will help answer many of your questions.

Thanks for your interest.

Rob Styler
President, Powur of Citizenre

Thanks for your input

I’m glad to see a senior rep from the company respond to those interested in the business. I realize it must be frustrating to see negative comments out on the web, and it’s good to see companies engage in this manner.

Obviously opinions will differ on MLM. However, MLM is not an “industry” but rather a style of sales. If MLM is a $120 billion industry, then “direct sales staff” is a 10 trillion dollar industry. (I’m pulling that number out of the air but you get my point.)

But you won’t deny that MLM has its taint, that many, in particular homeowners asked to make a large purchase — and in spite of the no-money-up-front financing, it is a large purchase — will respond to an MLM with immediate skepticism, and for valid reasons.

I recommend 2 level marketing instead. Yes, let customers recommend the system to future customers. Have a referral fee but have strong anti-spam rules and training, and have the closing sales staff make sure the promises are valid. Never get too distant from those who are selling.

But more than that, take on MLM when you need it, not before. Mary Kay products and Amway and kitchen tools are mostly everyday products, not “something new under the sun” which cheap PV is both literally and figuratively.

PV that competes with or beats the grid is a grail the alternative energy industry has been hunting since the very start. While existing suppliers will suffer at first from your cheap competition, they will soon be back in the game as others move in with another wave at even lower prices, and the solar industry will benefit. (Though they are correct that if you fail to deliver you will hurt the industry. That does not preclude trying honestly to deliver and failing, however, that is the nature of risk.)

You’ve seen the skepticism. It’s natural when something smells to good to be true, even if it is, as you say, true. You follow the natural instincts new companies have for secrecy but the truth is when you put up red flags, being open is the only way to put people at ease. Certainly after funding closes, you should lay out the numbers on how this will work. You plan to do commercial sales so the cost of your installations is not going to be secret for long. Make it not secret sooner, rather than later, and make all these potential customers feel better.

That will be your best marketing plan. Recommendations from people who get a kickback are never really trusted by savvy buyers. But when independent people get to look deep and declare “this is good” that’s worth far more than any MLM. When the independent people say “this doesn’t smell right” it’s just as powerful in the other direction. This isn’t the old days. When an ecopreneur approaches them, they will type your name into Google and see this thread (which appears to be the #1 hit on your name after your own web sites) and many others, and trust that more than the ecopreneur in many cases. When she’s a friend and user, that will get a lot of trust, I agree, and you will get that if you make customers happy.

On CitizenRe

Everyone wants affordable solar power, but no one wants a Solar specific version of Enron, and I don't accept that we should suspend the rules of fair play on the irrational hope that a web geek and an actor can do in 18 months what NREL, Boeing, MIT, LLL, Stanford, Berkely, BP, UCLA, UNC etc ... have been attempting competitively and cooperatively to accomplish in a lifetime.

I suggest the product isn't a "Solar System" the product is a contract.

Let me say that again:

The product is the contract. It is an Energy Futures - and nothing else. The rest is smoke, mirrors, distractions, and goodwill.

Here's how the contract works:

If the price of energy goes up - the company goes into bankruptcy, and the principles retire in Aruba. But if the price of energy GOES DOWN - ka-ching!! All those homeowners will be forced to pay the HIGHER rate for energy while Webhead and co are filling their bags with gold.

We are in an energy war. And the USD is being artificially held up by our single largest trading partner. Both of these point to a reasonable likelihood that energy prices, or the dollar in general, will fall over the next 25 years. There is very little on the horizon which suggest that Americans will have a greater buying power visa vi energy in the future than they do today.

In my view, CitizenRe is nothing more than a junk bond scheme to take a high-risk futures position against a million of America's poorest and least educated.

Ben

That's a bit too far

While I am among those calling for CR to show us how they will do what they advertise, I have not seen anything to suggest they won't be putting actual solar panels on people's rooftops. Do you have anything to back up your opinion? What you describe is a fraud, not a miscalculation.

Energy prices over the last

Energy prices over the last 30 years have not gone down, so there is certainly little, or no reason to think they will in the future. Further, as the value of the dollar is a fraction of what it was 3 decades ago, and promises to continue to devaluate in the future (thanks to rampant inflation, expansionist Federal Reserve monetary policies, and worsening trade imbalances), energy, which is largely a $USD priced asset at least in fungible, global terms, will increase in cost still further.
In short, history has shown that except for minor fluctuation, energy will not get cheaper over time, even with technological improvements.

Except

CitizenRe's whole business plan is based on exactly that idea -- they say they are building a new plant with a new process that does indeed drop the price of energy. So you have to say that "Except in this one example, energy will not go down."

The problem is, if there's solar to be had for cheap, then the grid will start using more solar. Why build or even fire up a coal burning plant for 6 cents/kwh if you can put up solar for 4 cents? Power companies aren't stupid. The more that carbon burning plant costs go up, the more they will stop using that method. The only think keeping their costs high at that point is their legacy investment. They will of course keep hydro and nuke plants running as their cost was all in building. Fuel burning plants cost money to build but also cost money to fuel.

Now if you get CR's panels, and some other competitor comes out with panels that cost half as much, you will be highly motivated to eat your deposit and get these new panels, which another company will be willing to "rent" to you for half what you are paying CR. As soon as the savings are sufficient to make up for your deposit loss over a few years, it's the right financial choice. (Which is why I think CR is crazy to let you do that.)

Now PV is not like a computer. It can't get more than 100% efficient, for example, and the physicalities like frames and install and wires and permits will not drop like crazy. But there is still plenty of room to grow. And on the grid, there is potential for other forms of interesting power such as wind, waves and newer, cheaper nuke designs. In fact, reportedly nuke power is about 2 cents/kwh, which solar will have a very hard time competing with if the nuclear plants come back online, even with doubling the price for transmission costs.

Nuclear power vanished from the scene after Three Mile Island and the China Syndrome, but in 30 years some vastly safer, can't-melt-down designs have come forward, and the environmental movement is starting to feel that in spite of the waste question, it would be better to have those than to burn coal. Of course, the environmental movement would like cheap solar most of all, but all these situations actually drop the price of grid power.

The problem with nuclear is,

The problem with nuclear is, and always has been, externalizing the (actual) costs. Factor in safe storage (Yucca Mountain won't be ready for another 17 years, if ever, per the DOE), spent rod reprocessing, decommissioning, and similar cleanup and disposal costs (the DOD has real figures on this from places like Savannah River and Hartford), and one finds nuclear is actually fairly pricey, much more so than other energy generation methods. Also ignored is the 10-year permit and construction timeframe and the ever-increasing cost of securing these facilities longterm. Finally, the US Corp of Engineers put out a paper last year citing a worldwide future shortage of uranium (thanks to decades-long dearth of mining and investment) outside of the now nearly exhausted supply of recycled former Soviet nuclear weapons), even at the present rate of use. Even pro-nuclear countries like Sweden and the UK are decommissioning their plants and not replacing them, indicative of a general trend away from what is increasingly seen as a failed experiment.

Externalizing the costs

Well, right now many are concluding that if more nukes don't come online, we'll burn coal instead. Don't know where you sit on the global warming issue but the externalized costs of coal plants, are, by some estimates, many orders of magnitude higher than for nuclear, are they not? You could take all the nuclear plants, melt them down and grind up the waste in front of giant fans and you would not get even close to the damage some people are predicting from global warming.

comparing comments made elsewhere

Rob,

You and I have spoken on the subject of CitizenRe elsewhere, and I'd like to bring up those quotes here, because the contrast I'm seeing between your comments is interesting.

You say here that you haven't broken ground on the factory yet and that you make it clear it will be quite some time before it's online....but you replied to me on Jan 23 saying:

We are building the largest solar manufacturing plant
in the world. The plant will not come online until Sept of
2007,

That's quite different from the impression you're giving here. Your quote to me implies that you're building it, and that it will be online fairly soon.

Also in January, you said about the secrecy:

The only reason we have not released the location of our plant
is because the state we wil be located in wants to make a media
splash with the announcement. We are creating 1,600 new
jobs and they are excited about it.

Yet here you say it's because you're still negotiating.

(quotes from my completely unknown livejournal that only 2 people read before Rob.)

One other thing...

That was not an "internal memo" or a "consultant" who wrote that document. It was one of our independent reps who had concerns and spent a considerable time to express them.

We welcome all questions. Of course, he never should have used our logos, and some of the information is not accurate, but we will have an official response to all concerns raised within the next few days.

Thanks,

Rob

Googling CitizenRe today I

Googling CitizenRe today I noticed that ALL the sponsored links where to CR affiliated site (unlike this valuable site). Rob's out of control marketing is spreading slime all over the web, blocking out healthy growth.

Also, one of those links offers "Solar For Free".

How soon will Rob be able to take back control of the Frankensteins monster he has created and remove these type of fraudulent representation from the web?

MPF

Answers to the concerns of Mr. Wolfe

Mr. Wolfe, a solar industry expert, had some concerns. Here are our answers:

Response to Re-Markets List on Topica.com
Rob Wills et al, Feb 11, 2007

Dear Jeff Wolfe, and fellow Solar Industry members:

Greetings from Citizenre.

We hear your concerns about our business plan. We are responding to your questions and modifying our plans to address the issues that you raise.

At this point, Citizenre is a startup company. We are still putting our management team together. We still have a lot to do. We have not broken ground yet on our PV plant, but plan to do so soon.

Our goal is to revolutionize the PV industry with:
- Successful end-user marketing
- Financing of end-user systems
- Vertically-integrated product line (i.e., integrated inverters)
- Innovative installation methods
- High volume PV manufacturing

The initial marketing program, as stated on the web site, is a pilot. It is showing us what can be done, and in some cases, what not to do. Viral marketing is very powerful, but can suffer from exaggerated claims as the message passes from one person to another.
We are moving quickly to correct misconceptions.

We believe that, rather than being a threat to the solar industry, Citizenre will greatly accelerate its growth.

The ideas behind the business plan come in part from work done by NREL, REPP, and the many NGOs and Environmental Organizations who have sought to commercialize PV effectively. If we do not succeed in our full plan, others will follow our path. At some point, someone will succeed with this plan.

What makes us different is that we are not owned by a multi-national oil or electric company, and so have a different reason for being in business – we want to see solar succeed.

Now the answers to your questions:

Sales Targets

Q: Goal of 100,000 sales in first year. Let's call it an average $20,000 per sale. That's $2 Billion of cost incurred. Various interviews have indicated that Citizenre has / is getting / will get (which is it?) $650MM of investment. How does that buy $2BB of installs, year one?

So after year one, we get to year two. Year two has another $2BB of equipment installed. More capital required. Debt markets? Sure, just need to convince them. They will loan against a program like this in maybe 5 years. Right now, you might get 3 - 5 year loans for part of it, but not all of it, and not for the terms needed. I'm actually in the capital markets, although nowhere near this level, and this stuff does not fall from the trees.

A: From this question, it appears that you are blurring the lines between the production facility’s ultimate nameplate capacity and the actual output of the facility during the scale-up of production capabilities.

Roughly nine months after we break ground, Citizenre plans to produce 100MW of PV. There are incentives built in to our construction contracts to motivate an earlier start date – as early as month-6 - and conversely, there are penalties for taking longer. It will take approximate 15 more months to bring the plant online fully. Under this phased approach, we expect that it will take 2 years to fully complete our first facility.

Nevertheless, the capacity we expect 9 months after ground breaking will at minimum produce enough PV for 20,000 systems per year. The target of 20,000 systems/year is based on our assessment of the market which assumes an average system size of 4.5 kWp.

Continuing to ramp-up and bring additional phases online will increase our capacity over the subsequent 15 months. Ultimately, we will have the ability to deliver to about 100,000 homes each year.

Once we prove the feasibility of the first plant, we will duplicate the design and bring more capacity online.

You and others have asked: how is this financed? We have commitments to finance construction of the plant. But as you correctly stated, construction financing does not finance the “Synthetic Power Producer” structure that supports the installation of systems on residential homes. Your estimation of $2 billion per annum is a little high, which is to be expected if you base your numbers on the way that the PV industry does business now. The approach that you should be taking is one that relies on sensible governmental support and more weight towards supply-chain stability, standardization, and operational efficiencies. You may also be overlooking the fact that we have the ability to carry manufacturer’s equity in these financial structures.

The power of Citizenre’s innovative business and financial model has already convinced major investment players of the tremendous opportunity ahead. The first round of investment will be announced shortly along with the plant location; subsequent rounds will underwrite each year’s residential installations.

State Incentives

Q: And Citizenre has said that incentives just get in the way. That's a good thing, because no state incentive program can put up with this run rate. Outside of CA no one has anything even close, and at this rate Citizenre would deplete the CSI in a couple of years. Ok if it gets the solar out there, but not if it then falls on it's face.

A: The main incentive that we need is a consistent net-metering law. We will work with the States and new Democratic congress to move towards a National net-metering law.

One of the things provided by our large dedicated customer-base is a significant lobbying base. We expect that we be able to change state and federal policy using this power.

Beyond the necessity for reasonable net-metering laws or a blanket national net-metering law, we will help advocate for 1) meaningful renewable portfolio standards; 2) carbon and other green-house gas taxes; 3) the push for a distributed portfolio standard to capture the economic and national security benefits that the distributed nature of PV provides; and 4) the continuation of renewable energy subsidy programs that place more emphasis on production.

Financing

Q: Where's the money? No one invests $650MM without some PR, an announcement, etc. And no one receives $650MM without an announcement, PR, etc. This is the most stealth money I've ever not heard of.
Understand that $650MM is a very significant percentage of all the money invested in solar to-date. Who are the investors?

A: The investors are large, well-known financial institutions. We will announce their identity and the location of our first manufacturing plant shortly.

Financial Model & Solar-Silicon Cost

Q: I've seen various people's attempts to figure out Citizenre’s financial model. No one has made it work. Even if we get the proposed federal tax credit, the numbers do not work at any reasonable cost for equipment, sales and G&A. The only way it works is if Citizenre is somehow able to lose on each sale! Not a great business model, but could help to get solar out there faster. PV costs money. Without long term silicon contracts (and those cost additional huge money) then Citizenre will be paying well over $60/kg of silicon. This puts a floor price on your modules. You're not buying glass and aluminum any cheaper than anyone else. So your product cannot be that much cheaper. Yes, you can cut out the middleman and slash the installation budget (perhaps), but you cannot get to half price out of the box, or even in a few years.

Where are you getting silicon? Do you have signed and sealed non-cancellable long term contracts for 200 to 500 MW?

A: We understand the solar-grade silicon market thoroughly. We also understand that secure long-term contracts cost $60 to $90/kg now, and that the spot market price is near $200. We have made arrangements for supply stability at the SG-Si level as well as for the other raw materials that are necessary in the production of PV modules. And although the cost savings are not tremendous – based on our bulk purchase, they are lower than what the average plant in the industry now pays. This is simply economy-of-scale.

SEIA and Legislation

Q: Is Citizenre a member of SEIA? Are you contributing money toward the hiring of very expensive lobbyists? Are you working to get legislation passed that helps the solar industry? Or are you riding on the work and money of others?

A: Yes we are a member of SEIA – and ASES, SEPA, IREC, and ACORE. Yes, we are working to get legislation passed that helps the solar industry - once again, a large customer base will be the most powerful tool that the industry has ever had for policy change. We will devote a considerable part of our profits to supporting SEIA and the other organizations in their legislative efforts.

We are indeed following the work of many who came before us – going back to Bill Yerkes and Arco Solar, the foundation build by JPL, Sandia and SERI (now NREL) and the contributions of all the manufacturers and installers who have brought us to where we are now. Most of our senior management has been in the solar business for more than 20 years.

AC Modules

Q: We've never had a good, inexpensive, reliable AC module (I.E. micro inverter). Why now? What's new and different and makes this unit good?
How many hours of field testing has it gone through? Tough environment on the back of a module. How many hours has it been on the roof?

A: Please check the definition of “AC Module” in the NEC. (I helped to write it). I agree that putting an inverter on the back of a module is a bad idea – we don’t plan to do that.

We are still in the development stage for this part of the system, but do have prototypes running. We have one of the most experienced inverter design groups in the country – we can make this work. Nevertheless, the prototype may have unanticipated problems in manufacturing, in getting into commercial scale production, particularly at the volumes we anticipate needing. Thus, we have created a contingency plan for the bulk-purchase of inverters if we see production delays.

Q: I assume product is at UL for testing (both PV modules and inverters). If not, CitizenRe cannot make the dates they are promising to their customers of September installs, since not only does the equipment need to pass UL, but it also needs to the be manufactured in volume. Please provide proof that equipment is at UL for testing, and an estimate of certification date (I realize that's hard with UL, but everyone has a schedule).

A: UL’s own estimate for passing the full set of 1547.1 tests is 3 calendar months. The module plant start-up will be approximately 12 months, so we will have enough time for field testing.

Manufacturing Plant

Q: Where is the PV manufacturing plant and where is the inverter manufacturing plant? Ground must be broken by now. How about some photos of construction? A 500MW plant (with only 100MW built out in the first year) is not a small place. It's also not cheap. My best guess is about $200MM for phase one. Of course, we have another numbers problem here.
If the plant is only built out to 100MW, and you sell 100,000 systems at 2kW each (would you sell smaller, on average?) then that requires 200MW of capacity. It just seems like Citizenre’s statements throw out big numbers, but the big numbers do not match each other. That means that the numbers are just being made up, that there is no plan. Please indicate what the real installation goals and manufacturing capacities will be for year one and two.

A: As stated above, we have not broken ground on the manufacturing plant; what’s more, we will not even be able to break ground immediately after the location is announced. We will have, however, a fast-track permitting process and hope to begin shipments at a rate just over 8 MW per month roughly 9 months after ground-breaking. That means delivering nearly 25 MW to the industry in Year-1 alone. The scaling up of the plant to 500MWp capacity over Year-2 will give us another 250 MW in addition to the existing 100MW. With the announcement now expected by mid-March, that places the first installations in December 2007. Translated to systems, this gives us an estimated maximum of 5000 installs Year-1, 70,000 installs Year-2.

The numbers may not “match up”, as you put it, because there are other parts to the equation that either have not yet been described, or may never be, because they represent proprietary solutions that reduce our costs well beyond the industry’s current experience.

Installation

Q: I hear that the installs take half a day. Amazing. Even with AC modules (so no inverter hook up per se), one still has to rack and install modules. I could believe a day in some areas (1 story, low slope roofs, simple electrical entrance). But this means that the systems must be sized to avoid main taps, cannot be on tile roofs, and have to be within 20 minutes of the shop. It takes time to simply get the ladders unstrapped from the truck and leaned against the house. Telling people half a day is, in my opinion, completely unachievable, except for a very small (two panel?) system that has UF wire connecting it to a breaker. (UF wire for 20 years outside?)

A: We know how much work goes in to a conventional PV installation. There are ways, however, to cut the installation time dramatically using clever design, standardized components and lifting equipment.

The half-day install is for small systems (2kW and the like). Larger systems will take longer. At the size most customers will require – 4 and 5 KWp, we expect that the installation time will be a full day. We allow for this in our business models.

Sales Training

Q: The CitizenRe site indicates that the sales people need to go through training before selling, as do the installers. All well and good, however, the sales people that we've spoken with do not, basically, know a thing about PV. Shading analysis? Building permits? Bill analysis? Nothing. Just sign up now and we’ll get you solar in September. How is CitizenRe going to correct this?

A: The first roll-out of the marketing plan is a pilot. We have learned much from this.
All current and new sales people will undergo a much higher level of training. Many present sales people will drop out because of this.

We are just as committed to ensuring the survival of the solar industry as you. We understand the necessity for each of our associates to have a high level of core knowledge and will institute this requirement this month.

One point to note, nonetheless, is the different roles our sales and installation people have. Even when trained to the new standards, the independent sales associates are not expected to do a shading analysis or deal with building permits. Citizenre’s model anticipates that different types of customer interactions require different skills. The sales associates are adept at building customer relationships and explaining the product at a basic level. The nuts and bolts of the installations, however, will be left to the installers who have completed NABCEP training and certification, as a minimum.

For the customer, there will be on-going reality-checks with regards to delivery time and business plans. For example, we are integrating a new tool on our web site to predict actual site review and delivery times. Part of the training will be to help the customer understand the issues that may arise – even the risk that customers may not receive a system if all of our requirements are not met.

Q: The site also indicates that the sales strategy is pure MLM (multi-level marketing - think Amway). Yes, this marketing method can work, but it can also have a life of it's own and create major problems for customers in terms of fulfillment. How is CitizenRe going to avoid the problems inherent in this sales method? I saw that in a few states, sales people are prohibited from buying more than about $495 of "sales aids" in the first 6 months of their employment. How much does the average sales person outside of these limiting states purchase in "sales aids" in the first six months? Is this a major revenue stream for CitizenRe at this point?

A: We prefer to call this “Direct Sales”. We do not emphasize the multi-level aspect (the purpose for signing up is to sell solar, not to enlist downstream sales reps), and are taking steps to make sure that the sales royalty stream is fair.

There is no cash contribution required from a sales rep – just time and a willingness to learn about solar electricity. We actively discourage sales reps from spending their own money for advertising (although a few are). We have several cooperative marketing agreements with non-profits and other companies to drive customers to us. These qualified leads are given to our associates to respond to – without charge. We have refrained from bringing this channel online and from starting our PR program at this point specifically because we know now that our sales team needs another level of training. We want to make certain that the first interaction customers have with the PV industry is a good one. As a last point, unlike MLM organizations, we ask for no money from our sales associates, and do not sell advertising or training materials.

Another way of putting this is that your grandmother could tell her friends about the possibility of solar electricity, and qualify leads. It’s the franchised installer who makes the final decision as to the viability of the site and system size.

A Threat to the Solar Industry?

Q: And the most fundamental question is, is CitizenRe out to put all other solar businesses out of business, since who will "buy" a system when they can just pay the electric bill at whatever level they are at?
($0.07 anyone?) Yes, we'll all be able to install for CitizenRe. Not the profitable business we've all been trying to build. Especially if we're only going to get paid for 1/2 day per job! But more importantly, if CitizenRe succeeds in stealing all the customers for the next 6 months, then fails, we'll have the double hit that many dealers will go under (no sales is bad for business) and then CitizenRe will not deliver (from what I see, highly probable). So here we are with one firm playing Russian Roulette with the entire industry, and perhaps the future of the US.

A: We understand very well that there is a great deal at stake here, and that Citizenre’s actions will have significant ripple effects for the industry and for the country.

We share the conviction that widespread solar implementation is an urgent part of the solution. It is not our intention to put the rest of the solar industry out of business—far from it. However, it IS our mission to change the trajectory of the solar and distributed generation industry. We plan to bring solar into the mainstream in a way that has never been possible before.

We understand that we are committing ourselves to a strategy that has some very big risks. Is it our intention to “play Russian roulette with the entire industry”? Of course not. Do we understand that competing against this strategy is going to be very difficult for the bulk of the existing industry? That it will inflict upon them the need to dramatically change their own business models in order to survive? Yes, we understand that. Yet we also know that the future landscape of the solar industry can’t be predicted with any certainty. In that sense, all of us – big companies and small, old and new – face the same challenge. We must all do the best we can to anticipate the future’s competitive challenges, and either adapt and survive, or fail in the attempt.

If Citizenre does not move ahead with its business plan, others will follow. The solar industry is about to change in very positive ways. There will not be a shortage of jobs – quite the contrary – there are opportunities in this business model for all of us, and many new people. We need people to handle logistics and distribution. We need a network of good installers ranging from large contracting firms in city areas to “one-person” shops in more remote areas. Our first PV plant alone will employ 1600 people.

Conclusion

Ok, that's a good start. Nothing hard to answer here, nothing that takes research on the part of the company. Just real hard questions that will tell us if there is anything behind the smoke. Thanks for your time in answering this Rob.

And thank you for asking. Now I would like to ask you a question:

Is it better to try for a quantum leap that results in PV power costing less than retail electricity? Or should we sit back doing business as usual, letting the government tell us they are supporting solar while they spend many times the annual SAI budget every week in Iraq.

Please give us a chance to move ahead and to succeed. There is a huge amount of effort that has gone into forming Citizenre.

It’s easy to attack a new idea, and to be fearful of the consequences of change. There are many in the industry who support us wholeheartedly and look forward to a time when PV has cost parity with other forms of electric generation.

There will be plenty or work for all of us. Solar Energy is abundant.

Dr. Robert Wills, P.E.
CTO, Citizenre

For your information, if you would like to understand more about our business plan, we would recommend beginning with the following documents:

“Solar Energy: from Perennial Promise to Competitive Alternative” (Greenpeace/KPMG)

“Financing Large-Scale Increases in PV Production Capacity through Innovative Risk Management Structures and Contracts” (REPP), and

“What the Solar Power Industry Can Learn from Google and Salesforce.com” (The Topline Strategy Group).

All are available on the web via Google search.

Why blog instead of making a FAQ?

I've been following this thread for a couple weeks now after my cousin, a Citizenre Ecopreneur, couldn't answer all of my questions successfully. I've visited a few other blogs where people post similar concerns. I've seen Rob's responses there too, and I do appreciate that he's provided some answers.

My question for Rob is, instead of spending valuable time and effort copying & pasting responses into numerous blogs, why not combine all the questions and answers into a FAQ that you can point people to on Citizenre's website? Seems to me that the grassroots momentum has been working quite well for you so far, and that now is the time to funnel all the widespread questions and concerns into a single focal point.

Having as much information as possible available to your potential customers--and being as completely transparent as all your future deals will allow--can only help your image, not hurt it. The LACK of answers is more damaging than whatever the answers eventually end up being.

And if I can only find the information I'm looking for through an online search, then something's not right. Spotty answers (no matter how high their ranking on Google) will just never be as powerful as a dedicated place for these discussions on Citizenre's actual website.

It really is hard reading

It really is hard reading this stuff with a straight face anymore. If it weren't so tragic for all the people who will be hurt by this it would be funny.

So this is Rob's big answer to all the questions? Nothing new here, just the same old tired song and dance.

The one I like is, "The main incentive that we need is a consistent net-metering law." Well golly, lets just go on up to Congress and get us one of those national net-metering laws. Aught to be able to get that before the end of the year.

Good Luck Rob. I'd start thinking about how to stay out of jail if I were you.

Rob Styler's previous incarnations

If you read about LifeWave, and Rob's 20,000,000 million a year sales projections on this transdermal energy patch, you will find similarities in his marketing techniques with CitizenRe. Lots of faith and very little questioning. Rob had a spiritual experience on the top of a mountain in South America after the Federal Government shut down the MLM company Equinox where he was a top ranking participant. What does Rob know about solar manufacturing and installation. Rob Wills former inverter company went bankrupt leaving a number of installers holding warranties on bad inverters which cost them time and money. Gregg is twenty-five, no college, no seeming previous experience in the solar industry. In fact, there is no one among the principals with ANY technical solar experience, and yet their Ecopreneurs are saying to potential customers, "Don't invest in solar now, we'll deliver Free Solar to you come September." There is no free lunch. A customer will continue to pay for energy forever. There is also a panel permanency clause in the California Solar Initiative Handbook. No moving of panels for ten years except for basically "Acts of God" or totally unforeseen emergency circumstances and then with 60 days notification and re-installation within the same utility territory within six months.

There is no factory, no installers, and yet they are putting out six page contracts as if they were a going concern. Their address is basically a mail drop in Delaware, not headquarters for a corporation with 650 million dollars in investor funds.

They are collecting names, and in some cases Social Security numbers, and it seems there is a religious fervor involved that requires blind faith. Blind faith and good business do not go together.

FAQ's

The person above asked for one centralized location for FAQ's. We have had this up for months for our customers: http://renu.citizenre.com/index.php?p=edu_faq

There is wealth of information on our website.

Please get your facts straight about Equinox. I left in 97. My book helped inspire a federal investigation and I was the lead witness against the company. They were shut down in 2000 and fined $50 million dollars for consumer fraud. I was just out of the Peace Corps when I joined them and when I rose to the top of that organization, I saw things that did not fit with the environmental mission I thought we were on. I walked away from a lot of money at a young age and made a stand against a $200 million dollar company.

I was young and naive and learned many lessons.

Let's please just deal with the facts of Citizenre. I realize that many of you will not believe our model until you have more information. I talked to one lady today who won't even believe us until we have panels on at least 1,000 homes--then she will be willing to reconsider. The onus is on us to deliver. We are asking for no money from the customer or from our Independent Ecopreneurs.

It is obvious that many of you are passionate about the solar industry. We feel that business as usual is not good enough any more.

When you see our financial backers, you will know that our model is valid. These people are not investing $650 million because they want to save the world, nor would they invest in some "mlm hype." MLM happens to be the best model to bring a new solution to the market that requires a lot of explanation. MLM is just one division of our company. We will also have a nationwide network of franchisees, a manufacturing plant that will employ 1,600 workers on three rotating shifts, and a commercial division. This is a big operation.

Please give us a few months to prove our model.

Thanks,

Rob

In the faq

There may be some new questions in that FAQ I didn’t see before. One doesn’t make a lot of sense to me. You write that if the price of solar drops and a customer wants to switch to some new, much cheaper solar, you will let them in exchange for their security deposit, which is around what 20 cents/peak watt? You project it as unlikley that such cheaper solar will arrive — the same thing people are saying about CR’s offer of cheaper solar, of course — but I don’t see how you can do this.

Your financial backers will be paying for all the PV systems you install, and they expect a nice secure series of cash flows to make their investment profitable. If you just let people out of their contracts like this, how can you make this work? A car company doesn’t let you out of your car loan if your car depreciates faster than expected. Your investors will not be interested in the panels, all they will care about are the cash flows they will generate.

If one of the thin-film companies, or some of the other different technology companies make good on $1/watt panels, how can you not be completely hosed, and the backers with you? I’m not saying it’s a slam dunk that they will deliver, but it’s surely not a slam dunk that they won’t.

Maybe I should have been more specific

Rob,

I probably should have mentioned that I read the "FAQ" you mentioned about 5 minutes after learning of Citizenre's existence. And maybe it will placate those who are merely curious or don't really care too much about looking under the hood of CR's "free" solar plan. But I get the feeling that you created this FAQ long before you actually had potential customers (and this is only bolstered by your comment that you "have had this up for months"), and that it has not had an update since.

Why have none of the questions brought up here and on other blogs been added to your FAQ? Why do we even have to go to a personal blog to find answers? It seems like you enjoy interacting personally with people who have questions, so why not set up a forum on Citizenre's site? This will only help your legitimacy. To not do so is only hurting your image: I may like the grassroots plan of getting information out to people, but I don't want the company to be *run* by grassroots.

Cancelling contracts

I had a hard time understanding that one at first, also. But the market for PV in Third World countries is stronger than here. The problem is, it is much more difficult to get financing for those projects.

We are technologically agnostic. If someone comes out with a better solution, we can plug that into our distribution model. Simple. Most customers will be happy with their original system because they are paying per kwh--and they will be paying equal or less than their current utility rates.

If someone wants their unit removed, we keep their security deposit and we can sell that system in the Third World to power villages or individual houses.

Thanks,

Rob

Cancelling contracts, etc.

Rob,

The market for PV is not stronger in the third world. Perhaps the need is stronger, but the market, which requires payment for panels (somehow) is not stronger. The US is currently the thrid largest PV market in the world, behind Germany and Japan (and perhaps soon behind Spain as well). And certainly, if a less expensive PV panel comes out, why would the third world pay more for a used panel instead of the new technology?

Your answer on this question shows as much thought as the rest of your business plan. It simply does not work, but sounds good as a sound bite.

Why should CitizenRE get a "bye" on good business practices? Why should CitizenRE be allowed to take customers away from legitimate businesses who are actually installing PV today? CitizenRE is still promising PV installations in September from your new factory, but the factory has not broken ground, in fact does not have a location, and therefore is not even permitted. It takes more than 7 months to permit and build a building, (more like 12 to 18 months for a facility of the size you are planning, based on my 15 years in building design and construction). Plus, that building needs to have PV manufacturing equipment in it. Has that been ordered? 12 to 18 month lead time there as well. I have a copy of private correspondence from senior CitizenRE personnel that indicate even CitizenRE believes it is a 12 month construction process after groundbreaking, after permitting. Why different stories in public?

This is the potential fruad that CitizenRE is perpetrating; telling people that installations will occur in September (most recently David Gregg stated this on the Renewable Energy Access podcast released Thursday), when it is absolutely not possible for this to happen, or for CitizenRE to even come close. Considering that there is no ground breaking to-date, and no verified PV manufacturing equipment orders, we're looking at June 2008, minimum, before the first installation happens. Is it not fraud to offer a product to someone, and not deliver it, even if no money has changed hands, but a contract has been signed? Is it not illegal disruption of business activity for one company to take customers from other businesses with promises that the company knows they cannot meet? I'm not a lawyer. Perhaps CitizenRE's corporate lawyer can answer these questions. And if it is legal, is it healthy for the solar industry?

Additionally, copies of private correspondence from CitizenRE senior executives indicate that the current marketing is simply a "pilot". Rob Wills confirmed this in my direct conversation with him on February 9, 2007. What does "pilot" mean? When does the "pilot" marketing stop, and turn into "real" marketing?

Lastly, why do you persist in posting the same answers to new questions? I received Rob Wills email answers to my original questions prior to writing my article in Renewable Energy Access, and incorporated that information into the article, even quoting parts of it. Is there no new information? Private correspondence in my possession from a senior CitizenRE officer indicated that a PR person had "just come on board" over a week ago. Will this person be issuing any real new information?

CitizenRE is supposed to be breaking new ground. It is incumbent upon CitizenRE to do so without breaking the solar industry. To lead the industry means that you also must care for the industry you lead. I see CitizenRE doing none of the above. I see CitizenRE trying to play a huge game of stall, "give us more time". Your timeteable, as stated by your CEO, David Gregg, is an operational plant in September 2007. As of January 1, 2007, that goal was no longer achievable, even under the best of construction and manufacturing circumstances. Yet CitizenRE continues to publicly promise and lead customers and businesses along, stating the same unobtainable date. Therefore, the plea for time is false, as it is not apparently being used to achieve the stated goal of an operational plant.

I'll meet with you and David Gregg at your corporate headquarters (or we can meet at mine, they're larger) any date you want. I'll bring a reporter or two. We can either make a big story for you, or a big story for me. What day will we meet?

Here Comes Trouble

Cheap Solar Power Poised To Undercut Oil And Gas By Half

By Ambrose Evans- Pritchard
The Daily Telegraph
February 19, 2007

Within five years, solar power will be cheap enough to compete with carbon-generated electricity, even in Britain, Scandinavia or upper Siberia. In a decade, the cost may have fallen so dramatically that solar cells could undercut oil, gas, coal and nuclear power by up to half. Technology is leaping ahead of a stale political debate about fossil fuels.

Anil Sethi, the chief executive of the Swiss start-up company Flisom, says he looks forward to the day - not so far off - when entire cities in America and Europe generate their heating, lighting and air-conditioning needs from solar films on buildings with enough left over to feed a surplus back into the grid.

The secret? Mr Sethi lovingly cradles a piece of dark polymer foil, as thin a sheet of paper. It is 200 times lighter than the normal glass-based solar materials, which require expensive substrates and roof support. Indeed, it is so light it can be stuck to the sides of buildings.

Rather than being manufactured laboriously piece by piece, it can be mass-produced in cheap rolls like packaging - in any colour.

The "tipping point'' will arrive when the capital cost of solar power falls below $1 (51p) per watt, roughly the cost of carbon power. We are not there yet. The best options today vary from $3 to $4 per watt - down from $100 in the late 1970s.

Mr Sethi believes his product will cut the cost to 80 cents per watt within five years, and 50 cents in a decade.

I spoke to Citizenre

I spoke to Citizenre recently regarding getting a solar system put on my house. I was concerned about the delay on the factory so I asked them if they would be willing to compromise. I would sign a contract and pay the deposit if they would put the infrastructure in place now. I would pay a small monthly rental fee on the wiring and grid tie inverter until the panels were in place. I am wondering if they will bite on this. I doubt it.

I already have a stand alone system on my house and if Citizenre went belly up, I could always use the infrastructure for a grid tie on my existing system.

However, I doubt they will go for my compromise.

Makes no sense

I can't imagine why they would want to take you up on that. If they are legit, they are very busy getting their real business together and would have no reason (unless you offered a boatload of profit in the deal) to divert there effort for a pointless specialty deal.

They keep insisting that a lot of their value comes from the vertical integration, that they do it all in one swoop rather than having it be put together piecemeal from different sources. I'm not sure that's true, but it's what they say they are selling, so you may have missed their point.

Citizenre

I think y'all are missing something...in high sunshine states, the solar panels will generate more energy that the user will consume. Most of these states have laws on the books that require the local electirc company to "buy back" this excess energy at a fair market rate. Now if I owned the panels, Gulf Power, (here in Florida) would need to cut me a monthly check for the energy I am generating for them. (Excess energy by the way will flow back into the power lines). Since Citizenre would own these panels, THEY, not me the renter, would get the check from consumers. I would imagine that this is how they are balancing their bottom line.

I met some Citezenre marketers at a home show recently, and I am giving it serious thought, simply because I want to use solar but cannot afford the massive upfront costto purchase my own panels. However, one thing they want is a signed application for "consideration" when they go into production. The only reason I can see for this is they can present all these signed "consideration applications" as part of a business plan for start up loans or IPO, ("see we have 20,000 people dying to pay us...loan me $100 million please"). That part bothered me a little bit. Also, the application seemed a little unclear as to whether I would be locked into an contract, or if I was just asking to be considered.

The other thing that bothered me was the whole MLM thing. I know this is a cheap and easy way to get a company marketed without the owner having to invest a ton more advertising, etc....let your "distributors" do it for you. The problem is, in my experience MLM marketers, (from whatever company, be it Amway, Shaklee, whatever), are often misinformed or ill educated and therefore frequently misleading about their products.

Overall, I think the marketer I spoke with just didn't really give me enough information. Rather, he used big scary words about Global Warming, and cited massive cost increases in California, Michigan, rather than the hard economics to scare me into buying. I would still be paying the same amount to them that I now pay to Gulf Power. Meanwhile, they would be selling my excess power to Gulf Power and making a fortune. (this is the sunshine state after all). So what is in it for me? Not to sound crude, but if they really want this thing to work, they need to provide financial incentive, not just the good feeling you get from saving the planet. A suggestion would be to let me buy out the panels or retain ownership of them after a certain point so Gulf Power will eventually cut the check for me. Or better yet, have the Feds step in and go back to the tax credit that will allow individuals to write off the entire start up cost for alternative energy. Or have the Feds fund programs designed to make the start up costs affordable for the average homeowner. Make it financially appealing and the masses, (including me) will switch.

Nope

First of all, most utilities don't let you actually net-sell power to the grid, they just let you use it as storage. Your meter runs backward if you are overproducing, but it never goes past zero (typically at the end of the year.) As such CitizenRe is smart and won't sell you a system that produces more power than you will actually use in the year, and in fact they say they will remove panels for you if it turns out this is happening.

Best I can tell, because of this, what happens is you commit to buying all the power, and then if there is any you don't use, you are the one who sells it to your utility, not CitizenRe. I can't see it working the way you describe, where they force you to buy it and they also sell it to the utility.

As for the loan, you say, "This is great because I can't afford the loan for install." I don't think that's true for most. Most customers will be homeowners with substantial equity (thanks to recent home appreciation.) They are quite capable of financing the purchase of a solar system on their own with a low interest home equity loan. (Some states even have cheap financing programs for buying solar.)

While there is a psychological value to the solar vendor handling the loan and just renting to you, in real life renting is very rarely superior to buying for those who can afford to finance something themselves.

CitizenRe's value comes not from them getting you the loan, but from simply making the product cheaper. If you could buy panels etc. at the price they say they will make them, you should do better than renting from them. Otherwise, how can they make a profit?

In Florida, investor owned

In Florida, investor owned utilities (IOUs) like Gulf Power are subject to Rule 25-6.065, Florida Administrative Code ("Interconnection for Small Photovoltaic Systems"). This rule requires IOUs to provide standard interconnection agreements with small PV systems, and to either credit custmomer accounts for excess generation provided back to the grid or to net meter (however they are only required to roll back the meter to zero). HOWEVER, the rule was written with the intention of interconnecting to CUSTOMER-OWNED pv systems. IOUs like Gulf Power are surely going to argue that this rule is inapplicable to Citizenre systems. This is because Citizenre has set themselves up in a position to be the utility. They are providing the generation equipment, they retain ownership of the generation equipment, they meter the electricity consumed, and they bill the customer based on the kWh consumed. Renewable generation is encouraged in Florida, however, small power producers must sell their electricity to the UTILITY. Here, Citizenre is trying to sell its electricity to the RETAIL CUSTOMER. This is clearly a violation of existing territorial agreements, and results in uneconomic duplication of generating facilities.

Interesting

Though one note is that CR is not selling the customer the power consumed, they are selling them the power generated, whether they consume it or not. (They will, of course, because they will sell any power they don't consume back to the utility. It is the homeowner, not CitizenRe that sells the power back on a net metering basis.)

So it looks a bit more like a lease, priced according to how much the panels generate, than a power company. It is marketed like a power company though.

A utility by any other name..

Here’s where it gets really interesting. There is a Florida Supreme Court case (PW Ventures v. Nichols) which says that the sale of electricity to even a SINGLE customer makes the seller a “public utility” as the term is used in section 366.04, Florida Statutes, (the statute that grants the FL Public Service Commission jurisdiction over the rates, terms and conditions of utilities in Florida).

As I understand it, a Citizenre customer pays to Citizenre a monthly bill that is based entirely on the amount of electricity generated by the Citizenre-owned generation equipment. To me, the customer is purchasing the electricity, regardless of whether the customer uses it him/herself, or whether the customer passes (sells) the electricity on to the grid. A “public utility” by any other name is still a “public utility.”

I think they are going to run into some regulatory problems under their current plan. This is not to say they can’t get around it. For example, Citizenre could probably transfer ownership of the system to the customers with a lease-back provision in the contract, and then charge the customer however they want.

All I am pointing out is that IOUs don’t take kindly to losing business. These are the things that jumped out to me when I first heard of this company, and IOUs will surely raise these issues if they start losing customers to Citizenre.

Losing customers

Actually, the power companies like losing customers to solar, and customers who sell back power aren’t so bad either (though admittedly it’s at a higher price than they usually pay.) That’s why the power company gives you rebates for buying more efficient appliances, and big rebates for buying your own solar, and a discount if you will allow yourself to be cut off at peak times.

It’s called demand side management and it’s based on the idea that power plants and wires largely cost based on peak demand, but peak demand only exists (duh) at peaks. Soften the peaks and you get a much better return on investment, even if you sell a bit less power.

...understood. But there is

...understood. But there is a difference in reducing demand (which ends up reducing utility costs since they pay less for un-used capacity), and paying retail rates to another utility (not the customer in this case) for electricity.

I think the whole key to the regulatory concerns (at least in Florida) is determining whether Citizenre is truly selling electricity or simply renting the panels.

Thanks for all the dialogue - this is a great site.

P.S. It may be sounding like I have something against Citizenre - I don't. In fact, it doesn't affect me one bit if the company succeeds. These legal issues just interest me.

climate registry

citizenre will cash in on carbon purchasing if they become a utility

Not really

Electrical power, while a huge producer of carbon in the aggregate, does not produce that much CO2, so a house might make a ton or two, and the offsets from that are just $4/ton on the CCX right now.

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