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By Andy Mannle | Wednesday, 09 April 2008
Lyndon Rive and his brother Peter were looking for a way to make a difference. After years of running software companies, they wanted to get into solar – and their idea has made their company SolarCity the largest residential solar-installer in California, as well as the fastest-growing solar installation company in the state just two years, and earned them a prestigious Energy and Environment Award from the Aspen Institute.
In this interview Lyndon talks about finding the 'Holy Grail' of solar, his prediction that we can have a virtually carbon-free lifestyle in just a few years, and why going solar is like writing yourself a check for $6000.
The way it works, explained Lyndon in his remarks upon accepting the Aspen Institute's award for Corporate Energy Generation, is that instead of paying twenty or twenty-five thousand dollars for a solar system, you make a down payment of just a few thousand dollars, and then lease the system from the company. For most people, the price of the lease combined with a new smaller electricity bill is less than their old bill, so they're saving money right from the start. The way they reduce costs is by doing installation in batches of 50 to 100 homes. And that's just the beginning. Solarcity aims to put solar cells on thousands and thousands of homes, and they're well on their way to doing it.
What's it like working with your brother?
The way we've established our relationship since day one is I handle sales and marketing, and business development; he handles technology, operations, and execution. We like to refer to it as offense and defense. I'm offense, and he's defense.
And how did you get into solar?
After 10 years of enterprise software, we were working 80 hours a week, and the drive started fading away. And knowing how much I enjoy the things that I do outside - I really dig our environment, I think it's awesome. It's very rare that you can go mountain biking in one area, snowboarding in another area, and go kite-surfing in another area. So I really enjoy what we have, and it would really suck for it to disappear. I want to do everything in my power to stop that from happening.
So we knew that the way to solve this was to get into the renewables industry.
We looked at all the different types that were out there, and when we looked at solar we realized this is one application that can truly scale. So what's preventing it from scaling? We realized that one of the biggest bottlenecks today is solar installations.
So I interviewed probably 30 companies during a year and a half, about their capacity to grow. And their answers just didn't get me excited about solving the problems that we face. It's too slow. For them to have a meaningful impact is going to take too long. So my brother and I decided we could get into this a lot faster, and have a significant impact a lot earlier.
That's why we started SolarCity: we realized that if we could build up the infrastructure, get solar installations to scale, and reduce the cost – then more people would start adopting it.
You're featured in a New York Times article about the solar industry that says, "the industry is being helped by substantial subsidies…" How necessary are government subsidies for your industry?
It's not just necessary, it's a crucial component. Without it, it just won't grow at any decent rate. The solar industry will figure out how to reduce its cost, but it'll need a litte time to do that. And it really has, we're dropping costs all the time. Since SolarCity has come on board, we've managed to innovate to reduce installation costs by 20%.
The only reason I'm mentioning this – if there's a long term tax or rebate incentive, it will allow the industry to reduce its cost so it can survive without subsidy. You are doing this over time, and the more volume we deploy, the more efficient we become. By becoming more efficient we can reduce our cost.
How long do you estimate that will take?
Between 5 and 8 years.
So basically the solar industry feels that if you can get some help for the next 5 to 8 years, you'll be able to stand on your own legs?
That's right. The one thing I want to make sure your readers understand is, if they wait two years they're not going to get a better price. Because if they wait two years the subsidies will be reduced and in fact they may find themselves getting a slightly more expensive price.
So there is an incentive for people to buy this now.
There's a massive incentive. But if the Federal tax credit doesn't get extended, they're going to really wish they'd bought it this year because it'll be 30% more.
But it is possible that a new administration could write stronger legislation, or enact new subsidies.
Anything's possible, but that's highly unlikely. There is a 30% tax credit available for solar in place today. What the administration is trying to do is get that renewed. Advocacy groups within the solar industry, all we're asking for is the extension. We're saying 30% is fine. Just extend it, give us another five or eight years to figure out a way to reduce the cost.
Which is an interesting argument, because I hear oil executives – and I mention this because they've just been speaking to Representative Markey in Congress – defending their subsidies, and resisting commitments on investing in renewables. What's your take on that?
To me, subsidies are there to launch an industry. I don't hear people subsidizing the software market. I don't hear any subsidies being given to Microsoft, to Google, or to Cisco. These are mature markets, they've created many jobs. The oil industry is very mature. It's mature and extremely profitable. Why the hell would you subsidize something that's mature and extremely profitable? It makes no sense.
Do you feel that Big Oil has a role in developing renewable energy? In other words, are they fossil-fuel companies, or energy companies, what's your perspective?
There's a tremendous conflict of interest. When the environmental part of your company is only generating 1% of your business, and everything else is 99% – it'll take a certain individual to truly want to make a change, and I'm not sure if all of them have those types of individuals running their companies.
So it's human nature. You may give it 2% of your attention, but you're not going to give it 30 or 40% of your attention. So they will look into it, and they will slowly move into it just because of political pressure, but it's not going to control a majority of their time or mindshare. It just won't happen.
So what do you see as a healthy relationship between government and energy companies?
When we have similar goals. The government itself needs to reduce state or local CO2 emissions, and solar helps tremendously for that. The two largest contributors to pollution today are electricity and transportation. So solar reduces at least one of the main contributions. And it's quite easy to see the future where you have a solar system powering your house and your electric car. If you do that we can have a carbon free lifestyle. And that is cool.
And this is not space age, this is just around the corner, I really think its very achievable. It can be done in the next two years, where people put a solar system on their roof that is large enough to power their car and their house. Then they can live close to a carbon free lifestyle.
So you're saying that a virtually carbon-free lifestyle is achievable in two years: if you do solar plus plug-in electric vehicles.
Right. Even a plug-in hybrid would be a major improvement. My whole philosophy relating to environmental improvements is to do it without compromise. I enjoy certain aspects of my lifestyle, so I don't want to compromise to be environmentally friendly. I want technology to enable me to do the things I like to do, and at the same time not have a negative impact on the environment. Solar combined with electric vehicles allows us to have that lifestyle without compromise.