make utilities accept electronic signatures on rebate applications. They used to return it if it wasn’t in blue ink or black ink. Crazy stuff like that. But we suffer like the rest of the industry. Since we have standardized and digitized and put everything into our CRM, there is an integration and sophistication to our business that is probably better than the cottage industry, but I won’t say we’re without pain around that.
X: Where do you get the solar panels that you install? Do you have a direct line to the big manufacturers in China or Europe? Do you have to keep a big inventory on hand?
DK: Our premise coming in is that these black rectangles would become significantly oversupplied. There is a slight tightening of supply right now, but broadly there is more production capability than demand. We would like to be a bit like Dell—it should be a dump-in-driveway situation, where you batch ship from China or Oregon or wherever, Mrs. Jones orders 5 kilowatts, we send the panels and the inverter by rail, and we’re done. We are not there yet, but we have built a software solution to manage that. We need some visibility, because we’re moving roughly a megawatt a month, and working three to six months in advance.
X: Who does the installation? You don’t have your own building contractors, do you?
DK: We own the customer relationship. We create this great experience where they buy or lease from us and work with us for 10 years. But the installation will be done by a subcontractor. You are not going to get to a million roofs, let alone 3 million or 4 million, by growing the existing cottage industry of 500 mom-and-pop solar installation shops. You are going to do it by leveraging the existing infrastructure of heating, ventilation, air conditioning, electrical, and cable installers. Pretty much anyone with a ladder and a truck can do solar installation. We have a mix of electrical contractors and solar installers, about 45 crews across Arizona, Colorado, and California.
There is a lot of indirect employment coming from Sungevity. There’s 40 percent unemployment in the construction sector due to the recession, and we’re getting them into the green economy. So from a customer point of view, there is the satisfaction of knowing that there is a local craftsman coming around to do your solar installation. It goes back to the business model. We have centralized and standardized the things that can be centralized and standardized in solar purchasing, and we outsource those things that are hyperlocal and need to be done in the community.
X: Why did you start Sungevity in California, and do you plan to grow beyond this region?
DK: I had lived here for some of the 1990s and in 2000-2001, and I knew a lot of the solar industry players here as an advocate. I knew this was a great place to try this business model. If there is anywhere that’s going to be comfortable adapting to Internet commerce models, it’s California. There is also a great rebate program here, since 2007. There’s the solar resource. So there are a lot of good reasons to pilot here. But we’ve always had the global ambition that this will be a household name that will ultimately be identified as the one-stop-shop. We want to be the Amazon of solar electricity.
X: How big do you think this opportunity is?
DK: In 2011 and 2012 we will continue to more than double each year. Obviously, we could mis-execute and stuff it up. But if we don’t stuff it up, the only way is up and to the right. There is no ceiling on this market. We are at 0.4 percent of California roof space, and even less of U.S. roof space. We could very feasibly fill 40 percent of the roof space. So that’s a factor of 100. My view is that this needs to be done in the next decade if we are going to make a real, meaningful contribution to solving climate change. So we are going to grow 100-fold in 10 or 20 years. If you are well placed, you should do well in this industry. The bigger challenge is how does the company connect with that growth and how does the company culture survive that transformation and continue to execute.
In Part 2: Why Kennedy left Greenpeace, and his thoughts on climate change and the Obama Administration’s lackluster record so far on clean-energy legislation.
