The home solar market is full of sales tricks, but this LA startup wants to change all that

This article originally appeared in the San Gabriel Valley Tribune:

What ridesharing services Uber and Lyft did to taxis, Max Aram and Chris Blevins are trying to do to the home solar industry.

The founders of the Los Angeles Cleantech Incubator award-winning startup Pick My Solar said they have witnessed too many high-pressure sales tactics from quantity-over-quality solar companies pulling the wool over customers’ eyes or scaring them away.

So they launched their online marketplace that uses 6-12 vetted installers and displays specs and prices from the best three across a single computer page so the homeowner can make an intelligent, informed and pressure-free decision about how to harness the sun to power their home.

Pick My Solar is also mixing in more changes to the solar industry, including a just-launched, first-ever San Gabriel Valley mass solar buy.

“They were taking advantage of homeowners. They were overcharging them,” summed up Kyle Cherrick, who heads up business development for Pick My Solar, describing what Aram and Blevins called despicable practices of certain installers. “They said this is not the way to do this.”

Made available to the public about three years ago, the new startup got a boost in April when Cherrick’s Solar Merchant — a similar idea but for commercial clients like Target and Kaiser Permanente — merged with Pick My Solar, winner of both the Techweek National Launch Competition and the U.S. Department of Energy’s SunShot Catalyst prize on the same day in December 2015.

“It is the Kayak of solar,” said Cherrick, using the online flights and hotel room aggregator as a comparison. Others compare it to Lending Tree, an online service providing homebuyers various mortgage products from different lenders, or TrueCar, an online way to shop for cars and avoid salesmen in showrooms ready to pounce on innocent buyers.

“Homeowners are interested in solar. They’ve heard about it. They often don’t know the right questions to ask,” he explained.

Who knew the solar business needed disrupting when solar energy itself is making inroads and raising eyebrows inside the halls of traditional utilities. But co-founders Blevins and Aram, who came up with the idea in the studio apartment they shared in Northridge, see their platform as the turning point toward a more transparent solar industry that’s bracing for more disruptions from the pending merger of Elon Musk’s electric car company Tesla and SolarCity, the national solar installer that has captured 30 percent of the U.S. home market.

“The whole industry is moving away from people signing contracts on the spot,” said Aram, who left Iran for the U.S. in 2009 and met Blevins, a Long Island native, at a course for solar salesmen in California.

Blevins, chief operating officer, said he saw some companies overcharging customers by $30,000 to $40,000 over the length of a lease. In an earlier published interview, he said he was “disgusted with the way the solar industry was bullying homeowners and trying to rip them off” and wanted to disrupt the solar industry.

Inside a tiny glass office in a corner of LACI located in the hip downtown L.A. Arts District earlier this week, Blevins spoke about the need to open up solar to the light of day by trying to blot out pressure sales and replace them with an online marketplace.

“Those are old sales tactics,” said Blevins dismissively. “We are trying to bring in more modern technologies.”

 

PRICES DROP, SOLAR INDUSTRY MATURES

Like computers, the prices of solar panels started high but continue to drop dramatically.

Almost a year ago, the 30 percent federal tax credit was extended for another five years. That, combined with the cost of solar panels and hardware dropping 80 percent since 2010, has made home solar more affordable.

“What hasn’t come down as fast is the cost of sales, marketing, design and installation. In other words, the labor,” Cherrick said. “This is what our business is really focused on.”

The average price of a solar home system from someone using Pick My Solar is about $18,000, as compared to $23,000 to $26,000 from straight-on installers, they say, putting the average savings at nearly $6,000.

How do they do it?

Eliminated are unnecessary site visits, because Pick My Solar uses satellite imagery of each home to create a 3-D custom design down to the size of each nearby tree and the precise placement of each purple-black solar panel on the roof. Also, they’ve done away with sales commissions and book installers who pass efficiency tests. Each installer must provide 20 customer testimonials with their application; about 30 percent of the applicants are accepted, he said.

“We can take one design to five installers and say bid on this,” Cherrick said.

The price savings across the market and platform has led Pick My Solar to encourage homeowners to buy their systems using cash or a loan starting at 2.99 percent, he said. This is different from the lease options pushed by national installers. That’s why 90 percent of its customers choose ownership over lease, Cherrick said.

With net-metering, excess energy is bought by the utility. For most, electric bills are reduced to near zero but in general, an owner’s loan payment is less than what they paid for electricity before installing solar, so payback starts immediately, he said.

“Even with a 12-year loan, you can be cash-positive the entire time,” Cherrick said.

 

ONLY USE REGIONAL INSTALLERS

They use only regional installers, mostly in Southern California, but they also do business in 10 Western states. They believe regional installers have lower overhead and prices and can compete better than national installers, such as Solar City, which is not part of the Pick My Solar team.

Robert Sarai, business development manager with LA Solar Group, with a warehouse in Van Nuys and other offices in Irvine, Riverside and San Bernardino, said his company was chosen to be a part of Pick My Solar’s vetted installers. Though LA Solar Group still does business on its own, it sees aggregators such as Pick My Solar and competitors Energy Sage and Geosolar as the future of an industry that is maturing.

“It puts the buyer into the driver’s seat,” he said.

More than 1,000 members of the Solar Energy Industry Association, a national trade group, do act responsibly, said Dan Whitten, vice president of communications. “Consumers can feel confident going directly to our members,” he said. Whitten said sometimes, they may prefer going directly to the installer, like someone buying an airline ticket going to a particular airline’s website instead of an aggregator. “Sometimes it is cheaper there,” he said.

As costs drop, some companies get into the installation business for the wrong reasons, said Sarai. Many are falling by the wayside as more informed buyers choose only experienced installers and read reviews on Internet sites. “What customers want now is to work with a renewable energy company that is professional, knowledgable and with a high level of expertise,” he said, noting that LA Solar Group is one of the fastest growing companies and was rated 75th on the Inc. 500 survey.

 

A GROUP BUY IN SAN GABRIEL VALLEY

One of Pick My Solar’s innovations is to flip its model of customizing solar systems using hands-on specialists and turning around a design in a few hours that can be installed in 10-30 days.

The SolarUp San Gabriel Valley project, for example, aims to bunch together 100 or more homeowners from Pasadena to Claremont in a group buy, using a fixed design and two top installers. Call it a prix fixe menu for home solar.

Installers can send out crews to a concentrated area at the same time, saving money on transportation, logistics and marketing. By shortening the process and pre-designing the product, prices may drop by 20-30 percent, he said.

Homeowners must sign up by Dec. 9 by going to www.solarupsangabriel.com. Installations start after Jan. 1 and would be wrapped up by April, he said.

This is the first community-wide solar buy in the San Gabriel Valley. So far, 50 homeowners have shown interest since the program launched in October.

Sustainable Claremont, a nonprofit, is promoting the group solar buy because it fits with its goals of reducing greenhouse gases that contribute to global climate change. Also, the city is competing to win the Georgetown University Energy Prize, which comes with a cash award. “We are new to the area of partnerships with for-profit companies,” said Anne Bremer, hired by the group to work on the competition that tracks a city’s energy usage.Pick My Solar representatives will speak Nov. 17 at Claremont Craft Ales as part of the green drinks event.

Cherrick said the company is considering other solar group buys in the San Fernando Valley and in Orange County’s Saddleback Valley. No dates have been set.

 

HUGE GROWTH EXPECTED TO SHAKE UP MARKET

By expanding its online platform, Pick My Solar’s strategy is to penetrate 10-15 percent of the U.S. market share, which is strongest in California with a total of 13,942 megawatts of solar energy as of last year, or enough to power 3.5 million homes.

Put another way, 1 percent of the power produced in the U.S. comes from solar energy. Expansion is unlimited and even expected. Whitten said it took the U.S. 40 years to reach 1 million solar installations. That will double in the next two years, he said.

“In the next 10-20 years, it (United States) will go to 10 percent solar, which is a ginormous jump,” Cherrick predicted.