Guest Post by James Lester, Managing Consultant with Cleantech Finance
Despite some well publicized difficulties for cleantech investors, one area in particular has been a very rewarding place for investors to put their money. An innovative business model known as third-party ownership, combined with the falling price of solar modules, has led to a boom in the US solar market. Residential solar installations in 2012 reached 488 megawatts, a 62 percent increase over 2011 installations. According to GTM Research, a solar photovoltaic system is installed every four minutes in the U.S. A Colorado company is poised to take full advantage of this booming market, by providing unique data that give homeowners and solar installers a clear and simple assessment of a building’s solar potential.
Sun Number, co-founded by David Herrmann and Ryan Miller is building off a $400,000 grant from the Department of Energy’s Sunshot Incubator, awarded last year to develop a tool to make it easier, faster and less expensive for both homeowners and solar companies to analyze the solar potential individual properties. The tool, known as a Sun Number Score, engages consumers by providing a solar analysis of their home or office building with an easy to understand score between 1 and 100, and then putting them in touch with a local solar professional. Solar professionals use the tool to reduce the costs of customer acquisition.
The DOE’s SunShot program established a new $10 million competition last year for innovative, sustainable, and verifiable business practices that reduce what’s are known as “soft costs”. The cost of acquiring customers and designing systems to fit their homes represents about 45% of all balance of systems costs in the U.S. rooftop residential solar market, according to the DOE. These high marketing costs, by some estimates as high as almost $5,000 per residential customer, create barriers for both the potential solar energy consumer and the solar installer. While soft costs have fallen as the solar industry grows, experts believe that further declines must occur in order to for solar to reach grid parity with other energy sources.
A large part of these soft costs results from several different issues with the acquisition process. In some cases, an on-site visit occurs by a professional to estimate the solar potential and energy requirements/capability of a residential or commercial rooftop. This process is not only costly, but often slows down the consultation process with the customer by several days. In many other cases, professionals use Google Earth or another imagery based program to try to estimate the size and location of the system. This often results in inaccurate readings due to guesses on nearby shading and rooftop pitch angles. These imprecise estimates lead to poorly designed systems and reductions in energy savings benefits.
This is where the market opportunity for Sun Number lies. The company streamlines the solar installer’s customer acquisition process. Utilizing high-resolution aerial data, advanced GIS technology and proprietary algorithms, Sun Number reduces these soft costs by providing an accurate, inexpensive, and quick analysis of the property allowing salespeople to screen out unsuitable properties on first contact. Using only a street address and Sun Number’s easy to use interface, solar companies can immediately obtain information about a property’s solar suitability that was previously only available if they sent an employee on-site for a lengthy inspection.
“The trend in solar installations is that soft costs are increasing as a percentage of overall costs, in part due to the labor-intensive analysis necessary to evaluate the solar potential of a rooftop. Not only is it costly, but it slows the sales process to a crawl as both the provider and the customer are forced to wait for their schedules to align and the weather to cooperate. Our goal was to develop a tool that eliminates those high costs and allows providers to get that information instantly,” said Herrmann.
The Sun Number Score represents the solar suitability of a building’s rooftop on a scale from 1 to 100, with 100 being the ideal rooftop for solar. Using a proprietary data set, Sun Number determines the solar-suitable square footage of a building by taking into account factors of importance to solar installers, including:
- The pitch of every roof section
- The orientation of every roof plane
- Shade created by surrounding buildings that might impact solar potential
- Shade created by surrounding vegetation that might impact solar potential
Additionally, Sun Number Scores will take into account regional factors such as:
- Average sunshine for the market
- Atmospheric conditions that may impact solar potential
- Availability of local solar incentives
- Regional cost of electricity for calculation of solar savings
While Sun Number considers themselves a ‘data-focused company, the company has much in common with the new wave of energy-related technology, dubbed ‘cleanweb’, which is increasingly getting the attention of venture capitalists for its promise of applying Internet business models and “big data” to clean energy. While many investors have been frightened from investing in ‘cleantech’ companies, this area in particular is attracting a lot of attention.
The Cleanweb, coined by venture capitalist Sunil Paul, describes technology companies that leverage the surge of available data in combination with the internet, social media and mobile to address society’s current resource constraints. When asked about the market potential of cleanweb, Paul said, “The cleanweb is the ability to distribute software and services on top of that infrastructure that makes it more efficient, and that is the next big evolution in cleantech.”
Rob Day, a partner with Black Coral Capital sees that there is significant interest from the venture capital community around the cleanweb business models and system integration. He describes these models as (sometimes financial-oriented, sometimes web-oriented, sometimes software and controls oriented, sometimes deployment-oriented, sometimes just plain services.
Sun Number has found a unique way to deploy rich data sets to reduce costs and increase the growth of the enormous market of solar rooftop installations. Thus far, Sun Number has processed data on over 7 million buildings in 12 metro areas. The company plans to expand to more cities in 15 to 18 states that are best suited to the growing solar market. The company is also developing a customer focused interface, or ‘dashboard’ that will incorporate the next generation of Sun Number scores, which will include local economic incentives and changing installation and permitting costs. The company plans to implement a dynamic scoring system, which will notify consumers if their Sun Number Score has changed due to recent changes in policies or market conditions.
Herrmann comments, “It is estimated that the solar industry spent over $200M on residential customer qualification and acquisition in 2012, much of it on inaccurate and expensive solutions. Sun Number is helping fuel the solar market growth by making available accurate low cost data that identifies properties and people that are most likely to purchase solar.”
If you would like to learn more about Sun Number, visit their website or contact David Herrmann at firstname.lastname@example.org