factories around the world, so that the learning curve kicks in. With every doubling in volume [in solar production] there has been a price reduction of 18 percent. So if you create demand in California, exporters selling into that market build bigger factories, the price comes down, and the price of solar electricity comes down. We’ve seen that in spades. Over the last couple of years we have doubled the volume, and sure enough the costs have fallen more than 50 percent in the last year alone, so that the price of solar electricity is now down in the competitive range for residential rates structures. Some of our customers get solar electricity from us for around 18 cents per kilowatt-hour, which is very competitive with PG&E. So the vision is to take it to the residential market en masse, with an easy and affordable value proposition.
To make it easy, that meant doing it online. We wanted to provide a solar-electricity-seeking customer with a similar process to iTunes or Netflix and familiar online commerce models. Affordability means offering finance solutions to customers so they don’t have to pay the up-front capital costs. Unfortunately, our journey started in 2008. We came to market thinking we would have banks and others lining up to provide financing, and then the world fell apart, and the financial industry forgot about solar financing for two years. We did a lot of cash sales in the first couple of years while we honed the tools.
X: Tell me some more about the specific tools.
DK: Our technology is software. We are a supplier-neutral vendor of the solar hardware. We make it easy for customers to go solar by putting the whole purchasing process online. That reduces our cost structure, which makes us a more profitable business and improves the experience of the customer, and that is really key. Mass uptake, from novelty to ubiquity in the next decade, is only going to happen if this stuff is really easy.
The conventional process was fraught with lots of contractor interactions, and time at home waiting for people to come and take measurements of your roof, and then waiting around for them to come back and pitch you a proposal, and then trying to pick between KACO and Fronius inverters. We have simplified and standardized it and put it online, which makes for a much more compelling buying process. The secret sauce, if you like, is a remote solar design tool that we built a couple of years ago which allows us to take a satellite view, similar to a Google Map, and pair it with angled aerial photos from planes. Without giving away the IP, we use the trigonometry and the angles and pitches in the roof, which then allows us to fully engineer the system without a site visit. The craft of solar installation requires getting four numbers: the length and width of the installed area, the pitch, and the azimuth [the compass direction], plus identifying any design obstacles. Anyone can use Google Earth to look down and see the length and the width. We’ve developed algorithms that also work out the pitch and the orientation to the compass, which gives us an accurate, rules-based reading.
You can have a cool tool, but unless it’s integrated into your business model it may not improve things that much. When I first moved back here and told people we were going to do remote site design and sell by phone, they said ‘You’re crazy—every roof is different. You have to
