In discussing SolarCity, Elon Musk explained that his approach is to recognize the biggest, most costly problems in any value chain and to focus innovation energy there. For residential solar energy, he identified the cost of financing and cost of installation as those problem areas. Similarly, financing is the factor gating energy efficiency technology. With SolarCity’s continued success, I expect many of its concepts will be migrating up to the enterprise and across vertical markets.
SolarCity puts panels on roofs for no-upfront cost to homeowners in a leasing arrangement. The cost of the monthly lease is often fully offset by how much less the homeowner pays to their electric and gas utility each month. Financing for the leased equipment is arranged through third-party entities such as banks and financing companies that can take advantage of solar tax credits from the government. Similar financing solutions are already being proposed by energy efficiency technology companies.
SolarCity has seamlessly expanded its market from residential to commercial & industrial buildings. It has won giant retailer WalMart as a customer. The dynamics of buildings markets is to trial technology solutions at the residential and small-scale commercial level first, before scaling up to multistory buildings and large campuses. A home or small business case study can also migrate up to enterprise markets and across vertical markets if there is merit in the story. People that work in offices and in industrial buildings also live in homes. ‘Consumerization of IT’ rules apply.
Solar City is also now offering a data-driven energy efficiency service to its residential customers. When the data reveals malfunctioning equipment, the system offers recommended fixes and ties into a database of local contractors that can get the work done. You can schedule and budget for service in a few clicks from the SolarCity interface. When people get accustom to such building analytics interfaces for their homes, they will expect the same in their offices. Go Elon Musk! Keep slaying the big problems.