After he moved to L.A., John Ayers searched for a way to re-create the small-community feeling he had growing up in the Midwest. In hilly Mar Vista, an attractive, leafy community a few miles from the beach, where low-water gardens and rain-recapture systems have become emblems of lower-impact urban living, Ayers found himself amidst a cohort of young parents eager to support each other.
It was at preschool pickups and drop-offs that Ayers met James Brennan, and the two began to talk about bringing solar power to Mar Vista.
In 2008, Ayers and Brennan started knocking on neighbors' doors. Their neighbors, fellow parents, empty nesters and young professionals, were excited about Ayers' and Brennan's idea to make solar adoption a group effort.
They weren't so keen on the steep cost.
“People didn't want to shell out the big dollars up front,” Brennan says. He and Ayers knew they needed to find a different way for middle-class homeowners to foot the bill. They began to focus on solar leasing as a way to drive down the cost.
Since it was introduced a few years ago, the leasing of solar power systems to homeowners has turbocharged the solar market, and it could end up playing a significant role in changing California's energy mix.
Under a solar lease, a homeowner typically pays $50 to $80 a month, though the fees creep up 3 to 4 percent a year. The company that owns the panels gets local rebates and a 30 percent federal tax credit; most offer a no-money-down deal to customers.
Ayers and Brennan were excited about solar leasing, but they hit a roadblock. The Department of Water and Power, the city's utility, wouldn't offer rebates for solar leases. Randy Howard, who oversees DWP's renewables program, was concerned about a third-party owner selling power to its customers. Knowing how crucial rebates were to making the structure economical, the men set out to convince the utility.
Ayers and Brennan arranged a meeting with Los Angeles City Councilman Bill Rosendahl, who represents Mar Vista. Ayers recalled of the meeting, his entrée into politics, “You think you've got an hour or two — and you've maybe got 10 minutes.”
But Rosendahl told them about a City Hall hearing at which they could share the leasing idea. In 2008, solar power policymaking in Los Angeles was dominated by industry executives, unions and politicians. In fact, that fall, a long-brewing controversy spilled into the public when the City Council hurriedly placed on the ballot a union-backed plan to hand the DWP's union a near-monopoly on a big solar-installation initiative, Measure B. Major players spent nearly $1.6 million to convince voters to trust the DWP and cut out private solar installers, but opponents — spending just $74,451, and using resources like Twitter and blog posts — stopped Measure B at the ballot box a few months later.
Ayers and Brennan, newbies to the solar politics roiling City Hall, went to a hearing downtown that year. “Out of a room full of 100 people, we were the only homeowners. That was a real eye-opener,” Brennan says. If the demands of homeowners were going to be heard, he says, they'd need to keep up their presence inside City Hall.
The DWP's Howard didn't think it was legal for the utility to offer rebates for power owned by a third party, the installers.
Ayers and Brennan spent hours on the phone with Deputy City Attorney Stanton Snyder in the office of then–City Attorney Rocky Delgadillo.
Eventually, they gathered enough advocates within City Hall to persuade DWP that leasing was permissible. By summer 2009, DWP had started to offer rebates for leases. That was the break Ayers and Brennan needed.
They formed the for-profit Open Neighborhoods firm and organized about 30 Mar Vista homeowners into a collective to begin negotiating with different solar companies. They got the best bid from SolarCity, a California firm with more than 15,000 customers. Thirty households signed on with Open Neighborhoods.
Ayers says: “People joined the group because they knew and trusted the other group members. They said, 'Well, if Joe's doing it, it must be good,' and 'I know Carol — she wouldn't do it unless she had done some research.' ” Ayers had re-created his Midwestern community.
David Olds, a father of three who has lived in Mar Vista for 17 years, joined the original 30 families and says, “My lease payment will not really change for 20 years, but the cost of electricity will most certainly go up.” Homeowner Sarah Auerswald signed on after initially assuming it was a scam. She recalls thinking, “This can't be true.”
In 2010, Ayers and Brennan expanded their radius, bundling 200 homeowners and businesses across the Westside.
The duo launched their third group program in September, offering a guarantee of 1 megawatt of power's worth of customers, or about 200 homes, to the installers (the average solar system is 5 kilowatts). They decided on local installer Permacity and negotiated 25 percent off the price of a typical lease. Participants will have a zero-down lease for $69 per month, and a typical household can expect to save 47 percent a month on electricity prices. Brennan notes, “The DWP rebates are going quickly.”
And demand for leasing deals is spreading not just in L.A. but across California.
The leasing model is “definitely taking off,” says Ethan Elkind, a climate-change research law fellow at UCLA and Berkeley schools of law. “For most people who are living paycheck to paycheck, the leasing model has opened solar to them.”
In the third quarter of this year, leasing outstripped purchases for the first time, representing 59 percent of California's residential solar, according to industry group PV Solar Report.
Another player in this emerging scene is David Llorens, who markets his One Block Off the Grid in L.A. and other cities as the “Groupon of solar.” His company creates pools of customers (usually 3,000 to 4,000 people in L.A.) to get a group rate. In May, it added a solar-panel leasing option.
Shannon Coulter, vice president of marketing at One Block, says, “Leasing is the way we're seeing people go.”
One Block Off the Grid keeps costs down by using satellite imaging to analyze the shade and direct sun exposure on a customer's rooftop, cutting the need to send a crew to the house.
“It's ironic,” says Coulter, that despite a negative political climate for solar energy after the Solyndra debacle, a new kind of market is opening. “We're really excited.”
Some solar-leasing families, now saving money each month, sound even more upbeat. David Olds' electricity bill used to be more than $100 a month. It's now usually $50, plus $33 for his discounted solar panel lease. The savings have gotten him thinking about installing a wind generator. “I'd love to be as much off the grid as possible,” he says. “And if I can do it in a suburban/urban community, anyone can do it.”