Lennar, the second-largest home building company in the country, has been on the forefront of making solar power available to its buyers since 2006. Throught the years, the company has responded to customers’ desire for affordable solar and now has launched a new venture that could change the way production builders offer solar power to American home buyers.
BUILDER talks with David J. Kaiserman, president of
Lennar Ventures and CEO of Lennar’s SunStreet Energy Group about the company's new program.
Why did you decide to change the way you offer solar to your buyers?
We have experimented with a variety of different solar offerings since 2006, first including the solar system in the price of the home and over time transitioning to a no-money down lease as we quickly learned that people liked solar but, in most cases, did not want to pay upfront. After a little while with the lease it become very clear that consumers wanted more than just no upfront cost. They understandably wanted a solar program that:
--Provides a guaranteed discounts relative to retail electricity rates from day one.
--Does not impede the sale of the home (initially, or when it is sold in the future) by requiring additional credit qualifications beyond those of buying the home.
--Is built as part of the home, not as an unsightly retrofit, to produce a better aesthetic result.
After a lot of time trying to find a company that could meet these needs, we decided to build one ourselves through our subsidiary, SunStreet Energy Group.
How does your program
First off, our program is not a lease, which generally carries a fixed cost per month for use of the solar system for an expected amount of energy. Rather, we offer a Power Purchase Agreement, or what is more commonly referred to as a PPA, which only charges for the actual energy produced by the system. That’s a big difference.
Second, our PPA sets the price of each unit of solar energy produced at a guaranteed 20% discount to prevailing utility rates for 20 years. No matter if retail electricity prices rise or fall, solar energy is guaranteed by us to be less than retail prices. That’s an even bigger deal.
Third, we don’t have any credit qualifications initially or if the home is sold and the PPA is transferred to the next homeowner. And last, we maintain the system at our expense. The combination of all these makes our SunStreet Solar 20/20 Plan a real groundbreaking advancement in residential solar and we have heard from many customers that it finally makes going solar a “no brainer.”
How are you able to
offer solar without adding to the price of the homes?
We are able to offer our SunStreet Solar 20/20 Plan because our cost to install a solar system is much lower than the general market. This is due, in large part, to the fact that we include solar on every home as a standard feature, so our customer acquisition costs are negligible. In the solar industry, the costs to find potential customers and turn them into buyers are significant. In our solar communities, the solar is a standard feature on every single home. So we eliminate that cost.
Second, because of our national footprint and the fact that we integrate solar into the construction process, we can achieve significant economies of scale, further reducing costs. These significant cost savings make a program like SunStreet’s Solar 20/20 Plan a reality.
What are the sizes of
the arrays on your homes? Who makes the equipment?
Our systems are sized during the planning process to provide for between 65% and 75% of the estimated energy needs of the home – roughly between 3kW and 5kW.
We use materials from some of the most trusted names in both the building and solar industries. Our solar panels, for example, come from CertainTeed, the U.S. roofing division of St. Gobain, a world leader with a long tradition of excellence in the building industry. Our systems are powered by Enphase micro-inverters, a networked technology that allows us to monitor the energy production of each and every panel in real time. Enphase micro-inverters also maximize power production and deliver household current that is safer than high-voltage central inverter systems.
Is solar becoming
mainstream with consumers?
Solar is one of those few features that, when you see it on the roof of a home, you know exactly what it does, and has been incredibly popular with buyers, especially in California and in our new Colorado communities. While panels on the roof reflect a lifestyle choice for some buyers and a pure financial decision for others, they clearly distinguish the new home from an existing home. Couple that with our Solar 20/20 Plan and that’s a really intriguing opportunity that we’ve pursued for a long time to get just right.
From a mainstream perspective, we are still at the very early stages. On the one hand, since residential solar systems became available decades ago, only 450,000 systems have been installed. That’s against the backdrop of 90 million homes in the country today. So we are just at the beginning. On the other hand, housing experts tell us that the country needs between 1.6 and 1.8 million new homes a year just to keep pace with household formation. Think about that number and the role production homebuilders like Lennar play in meeting that need. As an industry, we could make solar grow by orders of magnitude in a highly efficient way. But, again, when you put an offer in front of a consumer that says, “You can save money and do good by the environment” – that’s an idea that really catches on.