Introducing the solar-powered workforce. by Solstice Initiative
Transforming solar power into a benefit that any company can offer to its workforce.
The residential solar market has experienced a remarkable coming of age in recent years. The price of photovoltaics has declined approximately 80 percent over the past decade, to the point where the cost of generating solar power is approaching the cost of generating power from conventional sources of energy. As a consequence, households are finding rooftop solar increasingly compelling. California households, for example, installed more rooftop solar in 2013 than in the previous three decades combined.
If solar is to truly go mainstream, however, two enormous barriers in the residential solar market must be addressed:
- Access to the market must be broadened. Solar has the potential to power neighborhoods across the United States, but the benefits of solar are accruing mostly to high-income homeowners, with many consumer segments -- such as those who rent their homes, have an insufficient credit score, or possess a roof not optimized for solar -- effectively shut out of the market.
- Transaction costs must be sharply reduced. The vast majority of American households are interested in going solar, but relatively few have yet taken steps to do so. Solar developers, for their part, continue to struggle with high "soft costs". According to an estimate by SolarCity CEO Lyndon Rive, identifying and acquiring a customer for residential solar costs an average of $2000-$3000.
Solstice Initiative will address the barriers cited above by leveraging explosive innovation and growth in the commercial solar market, twin dynamics that expands significantly the ability of households to benefit from solar power. Specifically, under the Solstice model, organizations will dedicate a portion of their solar array to their workforce.
In this way, solar power can be transformed into a benefit that any employer can offer its employees.
Category of the action
Mitigation - What U.S. Federal Agencies can do to mitigate climate change
What actions do you propose?
Solstice believes there is a clear opportunity for the federal government to act as an "early adopter" of this innovative approach to broadening the number of households that can benefit from solar power. Specifically, the large-scale solar projects that the Department of Defense (DOD) has executed in recent years provide the ideal testbed for this concept.
Take, for example, the recently-installed China Lake solar array, which provides power to the Naval Air Weapons Station in California. The China Lake array was constructed on the basis of a power purchase agreement (PPA), such that the DOD entered into a contract to buy the energy from the solar field at a rate lower than that which it was paying for conventional energy. In fact, over the life of the solar asset, the DOD anticipates saving $13 million in energy costs.
Under the Solstice model, the DOD would retain the vast majority of this savings, but take some portion of it -- say $1 million over 20 years -- and transform it into a benefit to be offered to base personnel.
While this benefit could be structured however the Navy sees fit, Solstice sees the most potential in using these savings as a "force multiplier" of the impact of the Navy's solar investment. In a state such as California that has adopted "virtual net metering" legislation, the Navy could go so far as to use these savings to help base personnel purchase stakes in shared off-site solar arrays. In other words, the Navy could use its own decision to go solar to help Navy personnel go solar themselves.
Short of that, the Navy could dedicate these savings to other "energy rebate" programs for base employees. For instance, these savings be dedicated to subsidizing purchases energy efficiency upgrades for homes, fuel efficient vehicles, and so forth.
Beyond the direct impact such a program could have, we believe this offering provides two ancillary benefits to institutional users such as DOD. First, the program offers a strong public relations boost to any entity that offers it. This may be especially attractive to DOD in the face of recent news around, for instance, the treatment of soldiers under the care of military hospitals. In addition, a benefit along these lines will help employers attract and retain high-quality personnel. A "green benefit" of this sort is likely to be especially important to sustainability-minded young people, precisely the cohort that DOD needs to bring to its workforce.
The natural question is whether a program along these lines would diminish the economic attractiveness of solar to an institutional user such as DOD. Crucially, the rise of innovative financing arrangements such as PPAs means that, even with such a program in place, there is an opportunity for a positive sum transaction for all parties involved. Under the Solstice model, the entity that initiates a PPA still receives material positive cash flow over the life of the system, but opts to take a portion of that cash flow to invest in its workforce. In a word, it is choosing to multiply the energy impact of its solar dollar.
A related issue is how best to allocate the benefit. Based on dozens of conversations with human resources executives, benefits administrators, and sustainability officers, our understanding is that corporate entities prefer benefits that can be offered to their entire workforce. With that in mind, one possible method of allocation would be a mechanism where this "solar benefit" was offered as a way to reward performance or loyalty. For instance, the base's human resource officers could offer this benefit to reward particular sections of the base that achieved certain energy efficiency goals.
At a macro level, there is also the question of whether it would be equitable for some bases but not others to see this benefit. In fact, we believe our approach would help address these equity issues, rather than exacerbate them. DOD is currently partnering with SolarCity to execute the "SolarStrong" initiative, an effort to build rooftop solar on thousands of military homes. The beneficiaries of such an approach are, by definition, limited to those households that can install rooftop solar. The Solstice approach, by contrast, materially expands the number of households that have the opportunity to benefit from solar.
Who will take these actions?
As mentioned above, we believe that the Department of Defense (DOD) is in a position to act as a key validator for this concept. This stems from the fact that DOD has installed a number of large-scale solar projects in recent years, most of which are structured under a PPA or leasing arrangement that would lend itself to the Solstice model. In addition to the China Lake project, these installations include the Nellis Solar Power Plant in Nevada and an installation at Fort Bliss in Texas.
Where will these actions be taken?
The Solstice model can be applied anywhere there are commercial and institutional users who:
- have installed or are prepared to install large-scale solar arrays
- have a readily-identifiable constituency they are invested in (e.g. employees)
Initially, we foresee executing this concept in the United States, but we believe this idea could be applied across multiple geographies.
How much will emissions be reduced or sequestered vs. business as usual levels?
The success of this concept in addressing climate change will be determined by the extent to which this idea incentivizes organizations to install new solar capacity. That is, while we foresee initially working with users that have existing solar assets, we can also imagine that our concept will drive uptake of solar power among commercial and institutional users that have not yet gone solar. This impact cannot be easily quantified, but could be material, if the concept is successfully brought to scale.
What are other key benefits?
The savings from large-scale commercial solar arrays will act as a "force multiplier," with a portion of the money dedicated to helping employees go solar or financing other energy-saving investments.
What are the proposal’s costs?
The insight underlying the Solstice model is that, particularly with the advent of commercial PPAs, solar power can offer a positive sum outcome for all actors involved:
- Employees. As noted above, the Solstice model turns on the idea that employers can use the savings from going solar as a "force multiplier" to help their own employees go solar or undertake other energy-saving investments. In this way, households that have traditionally been shut out of the solar market can benefit from solar in a transparent, straightforward, and seamless transaction.
- Employers. The only cost involved with this arrangement is that an employer will be capturing slightly less savings from their solar asset than they would have otherwise. In exchange for doing so, however, they receive two key ancillary benefits. First, it sees a material public relations benefit stemming from their role in helping its employees "go green." Second, it attracts and retains high-quality personnel, allowing the entity to cut down on training costs and maximize productivity.
The Solstice model can begin to have a positive social impact immediately. With the help of our enterprise, any organization that currently possesses -- and is financially benefiting from -- a solar asset can use that array to offer solar power as a benefit to its employees. This includes the DOD installations that have already put in place large-scale solar fields.
As described above, over the medium- and long-term, our vision is that our concept will drive uptake of solar power among commercial and institutional users that have not yet gone solar. What is truly exciting is that, as awareness of solar power among commercial users rises, the costs of solar power continues to fall, and third-party ownership models become increasingly common, the number of people who can benefit from solar will only increase.
The Solstice proposal aligns closely with the category of submissions related to shifting individual behavior and public perception. Our enterprise is motivated by a belief that the mainstreaming of renewable energy will be driven, to a large degree, by widening the number of individuals that are able to participate in and benefit from it.
To that end, we envision working with employers to offer a suite of "engagement services" to the employees we are benefiting. For example, we imagine developing an online platform that enables employers to monitor the output of their employer's array and use the "credits" (i.e. output) generated by that array as rebates to purchase solar themselves and/or purchase energy efficient goods.
In this way, our proposal is most analogous to ideas such as the one offered by Alex Krotz, who offers the wonderful suggestion of an online platform that aggregates and analyzes information related to an individual's consumption levels.